New DFS Guidance on SSL Insurance
The New York State Department of Financial Services (DFS) today published instructions about the upcoming change to New York insurance law regarding Supplemental Spousal Liability (SSL) coverage under auto insurance policies. The change narrowed the scope of a law that required the coverage on all policies unless the insured rejected it.
The circular letter is addressed to all auto insurers, the New York Automobile Insurance Plan (NYAIP,) rate service organizations such as the Insurance Services Office (ISO,) and licensed insurance producers. Deputy Superintendent, Property Bureau Bernard Ganley wrote the letter.
SSL insurance covers an insured for damages they may owe to their spouse for injuries or death suffered in an auto accident, where the injured spouse must prove that the other spouse was legally liable. Legislation enacted in 2002 required insurers to offer the coverage and add it at the insured’s request. A 2023 amendment flipped that requirement around. It made the coverage automatic unless the insured rejected it in writing.
This change resulted in business entities and unmarried individuals buying SSL coverage that they did not ask for or need. Some individuals reported in the media that getting the coverage removed and the additional premium refunded was difficult.
In response, and at the urging of Big I New York, the state legislature passed another amendment in 2024, removing the requirement that the coverage be automatically added to commercial auto policies and personal policies where the insured stated on the application that their marital status was “single.” These insureds may still request the coverage. New York Gov. Kathy Hochul signed the bill last September; it takes effect on March 26, 2025.
The letter described the change to state law and noted that:
- The law “does not require that an insurer automatically add or remove SSL insurance from a policy when a named insured’s marital status changes after policy issuance. In this instance, the named insured must request the addition or removal of SSL insurance in writing.”
- The SSL insurance requirements do not apply to umbrella liability insurance policies or for-hire motor vehicle liability insurance policies.
- Insurers must provide, at policy issuance and renewal, notice to affected insureds that their policies include SSL insurance, and they may reject it in writing if they wish. They must also provide notice to other insureds that the coverage is available. At least annually, insurers must provide notices to existing insureds who do not have SSL insurance that it is available. The notices must be on the front of the premium notice in boldface type, include an explanation of the coverage, and quote the premium.
- “An insurer may not inform a first named insured that there is no charge for the SSL insurance or otherwise specify ‘$0.00’ on the notifications. … In addition, if a first named insured declines the SSL insurance, then the insurer must provide the first named insured with the appropriate premium reduction based on the insurer’s filed and approved rates and rules, even if the insurer considers the premium reduction to be nominal.”
- DFS has created a declination form for insurers to provide insureds who wish to reject the coverage. ACORD has revised form ACORD 65 NY to include this sample form.
- Insurers may obtain the written declination in electronic format.
- The effective date of the rejection is the date the insurer receives an electronic declination or the postmarked date if they receive it through the U.S. mail.
- Once an insured has rejected the coverage, insurers are not required to obtain written declinations at policy renewals. However, if the insured purchases the coverage, they must provide the declination form at each policy renewal.
Every insurer and the NYAIP should implement these changes by March 26th.
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