NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A1395
SPONSOR: Perry TITLE OF BILL:
An act to amend the insurance law, in relation to group policies for
certain motor vehicles engaged in the business of carrying or transport-
ing passengers for hire
PURPOSE:
The purpose of this bill is to make clarifying changes to Chapter 374 of
the Laws of 2020 which established and authorized the sale of group auto
insurance policies for commercial vehicles for use by for-hire vehicle
associations, and to amend such language to eliminate the mandate for
all insurance companies that offer commercial motor vehicle coverage to
establish and offer such group fleet policies.
SUMMARY OF PROVISIONS: Section one of the bill amends § 3457 of the
insurance law to:
*Provide for definitions, establishing and defining "for-hire motor
vehicle group policy," wherein such policy provides insurance to group
members or both the group policyholder and the group members.
*Define "sponsoring entity," which may be an association or other organ-
ization where all eligible members of such association have the same
profession or trade and such group has been established for at least two
years, an entity that owns for-hire vehicles and leases them to drivers,
or any other entity where the Superintendent of DFS has determined in
regulation that the members are engaged in a common enterprise, have an
economic or social relationship, and that issuing such would not be
contrary to public interests.
*Authorize insurance companies to establish and offer such for-hire
motor vehicle group policies, which may provide: coverage for limits
higher than the required minimum limits pursuant to Section 370 of the
Vehicle and Traffic Law and Section 3420 of the Insurance Law; supple-
mental spousal liability insurance; and motor vehicle physical damage
coverage.
*Require that each group policy written shall provide per occurrence for
each group member.
*Require insurers to be responsible for the mailing and/or delivery of a
certificate of insurance to each group member covered under the group
policy. Such certificate shall include all material terms and conditions
of coverage afforded to group members.
*Allow for insurers to cancel group coverage or certificates due to
noncompliance with requirements set forth in sub paragraphs (A) through
(D) or (F) through (H) of paragraph 1, subsection c of Section 3426 of
the Insurance Law. Such cancellations would not take effect until thirty
days mails or delivers written notice of policy or certificate cancella-
tion.
*Allow group policyholders to cancel a group policy, including all
certificates or any individual certificate for any reason upon at least
thirty days notice before the effective date of the cancellation to both
group members and the insurer.
*Provide that group policyholders shall be entitled to renew the group
policy and all certificates upon timely payment of the premium billed
for such renewal, unless the insurer delivers to the group policyholder
and all members written notice of non-renewal or conditional renewal,
and such written notice is delivered at least sixty but not more than
one hundred and twenty days prior to the expiration of such policy.
*Authorize the Superintendent of DFS to promulgate regulations pertain-
ing to such for-hire motor vehicle group policy.
Section two of the bill provides the effective date.
JUSTIFICATION:
Section 370 of the Vehicle and Traffic Law requires minimum liability
coverages for for-hire vehicles based on carrying capacity. Part III of
Chapter 59 of the Laws of 2019 increased the liability coverage required
for for-hire vehicles with a capacity of eight or more persons to a
minimum of $1.5 million. This has resulted in increases in the rates of
premiums for this coverage. This bill was negotiated to provide for
opportunities for more affordable and accessible commercial motor vehi-
cle coverage by authorizing the sale of group insurance policies cover-
ing for-hire vehicles transporting at least eight passengers. Such group
fleet policies would spread the risk among several vehicles and would
potentially result in a decrease in premiums.
PRIOR LEGISLATIVE HISTORY:
New bill.
