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New York's 'Scaffolding Law': It Isn't Just About Buildings

Whether an item is or is not a "structure" is fact-specific and must be determined on a case-by-case basis. In determining each case, courts may consider a number of relevant factors. These factors should include, but are not necessarily limited to, the item's size, purpose, design, composition, and degree of complexity; the ease or difficulty of its assembly and disassembly; the tools required to create it and dismantle it; the manner and degree of its interconnecting parts; and the amount of time the item is to exist. However, no one factor should be deemed controlling.

We find that in this case and upon consideration of all relevant factors, the Supreme Court properly held that the chupah at Abigail Kirsch was a "structure" within the intended scope of Labor Law § 240(1). In this action, the chupah consisted of various interconnected pipes 10 feet long and 3 inches wide, secured to steel metal bases supporting an attached fabric canopy. A ladder plus various hand tools were required to assemble and disassemble the chupah's constituent parts in a process that would take an experienced worker more than a few minutes to complete. The chupah here is more akin to the things and devices which the courts of this state have recognized as structures than to the things and devices that have not been recognized as structures.

This is not to say that every chupah qualifies as a structure under Labor Law § 240(1). Undoubtedly, there are wide variations of chupahs, some involving a series of durable interconnected parts, and others being much more simple and merely decorative in nature. Whether or not a chupah qualifies as a "structure" under Labor Law § 240(1) requires a consideration of more than only the purpose for which it is used. For example, the assembled pipe, wood, and fabric chupah in this matter consisted of intricate, interconnected parts, whereas, the wedding canopy in Stanislawczyk v 2 E. 61st St. Corp. (1 AD3d 155), a case upon which the defendants heavily rely, was suspended from a ceiling and was not itself assembled or interconnected with any other object. While the items here and in Stanislawczyk may have been used for the same ultimate purpose, the items themselves were, in a structural sense, vastly different from one another, one being a simple one-piece object, and the other being a collection of attached pieces of wood, metal, and fabric.

via courts.state.ny.us

 

When it comes to topics for blog posts, New York State Labor Law Sections 240 and 241 (a/k/a, "the scaffolding law") are the gifts that keep on giving. Ordinarily, when we think of the scaffolding law, we think in terms of someone falling off of a building. However, as this court decision illustrates, many types of structures can be sources of Labor Law claims. Even a wedding canopy. Will this decision result in higher liability insurance rates for synagogues? 

I'm being facetious here, but I keep reading reports that the commercial insurance market is hardening, so you never know...

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New York's Scaffolding Law Isn't Quite So Absolute

Not everyone working at an elevated height has a cause of action under New York's scaffolding law, according to an appellate court decision handed down on Tuesday:

Plaintiff house electrician was engaged in routine maintenance work when he fell from a ladder affixed to a scissor lift after fixing a light fixture (see Monaghan v 540 Inv. Land Co. LLC, 66 AD3d 605 [2009]). Indeed, plaintiff testified that he fixed light fixtures about twice weekly, that "nine out of ten times" the house electricians would change the whole fixture when performing such work, and that he retrieved sockets and bulbs from the building's storage area in order to perform his work. Further, his subforeman stated in an affidavit that the high-voltage nature of the lights caused the sockets to deteriorate, requiring them to be replaced on a regular basis, which necessitated keeping a large volume of sockets in stock on the premises. [*2]Accordingly, plaintiff's work clearly involved "replacing components that require replacement in the course of normal wear and tear" (Esposito v New York City Indus. Dev. Agency, 1 NY3d 526, 528 [2003]).

via courts.state.ny.us

Apparently, someone engaged in routine maintenance is not engaged in construction, at least within the meaning of New York Labor Law Section 240. We tend to think of the scaffolding law as being a black hole into which contractors fall and automatically become liable for hundreds of thousands of dollars. As this case illustrates, the law is a little more complex than that.

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The Penn State Scandal and the Colorado Theater Shooting: What Are the Insurance Lessons?

