Relates to allowing reduced deductibles for insurers offering physical damage insurance

BILL NUMBER:S3860

Title of bill

An act to amend the insurance law, in relation to deductibles for physical damage insurance

Purpose

The purpose of the legislation is to permit automobile insurance companies to reduce or zero out automobile physical damage deductibles

Summary of provisions

Amends insurance law section 3411(k) to allow auto insurance companies to offer a reduced or zero deductibles for automobile physical damage

Existing law

Current insurance law requires auto insurers to offer physical damage insurance with a standard deductible of $200 for each occurrence. The insured also currently has the option to purchase a policy with slightly lower deductibles upon inception of the policy, at the annual anniversary date, or upon replacement/addition of a vehicle as follows: $50 for fire/theft/comprehensive, $100 for assigned risk policies, and $100 for collision. Current insurance law also requires insurers to offer physical damage insurance with higher deductibles ($250, $500, $1000 and any other amount the superintendent may prescribe). Insurers are not currently permitted to offer a reduced deductible, a zero deductible, or a deductible that diminishes over time.

Justification

This legislation would permit automobile insurance companies to offer policies where there would be no out-of-pocket payments for automobile damages. Currently the law mandates a minimum deductible be paid by the customer. Automobile insurance offerings have progressed since the enactment of this provision fueled by innovative products and consumer demand.

In other states, consumers have access to different policies which suit their needs This legislation would provide flexible options to automobile insurance companies. For example, one insurance company may wish to provide reduced or zero deductibles based on the length of time the consumer is with the insurance company, another may wish to offer no deductible on property damage as part of an increased premium. This legislation would accommodate these options. Such options would be subject to the oversight of the Department of Financial Services.

Policies without the requirement of deductibles or the payment out-of-pocket expenses are widely accepted throughout the nation, but are currently denied New Yorkers. This bill would allow for the offering of these products to New York residents so they can decide what level of coverage best suits their needs.

Legislative history

S.6981 of 2012.

Fiscal implications

None.

Effective date

Immediately.