FISCAL IMPLICATIONS:
None
EFFECTIVE DATE:
Immediately
STATE OF NEW YORK
________________________________________________________________________
1395
2021-2022 Regular Sessions
IN ASSEMBLY
January 8, 2021
___________
Introduced by M. of A. PERRY -- read once and referred to the Committee
on Insurance
AN ACT to amend the insurance law, in relation to group policies for
certain motor vehicles engaged in the business of carrying or trans-
porting passengers for hire
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Section 3457 of the insurance law, as added by a chapter of
2 the laws of 2020, amending the insurance law relating to group policies
3 for motor vehicles engaged in the business of carrying and transporting
4 passengers for-hire, as proposed in legislative bills numbers S. 8437
5 and A. 9761-A, is amended to read as follows:
6 § 3457. [Group fleet policy for motor vehicles engaged in the business
7 of carrying or transporting passengers for-hire. (a) (i) Every author-
8 ized insurer that issues or issues for delivery in this state a policy
9 of commercial risk insurance insuring against losses or liabilities
10 arising out of the ownership, operation, or use of a motor vehicle,
11 shall establish and offer a group fleet policy insuring against the
12 losses or liabilities arising out of the ownership of motor vehicles
13 engaged in the business of carrying or transporting passengers for-hire,
14 having a seating capacity of not less than eight passengers. Such group
15 fleet policy shall provide coverage for more than one vehicle through
16 one policy. Such group fleet policies shall be subject to all laws,
17 rules and regulations applicable to policies of commercial risk insur-
18 ance insuring against losses or liabilities arising out of the owner-
19 ship, operation, or use of a motor vehicle engaged in the business of
20 carrying or transporting passengers for-hire, having a seating capacity
21 of not less than eight passengers, including but not limited to laws,
22 rules and regulations establishing financial responsibility require-
23 ments.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD07189-01-1
A. 1395 2
1 (ii) For the purpose of this section, a "group fleet policy" shall
2 mean, a policy issued by an authorized insurer in this state insuring
3 against losses or liabilities arising out of ownership, operation, or
4 use of a motor vehicle engaged in the business of carrying or transport-
5 ing passengers for-hire, having a seating capacity of not less than
6 eight passengers, and such policy shall cover more than one vehicle.
7 (b) The group fleet policy may be issued to:
8 (i) Any person, firm, association, corporation or other entity which
9 shall be deemed the policyholder, where the policy insures the for-hire
10 motor vehicles owned by such person, firm, association, corporation or
11 other entity; or
12 (ii) An association where such association shall be deemed the policy-
13 holder; where all the eligible members of the association have the same
14 profession, trade, or occupation, and the association has been organized
15 and maintained in good faith for purposes principally other than that of
16 obtaining insurance, and has been in active existence for at least two
17 years, and where the policy insures the members of the association.
18 (c) An authorized insurer issuing policies pursuant to this section
19 shall provide a multiple vehicle reduction based on the number of motor
20 vehicles that will be covered under such policy. Such reduction shall be
21 based on actuarially appropriate reductions as provided for in
22 subsection (e) of this section. Each insurer required to provide such
23 reduction shall submit a report to the superintendent at the end of each
24 calendar year identifying the number of policies eligible for such
25 discount and the number of policies to which such discount has been
26 applied.
27 (d) A member of an association shall not be deemed to be an employee
28 of such association solely because such member is covered under a group
29 fleet policy issued to an association pursuant to this section.
30 (e) Authorized insurers required to establish group fleet policies
31 pursuant to this section shall make such policies available for purchase
32 no later than January first, two thousand twenty-one.
33 (f) The superintendent shall provide for an actuarially appropriate
34 reduction in the rates of premiums for commercial risk insurance appli-
35 cable to motor vehicles engaged in the business of carrying or trans-
36 porting passengers for-hire, having a seating capacity of not less than
37 eight passengers, for policies that provide coverage for multiple vehi-
38 cles. Nothing in this section shall be construed to authorize any
39 increase in premium rates for any other policy issued by such authorized
40 insurer as a result of any group fleet policy premium rate.
41 (g) The superintendent may promulgate any rules and regulations neces-
42 sary to implement the provisions of this section.]
43 Group insurance policies for certain for hire motor vehicles. (a) For
44 purposes of this section, the following definitions shall apply:
45 (1) "Certificate" or "certificate of insurance" means any policy,
46 contract or other evidence of insurance, or endorsement thereto, issued
47 to a group member under a for hire motor vehicle group policy.
48 (2) "For hire motor vehicle" or "vehicle" means a motor vehicle
49 engaged in the business of carrying or transporting passengers for hire,
50 having a seating capacity of not less than eight passengers, excluding
51 the driver.