(This post also appeared in the July 25, 2012 issue of IIABNY Insider.)

Since last Wednesday’s issue of IIABNY Insider, two events have dominated the news: The NCAA’s disciplinary actions against Penn State and the horrible massacre of patrons at a Colorado movie theater. The most important consideration in both of these stories is the harm done to the victims – the children that former Penn State assistant football Coach Jerry Sandusky sexually abused, and the people who paid with their lives and their health for the crime of going to a midnight movie showing. The human loss is immeasurable. However, there are also measurable insurance considerations in these situations. As insurance professionals, we can use these events as reminders of how to advise clients on their insurance programs.

If you insure schools, small colleges, or entertainment venues, here are some questions to consider:

Is the movie theater liable for the injuries and deaths resulting from the attack?

That’s a legal question to be determined by lawyers negotiating a settlement or a judge or jury. The theater has legal liability if it was negligent. For it to be negligent, four things must be true:

• The theater owed a duty of care to the patrons
• The theater breached its duty
• The patrons suffered injuries
• The theater’s breach of its duty resulted in the patrons’ injuries and deaths.

The first and third points are indisputable. The question is whether the theater breached its duty by not preventing the attack. In other words, is this an event that the theater could reasonably have foreseen and prevented? If the answer is yes, then the fourth point also becomes indisputable and the theater will be legally liable. Otherwise, it will not.

Will the theater’s liability insurance policy provide coverage if the theater is liable?

Yes, if a theater has a standard ISO Commercial General Liability Insurance Policy. That policy covers the insured’s legal liability for bodily injury caused by an occurrence that takes place during the policy term. The standard policy contains a number of coverage exclusions, but none of them apply to an event like this. (The policy excludes coverage for expected or intended injury, but the theater owners did not expect or intend for this to happen.) The Colorado theater is part of the Cinemark corporate chain, so it likely has some sort of alternative risk financing plan, such as self-insurance or a high deductible.

What about the legal bills?

Even if the theater ultimately has no legal liability, reaching that conclusion will cost a small fortune in legal bills. Courts in the U.S. have tended to find that, if there is a reasonable chance that a liability policy’s coverage will apply to a loss, the insurer is duty-bound to provide a legal defense for the insured. Therefore, a theater that has suffered this type of event will have coverage for its legal defense.

An important question is whether the policy covers defense costs in addition to the policy’s limit of liability or if those costs actually reduce the limits available to pay the claim. If the policy has a $2 million limit but the $250,000 in legal costs come out of that limit, the amount left over to compensate the victims shrinks significantly.

If the theater is liable and the insurance covers it, is the theater worry-free?

That depends on how much insurance it bought. A dozen people died in the hours after the shooting, others may not live, and more than 50 suffered wounds of varying severity. In a situation like that, $2 million of liability insurance will not go very far. Even an umbrella policy with a $5 or $10 million limit may not fully cover the theater’s liability.

Switching to the Penn State situation, why is State Farm claiming that it doesn’t cover Jerry Sandusky?

According to reports, Sandusky had homeowners insurance coverage from State Farm. The insurer has sought a declaration in court that it does not have to pay for his defense or any legal judgments on his behalf. A standard ISO homeowners policy provides no coverage for bodily injury arising out of the insured’s intentional acts unless the acts included the use of reasonable force to protect persons or property. State Farm’s policy doesn’t even cover reasonable force. The insurer is saying that Sandusky intentionally acted to harm the children in question and therefore its coverage does not apply.

Does a college’s liability insurance cover it for molestation claims?

PMA Insurance Co., which provided Penn State’s liability insurance, has refused to pay for the university’s defense in the Sandusky matter. A small private college that has purchased a CGL policy might have the same problem. Whether the policy will provide coverage depends on whether it contains a specific endorsement. If the policy includes ISO endorsement CG 21 46 07 98, Abuse or Molestation Exclusion, it provides absolutely no coverage for incidents of this type. The endorsement specifically excludes coverage for the actual or threatened abuse or molestation by anyone of any person in an insured’s care, custody or control. It also excludes coverage for the negligent employment, investigation, supervision, retention, or reporting to the proper authorities or failure to so report of a person for whom an insured has legal responsibility.

