What's happening
This bill allows certain liability insurance policies in New York to cover punitive damages and civil penalties, with specific exceptions.
Why it matters
Affects liability for organizations and businesses. By allowing insurance to cover punitive damages and civil penalties (previously often excluded), businesses and other insured entities may face less financial risk from lawsuits alleging gross negligence or reckless conduct, potentially changing how they assess and manage liability.
Explicit exclusions and limits. The bill does not allow such coverage for personal lines insurance (e.g., standard home or auto policies for individuals) or commercial auto liability insurance, maintaining stricter rules for individuals and commercial drivers.
Vicarious vs. direct liability. Coverage can apply both to vicarious liability (when a party is held responsible for someone else’s actions, such as an employer for an employee) and direct liability for gross negligence or recklessness, but not for intentional harmful acts—so it still discourages deliberate wrongdoing.
Potential impact on litigation and settlements. The availability of insurance for punitive damages may influence both the willingness of plaintiffs to pursue such damages and the settlement dynamics, possibly leading to more claims or higher settlement values in some cases.
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Who cares
Headline styles
Allow Insurance for Punitive Damages
Plain English, a few words. Used as the page title.
Sponsors
2 Co-sponsors
History
- Referred to insurance
- Referred to insurance
Full text
1 pageUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
71
2025-2026 Regular Sessions
IN ASSEMBLY (Prefiled)
January 8, 2025
Introduced by M. of A. DINOWITZ, HUNTER -- read once and referred to the Committee on Insurance
AN ACT to amend the insurance law, in relation to permitting certain liability policies to provide coverage for punitive damages and civil penalties
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. The insurance law is amended by adding a new section 3423 to read as follows:
§ 3423. Punitive damages and civil penalties coverage. 1. An insurer may provide and an insured may purchase insurance against an award of punitive damages, or civil penalties, or other non-compensatory damages in any liability insurance policy except in a policy of personal lines insurance issued to a natural person for non-business purposes, or a commercial automobile liability insurance policy.
2. Coverage may provide protection for vicarious liability resulting from the conduct of another, or when assessed against a party directly for gross negligence or reckless conduct. Coverage shall not apply where liability results from action that was intended to cause the resulting harm, damage or injury. Coverage shall apply only when expressly provided for by the insurance policy.
3. This section shall apply prospectively to insurance policies with effective dates on or after the effective date of this section.
§ 2. This act shall take effect immediately.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD00799-01-5
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.