52 (3) "For hire motor vehicle group policy" or "group policy" means a
53 group policy, including certificates issued to the group members, where
54 the group policy provides insurance to the group members or both the
55 group policyholder and the group members of the type described in para-
A. 1395 3
1 graph twelve, thirteen, fourteen, or nineteen of subsection (a) of
2 section one thousand one hundred thirteen of this chapter.
3 (4) "Group member" means the owner of a for hire motor vehicle.
4 (5) "Group policyholder" means a sponsoring entity.
5 (6) "Owner" shall have the same meaning as set forth in section one
6 hundred twenty-eight of the vehicle and traffic law.
7 (7) "Sponsoring entity" means:
8 (A) an association or other organization, or a trustee or trustees of
9 a fund established, created, or maintained for the benefit of one or
10 more associations or other organizations, where all the eligible members
11 of the association or associations or other organization or organiza-
12 tions have the same profession, trade, or occupation, and the associ-
13 ation or associations or other organization or organizations have been
14 organized and maintained in good faith for purposes principally other
15 than that of obtaining insurance, and have been in active existence for
16 at least two years;
17 (B) an entity that owns for hire motor vehicles and leases them to
18 drivers; or
19 (C) any other entity where the superintendent has determined in a
20 regulation that the members are engaged in a common enterprise, or have
21 an economic or social affinity or relationship, and that the issuance of
22 the group policy would not be contrary to the best interests of the
23 public.
24 (b) An authorized insurer may issue or issue for delivery in this
25 state a group policy to a sponsoring entity as a group policyholder only
26 in accordance with the provisions of this section.
27 (c)(1) A group policy shall provide coverage in satisfaction of the
28 financial responsibility requirements set forth in section three thou-
29 sand four hundred twenty of this article, section three hundred seventy
30 of the vehicle and traffic law, article fifty-one of this chapter, and
31 such other requirements or regulations that may apply for the purposes
32 of satisfying the financial responsibility requirements with respect to
33 the use or operation of a for hire motor vehicle.
34 (2) A group policy may provide:
35 (A) coverage for limits higher than the minimum limits required pursu-
36 ant to section three hundred seventy of the vehicle and traffic law and
37 paragraph two of subsection (f) of section three thousand four hundred
38 twenty of this article;
39 (B) supplemental spousal liability insurance pursuant to subsection
40 (g) of section three thousand four hundred twenty of this article; and
41 (C) motor vehicle physical damage coverage as described in paragraph
42 nineteen of subsection (a) of section one thousand one hundred thirteen
43 of this chapter.
44 (3) A group policy, including certificates, shall be issued by an
45 authorized insurer.
46 (4) A policyholder also may be an insured under a group policy.
47 (d) The premium for the group policy, including certificates, may be
48 paid by the group policyholder from the funds contributed wholly by the
49 group members or jointly by the group policyholder and the group
50 members.
51 (e) Each policy written pursuant to this section shall provide per
52 occurrence limits of coverage for each group member in an amount not
53 less than that required by this article and may provide coverage for
54 limits higher than the minimum limits required pursuant to law.
55 (f)(1) The insurer shall be responsible for mailing or delivery of a
56 certificate of insurance to each group member insured under the group
A. 1395 4
1 policy. The insurer shall also be responsible for the mailing or deliv-
2 ery to each group member of an amended certificate of insurance or
3 endorsement to the certificate whenever there is a change in limits,
4 change in type of coverage, addition, reduction, or elimination of
5 coverage or addition of an exclusion, under the group policy or certif-
6 icate.
7 (2) The certificate shall contain in substance all material terms and
8 conditions of coverage afforded to group members, unless the group poli-
9 cy is incorporated by reference and a copy of the group policy accompa-
10 nies the certificate.
11 (g) A group policyholder shall comply with the provisions of section
12 two thousand one hundred twenty-two of this chapter, in the same manner
13 as an insurance agent or insurance broker, in any advertisement, sign,
14 pamphlet, circular, card, or other public announcement referring to
15 coverage under a group policy or certificate.