Clearly, a college faced with a situation like the one facing Penn State would have no coverage under this endorsement. Even without the endorsement, the policy would not cover Sandusky, again because he acted intentionally. It would, however, cover the school and the school’s cost of defending the claim.

Would the college’s liability limits be high enough?

How much is high enough for the physical and emotional damage done to these children? Awards and settlements in cases like this are likely to be very large. Institutions that have this kind of exposure should be thinking about liability limits in the tens of millions.

 

Insurers, agents and brokers don’t have it in their power to erase the harm that results from events like these. However, by thinking about the financial implications, they can help prepare their clients for the worst while hoping that it never happens.

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Can an Insurer Renew a Policy Short-Term and Then Non-Renew?

Question from an IIABNY member: One of my insureds has a businessowners’ policy, issued by an admitted carrier, that is about to expire on June 26, 2012. As of today, the carrier has not sent any type of notice (e.g., nonrenewal or conditional renewal) to the insured regarding the upcoming renewal. However, I was just advised by the underwriter that, since they did not issue such a notice in time, they will issue a 60-day renewal, which will allow them more time to evaluate the risk and issue a notice, if deemed necessary.

My question to you is whether or not the carrier can issue a short-term renewal (effective June 26, 2012) without sending any notice to the insured. I believe they must send a notice but the carrier disagrees.

Answer: No, it cannot issue a short-term renewal. New York Insurance Law Section 3426(d)(2) states:

No covered policy which provides for a policy term of less than one year may be issued, or issued for delivery, in this state, except:

(A) a policy issued to an insured for a seasonal purpose;

(B) a policy issued to cover a specific event or particular project that will be performed in less than one year;

(C) a new policy where the specific term is made to coincide with the term of an insured's already existing policy with the same insurer, with any insurer at the insured's written request or, in the case of an excess liability policy, with different insurers; or

(D) a group property/casualty policy or certificates, policies issued pursuant to a safety group or mass merchandising program, or a medical malpractice or for-hire vehicle policy whose expiration date is common to all other policies issued by an insurer; in any of which events the first policy period may be for a period of less than one year with subsequent renewals requiring at least a one year policy period, and any such policies issued since the effective date of this section may be amended to conform to a common expiration date.

The renewal you’ve described isn’t for the summer; isn’t project-specific (like an Owners and Contractors Protective or Builders’ Risk policy); isn’t designed to make the expiration concurrent with other policies; and isn’t a group P&C policy. Therefore, a 60-day policy is impermissible.

It sounds to me like the carrier needs to send the little-used “alternative renewal notice,” as described in New York Insurance Law Section 3426:

(e)(1) A covered policy shall remain in full force and effect pursuant to the same terms, conditions and rates unless written notice is mailed or delivered by the insurer to the first-named insured, at the address shown on the policy, and to such insured's authorized agent or broker, indicating the insurer's intention:

(A) not to renew such policy; or

(B) to condition its renewal upon change of limits, change in type of coverage, reduction of coverage, increased deductible or addition of exclusion, or upon increased premiums in excess of ten percent (exclusive of any premium increase generated as a result of increased exposure units, pursuant to subsection (d) of this section, or as a result of experience rating, loss rating, retrospective rating or audit), except that with respect to an excess liability policy, the insurer may also, consistent with regulations promulgated by the superintendent, condition its renewal upon requirements relating to the underlying coverage, in which event the conditional renewal notice shall be treated as an effective notice of nonrenewal if such requirements are not satisfied as of the later of the expiration date of the policy or sixty days after mailing or delivery of such notice; or

(C) that the policy will not be renewed or will not be renewed upon the same terms, conditions or rates; such alternative renewal notice must be mailed or delivered on a timely basis and advise the insured that a second notice shall be mailed or delivered at a later date indicating the insurer's intention as specified in subparagraph (A) or (B) of this paragraph and that coverage shall continue on the same terms, conditions and rates as the expiring policy, until the later of the expiration date or sixty days after the second notice is mailed or delivered; such alternative renewal notice also shall advise the insured of the availability of loss information pursuant to subsection (g) of this section and, upon written request, the insurer shall furnish such loss information within ten days consistent with the provisions of such subsection. [EMPHASIS ADDED]

(2) A nonrenewal notice as specified in subparagraph (A), a conditional renewal notice as specified in subparagraph (B), and the second notice described in subparagraph (C) of paragraph one of this subsection shall contain the specific reason or reasons for nonrenewal or conditional renewal, set forth the amount of any premium increase (or, where such amount cannot reasonably be determined as of the time the notice is provided, a reasonable estimate of the premium increase based upon the information available to the insurer at that time), and describe in plain and concise terms the nature of any other proposed changes specified in paragraph one of this subsection. The superintendent shall by regulation specify the permissible range of such estimate (which shall not exceed five percent of the actual amount) and the permissible methods by which an insurer may satisfy the notice requirements of this section.

(3) The notice required by paragraph one of this subsection shall be mailed or delivered at least sixty, but not more than one hundred twenty, days in advance of the expiration date of the policy, except that for an excess liability policy or a policy issued to a jumbo risk, the notice shall be mailed or delivered at least thirty, but not more than one hundred twenty, days in advance of the expiration date of the policy.

(4) Paragraphs one, two and three of this subsection shall not apply when the named insured, an agent or broker authorized by the named insured, or another insurer of the named insured has mailed or delivered written notice that the policy has been replaced or is no longer desired.

(5)(A) If the insurer employs an alternative renewal notice as authorized by subparagraph (C) of paragraph one of this subsection, the insurer shall provide coverage on the same terms, conditions, and rates as the expiring policy, until the later of the expiration date or sixty days after the mailing or delivery of the second notice described in such subparagraph, except to the extent that, prior thereto, the insured has replaced the coverage or elects to cancel, in which event such cancellation shall be on a pro rata premium basis.

(B) In the event that a late conditional renewal notice or a late nonrenewal notice is provided by the insurer prior to the expiration date of the policy, coverage shall remain in effect, at the same terms and conditions of the expiring policy and at the lower of the current rates or the prior period's rates, until sixty days after such notice is mailed or delivered, except to the extent that, prior thereto, the insured has replaced the coverage or elects to cancel, in which event such cancellation shall be on a pro rata premium basis; provided, however, that if the insured elects to renew on the basis of the conditional renewal notice, then such terms, conditions and rates shall govern the policy upon expiration of such sixty day period unless such notice was provided at least thirty days prior to the expiration date of the policy, in which event the terms, conditions and rates set forth in the conditional renewal notice shall apply as of the renewal date.

(C)(i) In the event that a late conditional renewal notice or a late nonrenewal notice is provided by the insurer on or after the expiration date of the policy, coverage shall remain in effect on the same terms and conditions of the expiring policy for another required policy period, and at the lower of the current rates or the prior period's rates unless the insured during the additional required policy period has replaced the coverage or elects to cancel, in which event such cancellation shall be on a pro rata premium basis.

(ii) Every notice mailed or delivered pursuant to this subsection shall advise the insured of the insured's rights to coverage and the duration thereof.

Essentially, the alternative renewal notice buys them a little time, but they still have to make a decision before the current policy expires.

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Ask Tim, Episode #32: MVR's

Motor vehicle records (MVR's, for short) are an important part of the insurance business. Insurance agencies everywhere spend a lot of time on them -- ordering copies, reviewing them, flagging drivers with poor records. Much of the time, there are other people interested in sneaking a peek at the information in those records, and they want their insurance agents to share. These people tend to be the ones who write paychecks to the drivers described in the records. When this situation comes up (and that is almost daily), agents have two questions: Can they share the MVR's? Should they share them?