16 (h) A group policy shall not be subject to section three thousand four
17 hundred twenty-five or section three thousand four hundred twenty-six of
18 this article, provided that the following requirements shall apply with
19 regard to termination of coverage:
20 (1) An insurer may cancel a group policy or certificate only if
21 cancellation is based on one or more of the reasons set forth in subpar-
22 agraph (A) through (D) or (F) through (H) of paragraph one of subsection
23 (c) of section three thousand four hundred twenty-six of this article;
24 provided, however, that:
25 (A) an insurer may cancel an individual certificate if the driver's
26 license of the group member insured under that certificate is suspended
27 or revoked during the period of coverage, other than a suspension issued
28 pursuant to subdivision one of section five hundred ten-b of the vehicle
29 and traffic law or one or more administrative suspensions arising from
30 the same incident that has or have been terminated prior to the effec-
31 tive date of the cancellation; and
32 (B) an act or omission by a group member that would constitute the
33 basis for cancellation of an individual certificate shall not constitute
34 the basis for cancellation of the group policy.
35 (2) An insurer's cancellation of a group policy, including all certif-
36 icates, shall not become effective until thirty days after the insurer
37 mails or delivers written notice of cancellation to the group policy-
38 holder at the mailing address shown in the policy. The insurer shall
39 also mail or deliver written notice of cancellation of the group policy,
40 including all certificates, to the group member at the group member's
41 mailing address. Such cancellation shall not become effective until
42 thirty days after the insurer mails or delivers the written notice to
43 the group member.
44 (3)(A) A group policyholder may cancel a group policy, including all
45 certificates, or any individual certificate, for any reason upon at
46 least thirty days written notice to the insurer and each group member;
47 and
48 (B) the group policyholder shall mail or deliver written notice to
49 each affected group member of the group policyholder's cancellation of
50 the group policy or certificate and the effective date of cancellation.
51 The group policyholder shall mail or deliver the written notice to the
52 group member's mailing address at least thirty days prior to the effec-
53 tive date of cancellation.
54 (4)(A) Unless a group policy provides for a longer policy period, the
55 policy and all certificates shall be issued or renewed for a one-year
56 policy period.
A. 1395 5
1 (B) The group policyholder shall be entitled to renew the group policy
2 and all certificates upon timely payment of the premium billed to the
3 group policyholder for the renewal, unless:
4 (i) the insurer mails or delivers to the group policyholder and all
5 group members written notice of nonrenewal or conditional renewal; and
6 (ii) the insurer mails or delivers the written notice at least sixty,
7 but not more than one hundred twenty days, prior to the expiration date
8 specified in the policy or, if no date is specified, the next anniver-
9 sary date of the policy.
10 (5) Every notice of cancellation, nonrenewal, or conditional renewal
11 shall set forth the specific reason or reasons for cancellation, nonre-
12 newal, or conditional renewal and the insurer shall also mail or deliver
13 the notice to the insurance producer that procured the group policy when
14 the group policy and any certificates are cancelled, nonrenewed, or
15 conditionally renewed.
16 (6)(A) If, prior to the effective date of cancellation, nonrenewal, or
17 conditional renewal of the group policy, or cancellation of a certif-
18 icate, whether initiated by the insurer, group policyholder, or group
19 member in regard to the group member's certificate, coverage attaches
20 pursuant to the terms of the group policy, then the coverage shall be
21 effective until expiration of the applicable period of coverage provided
22 in the group policy notwithstanding the cancellation, nonrenewal or
23 conditional nonrenewal of the group policy.
24 (B) Notwithstanding subparagraph (A) of this paragraph, an insurer may
25 terminate coverage under an individual certificate on the effective date
26 of cancellation if the certificate is cancelled in accordance with the
27 provisions of paragraph one of this subsection.
28 (i) An insurer shall not include a mandatory arbitration clause in a
29 policy that provides financial responsibility coverage under this
30 section, except as permitted in section five thousand one hundred five
31 of this chapter.
32 (j) The superintendent may promulgate regulations pertaining to a for
33 hire motor vehicle group policy, including regulations regarding
34 payments of dividends or retrospective premium refunds, minimum number
35 of group members, and other reasonable limitations.
36 § 2. This act shall take effect on the same date and in the same
37 manner as a chapter of the laws of 2020, amending the insurance law
38 relating to group policies for motor vehicles engaged in the business of
39 carrying and transporting passengers for-hire, as proposed in legisla-
40 tive bills numbers S. 8437 and A. 9761-A, takes effect.