The new episode of the Ask Tim podcast seeks to answer those questions. Special guest co-host Dee Macheda joined me for this little eight-minute exploration of insurance geekiness. We examine in some detail:

• The prohibitions and allowances under the federal Drivers Privacy Protection Act
• The limitations commonly found in contracts with vendors of MVR's
• Some provisions of the federal Fair Credit Reporting Act that also apply.

More information is available on the MVR's page in the Research section of the IIABNY Web site.

Special thank you to my son Nathan Dodge for providing the prop that Dee used during the filming of this podcast, an act that was both generous and done completely without his knowledge.

Download Ask Tim Episode 32

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Premium Trust Accounts and Commissions

Question from an IIABNY member: I’ve had a chance to read Regulation 29 a couple of times now and I was wondering if you could just let me know if I understand it completely.  From the way I read it, it sounds like as agents we are not allowed to mix our earned commission with money we’re holding in trust in the same account, except in the instance where the commission hasn’t been taken from that customers payment yet.  And the only time we can make transfers out of that trust account is to pay a company or a customer, or to transfer our earned commission to our operating account. 

So basically, if we’re getting our direct billed commissions directly deposited into a checking account, to comply with this regulation they would have to go directly into our operating account, correct?  And I assume that would also refer to any profit sharing as well?  Does this sound like I’m understanding this? 

Also, do you see a lot of agents getting caught violating this regulation?

Answer: Basically, you can transfer money out of the premium account to: 

• Pay premiums to carriers
• Pay return premiums to clients
• Transfer earned interest to your operating account (assuming you have your carriers’ and clients’ permission to keep it)
• Transfer commissions to your operating account
• Transfer back to your operating account any deposits you made to the premium account voluntarily to maintain a minimum balance.

You are correct in that holding commission in the premium account does not violate the regulation. If your direct-billed commissions are going straight to your checking account, I really can’t think of a reason to move them to the premium account. The premium account is supposed to be only to hold premiums that you’ve received but not yet forwarded on to your carriers and clients. Since your direct-billed commissions aren’t intended for someone else, there’s no reason to put them in the premium account. Ditto for profit-sharing payments.

It’s common for agencies to get fined or worse for mixing up premium and operating funds. To get a feel, check out an of the Disciplinary Actions reports on the Financial Services Department’s Web site (reports issued since last October are here.) Open up one of the reports and do a text search for the word “commingled”. The latest report listed four agencies that were disciplined for that infraction.

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Employers Liability Coverage is Unlimited in New York, Except When It's Not

Question from an IIABNY member: When a certificate lists employers liability at :

• 100,000 each accident
• 500,000 policy limit
• 100,000 each employee

I always tell insured that in New York Employers liability is unlimited per the statute. Do you have something that proves this?

Answer: This is actually a little complicated because there isn’t a statute that mandates this. It’s more of a longstanding tradition. Also, the EL limits on the dec page may actually apply in certain circumstances. 

There is a 1988 New York Insurance Department advisory legal opinion on this topic. The last opinion the department issued on this was in 1990, and I think the 1988 opinion provides a better explanation. The attorney wrote in part: 

The workers' compensation carrier must "pay all sums" that the insured employer is legally obligated to pay third parties with respect to an employee's injuries which arose out of and in the course of employment, provided that, both the insured employer and the employee are subject to the New York State Workers' Compensation Law. [EMPHASIS ADDED]

The workers' compensation carrier may not impose any limit of liability for compensable injuries. The unlimited liability language of the New York Workers' Compensation Policy has been in effect for more than 40 years. The New York State Department of Insurance has never approved a workers' compensation policy form that would impose a limit on a carrier's liability for a compensable injury which includes the employer's liability. It is interesting to note that, the unlimited coverage for liability contained within Coverage B is a continuation of the coverage prevalent at the time the standard compensation policy was revised in New York in 1954. The concept of unlimited liability coverage originated in the insurance industry and was accepted by the Insurance Department when workers' compensation policy forms were submitted to the Superintendent of Insurance for approval.

Therefore, EL coverage is unlimited with regard to injuries and employments that are subject to the New York Workers’ Compensation Law. For example, a worker is in a scissor lift installing overhead piping when the lift collapses. He collects WC benefits but also sues the lift’s manufacturer, who in turn sues the employer, alleging improper use or maintenance. The employer’s EL coverage is unlimited for this loss because the injury and employment are compensable under the New YorkWC law.

In contrast, a worker borrows a power saw without permission from his employer because the motor burned out on his own saw. While at home on a weekend, he amputates a finger when the guard on the saw falls off. He sues the saw’s manufacturer, who sues the employer, again alleging faulty maintenance. Because this injury is probably not compensable under the New York WC law, the EL coverage is subject to the limits shown on the dec page.

Another example: Recently, a public school teacher near here got burned when his science experiment in the classroom went wrong. Put him in private school. If he sued the manufacturers of the equipment and supplies used in the experiment, and those entities in turn sued the private school, the EL limits on the school's WC policy would apply, because “people engaged in a teaching capacity in or for a nonprofit…educational institution” are not covered by the NY WC law while “performing teaching duties.” 

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When Is a Home 'Unoccupied' Under a Homeowners Policy?

Question from an IIABNY member: In a strict reading on the homeowners policy, after a period of the home not being occupied, coverage becomes limited. The question came up on clients who leave their summer homes in New York to go to their winter residence, such as in Florida. We have a disagreement in our office as to whether the summer home would be considered unoccupied under the policy. Is there a clear answer to this?

Answer: I found a 1999 New York appellate court decision that appears to address your question. In McCabe v. Allstate, which pertained to a seasonal home located in Saratoga County, the judge wrote: 

We next review Allstate's contention that it was entitled to summary judgment due to the following loss exclusion: "Freezing of plumbing, fire protective sprinkler systems, heating or air conditioning systems or household appliances, or discharge, leakage or overflow from within the systems or appliances caused by freezing, while the building structure is vacant, unoccupied or being constructed unless you have used reasonable care to: (a) maintain heat in the building structure; or (b) shut off the water supply and drain the system and appliances." We find plaintiffs' assertion that their house was not "unoccupied" in light of their continuing, albeit seasonal use of the premises, to be unavailing. Inasmuch as plaintiffs' primary residence was in Virginia and they concede that no one resided at or visited the house in Edinburg from September 1995 until March 1996, their claim falls squarely within the exclusion provision. This Court has previously determined that use of the word "unoccupied" in an insurance policy carries its ordinarily accepted meaning and that "[i]t is the regular presence of inhabitants that makes occupancy" (Coutu v Exchange Ins. Co., 174 AD2d 241, 244; see, Page v Nationwide Mut. Fire Ins. Co., 15 AD2d 306, 306-307). [EMPHASIS ADDED]

This decision has been cited by a federal court as recently as 2009, so it appears to still be a valid precedent. Consequently, it appears that the coverage limitations do apply to a home in New York that is unoccupied during the winter months.

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When a Carrier Terminates an Agency: Personal Lines Policies

Question from an IIABNY member: Can you please indicate where it is stated that an insured can request a one more year renewal for an automobile insurance policy after the required three successive one year policy periods, and if it also applies to personal lines insurance policies?

Answer: That’s not exactly what the law says. New York Insurance Law Section 3425(j)(1) states:

Where an insurer or an agent who is authorized by such insurer to accept lines of insurance from licensed agents or brokers notifies a licensed agent or broker that its contract or account shall be terminated:…

(B) with respect to an automobile insurance policy subject to this section, the insurer shall offer to continue the policy for any remaining part of the required policy period and, unless the policy is cancelled or non-renewed in accordance with the provisions of either subsection (b), (c) or (f) of this section, it shall, at the specific request of the insured, offer to continue the policy through the terminated agent or broker for three successive one year policy periods which commence within the year following the date of mailing or delivery to the terminated agent or broker of written notice of termination of such contract or account;

As a side note: 

• Subsection (b) permits the insurer to cancel a policy for any reason in the first 60 days.
• Subsection (c) permits the insurer to cancel after day 60 and on renewals for non-payment of premium; suspension or revocation during the required policy period of the driver's license of the named insured or any other person who customarily operates an auto insured under the policy; and discovery of fraud or material misrepresentation in obtaining the policy or in making a claim under it.
• Subsection (f) permits the insurer to non-renew up to two percent of its auto policies in a given rating territory per calendar year.

What the above provision of the law is saying is that the insurer must offer to finish the auto policy’s required policy period (which is one year – see subsection (a)(8),) and, if the insured requests, offer to renew the policy through the terminated agent for three consecutive one-year policy periods. Here’s an example to illustrate:

• Carrier notifies agent on Dec. 16, 2011 that the appointment is terminated
• Personal Auto Policy finishes the one-year required policy period on March 1, 2012

The carrier must offer to continue coverage under the policy until March 1, 2012. In addition, if the insured requests, it must offer to renew the policy through the terminated agent in 2012, 2013 and 2014. Effective March 1, 2015, it no longer has any obligation to offer a renewal.

With non-auto personal policies, it’s a bit different. The law states:

Where an insurer or an agent who is authorized by such insurer to accept lines of insurance from licensed agents or brokers notifies a licensed agent or broker that its contract or account shall be terminated:(A) with respect to a personal lines insurance policy required to be continued by this section, the insurer shall offer to continue the policy for any remaining part of the required policy period … and the insurer shall offer to continue the policy through the terminated agent or broker for at least its next one year policy period which commences within one year following the date of mailing or delivery to the terminated agent or broker of written notice of termination of such contract or account, and thereafter, at the specific request of the insured, shall offer to continue the policy through such terminated agent or broker for any remaining part of the required policy period …

Here are two illustrations (in more understandable English) to show what this means. First:

• Carrier notifies agent on Dec. 16, 2011 that the appointment is terminated
• Homeowners policy was written new on March 1, 2009, so the three-year required policy period (see subsection (a)(7)) ends on March 1, 2012.

The carrier must offer to continue coverage under the policy until March 1, 2012, it must offer to renew the policy through the terminated agent for the 2012-13 policy period, and, if the insured requests, must offer to renew the policy through the terminated agent for 2013 and 2014. Effective March 1, 2015, it has no obligation to offer a renewal.

Second scenario:

• Carrier notifies agent on Dec. 16, 2011 that the appointment is terminated
• Homeowners policy was written new on March 1, 2010, so the three-year required policy period (see subsection (a)(7)) ends on March 1, 2013.

The carrier must offer to continue coverage under the policy until March 1, 2013, but it has no obligation to offer to renew the policy through the terminated agent after that. This is because the three-year required policy period ends more than a year after the carrier notified the agent of termination.

The rules surrounding a carrier's obligations to insureds when it terminates an agent are complex, but they boil down to when the carrier notifies the agent and when a policy expires.

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Ask Tim, Episode #31 -- Conditional Renewal Notices

In today's episode of the Ask Tim podcast, I take a look at the requirements in New York Insurance Law Section 3426 regarding when insurance carriers have to send conditional renewal notices on commercial lines policies. Also, a generous IIABNY colleague buys me lunch. Here are the highlights:

Carriers must send conditional renewal notices on some commercial lines policies to the first-named insured, at the address shown on the policy, and to the insured's authorized agent or broker. They must send a notice if they are conditioning renewal upon:

• Change of limits
• Change in type of coverage
• Reduction of coverage
• Increased deductible
• Addition of exclusion
• Some premium increases in excess of 10 percent

Future episodes will explore Section 3426 in more detail. 

Download Episode 31 of Ask Tim

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