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March 2022: An Update on Changes to the New Comprehensive Insurance Disclosure Act and How Agencies and Brokerages Should Handle Requests for Information

March 2022 | Volume 37, Number 3

As we reported in the February 2022 E&O Report, on December 31, 2021, New York Governor Hochul signed into law Senate Bill 7052, called the “Comprehensive Insurance Disclosure Act", (“CIDA"). It amends the rules that apply to civil litigation in New York as to the production by a party in a lawsuit of its insurance information. Although the Governor signed the Bill as drafted, she requested that various changes be made to the law. Those changes have now been made. In this issue of The E&O Report we will review the elements of this newly changed law and also provide recommendations regarding how agencies or brokerages should deal with any requests that they may receive for information related to the disclosure of insurance information under the law.

Article 31 of the Civil Practice Law and Rules (“CPLR") sets forth the rules for discovery in civil litigation. CPLR §3101(f) governs the disclosure of insurance information in litigation and contains the elements of the newly amended CIDA, which now provides as follows:

“f) Contents of insurance agreement"

1) No later than ninety days after service of an answer pursuant to rule three hundred twenty or section three thousand eleven or three thousand thirteen of this chapter, any defendant, third-party defendant, or defendant on a cross-claim or counter-claim shall provide to the plaintiff, third party plaintiff, plaintiff on counter-claim, and any other party in the action proof of the existence and contents of any insurance agreement in the form of a copy of the insurance policy in place at the time of the loss or, if agreed to by such plaintiff or party in writing, in the form of a declaration page, under which any person or entity may be liable to satisfy part or all of a judgment that may be entered in the action or to indemnify or reimburse for payments made to satisfy the entry of final judgment. A plaintiff or party who agrees to accept a declaration page in lieu of a copy of any insurance policy does not waive the right to receive any other information required to be provided under this subdivision, and may revoke such agreement at any time, and upon notice to an applicable defendant of such revocation, shall be provided with the full copy of the insurance policy in place at the time of the loss. Information and documentation, as evidenced in the form of a copy of the insurance policy in place at the time of the loss or the declaration page, pursuant to this subdivision shall include:

(i) all primary, excess and umbrella policies, contracts or agreements issued by private or publicly traded stock companies, mutual insurance companies, captive insurance entities, risk retention groups, reciprocal insurance exchanges, syndicates, including, but not limited to, Lloyd's Underwriters as defined in section six thousand one hundred sixteen of the insurance law, surplus line insurers and self-insurance programs insofar as such documents relate to the claim being litigated;
(ii) if the insurance policy in place is provided, a complete copy of any policy, contract or agreement under which any person or entity may be liable to satisfy part or all of a judgment that may be entered in the action or to indemnify or reimburse for payments made to satisfy the entry of final judgment as referred to in this paragraph, including, but not limited to, declarations, insuring agreements, conditions, exclusions, endorsements, and similar provisions;
(iii) the contact information, including the name and e-mail address, of an assigned individual responsible for adjusting the claim at issue; and
(iv) the total limits available under any policy, contract or agreement, which shall mean the actual funds, after taking into account erosion and any other offsets, that can be used to satisfy a judgment described in this subdivision or to reimburse for payments made to satisfy the judgment.

       (2) A defendant, third-party defendant, or defendant on a cross-claim or counter-claim required to produce to a plaintiff or third-party plaintiff or plaintiff on a counter-claim all information set forth in paragraph one of this subdivision must make reasonable efforts to ensure that the information remains accurate and complete, and provide updated    information to any party to whom this information has been provided at the filing of the note of issue, when entering into any formal settlement negotiations conducted or supervised by the court, at a voluntary mediation, and when the case is called for trial, and for sixty days after any settlement or entry of final judgment in the case inclusive of all appeals.
        (3) For purposes of this subdivision, an application for insurance shall not be treated as part of an insurance agreement. Disclosure of policy limits under this section shall not constitute an admission that an alleged injury or damage is covered by the policy.
        (4) Information concerning the insurance agreement is not by reason of disclosure admissible in evidence at trial.
        (5) The requirements of this subdivision shall not apply to actions brought to recover motor vehicle insurance personal injury protection benefits under article fifty-one of the insurance law or regulation sixty-eight of title eleven of the New York codes, rules and regulations.
§4. This act shall take effect immediately and apply to all Actions commenced on or after such effective date.

By its terms, the newly amended CIDA, as set forth above, provides for the following:

It applies to all legal actions commenced after the effective date.
It mandates that even without a demand a party to a lawsuit has an affirmative obligation, within sixty (60) days after serving an answer, to provide the “insurance agreement."
Based upon the definition of “insurance agreement" a party is required to provide:

all primary, excess and umbrella policies, contracts or agreements issued by any insurer in the admitted, E&S markets or via Self Insurance
a complete copy of any policy, contract or agreement
the contact information, including the e-mail address, of any person or persons responsible for adjusting the claim made to or against the person or entity described in subparagraph (i) of this paragraph, including third-party administrators and persons within the insuring entity to whom the third-party administrator is required to report;
the amounts available under any policy, contract or agreement to satisfy a judgment or to reimburse for payments made to satisfy the judgment;
any lawsuits that have reduced or eroded or may reduce or erode such amounts, including the caption of any such lawsuit, the date the lawsuit was filed, and the identity and contact information of the attorneys for all represented parties therein; and
the amount, if any, of any payment of attorney's fees that have eroded or reduced the face value of the policy, along with the name and address of any attorney who received such payments.

The accuracy of the information/documents must be certified.

Recommendations Regarding Assisting Insureds with Compliance

Although an insurance agency or brokerage may have some of the above- mentioned information that an insured is required to disclose pursuant to the CIDA, the insurance company is certainly in a better position to accurately and quickly provide all of the necessary information. All of the information required to be disclosed pursuant to the CIDA are in the custody of the insurance company and not the agency or brokerage. Accordingly, it is our suggestion that an agency or brokerage that receives a request from an insured for this information should promptly forward the request to the applicable insurer(s) to prove a response. It is possible that some insurers may push back on doing this and take the position that the agency or brokerage should instead be the one providing the information to the insured. If that occurs the agency or brokerage should explain to the insurer that they should have all of the required the information readily available, while the agency or brokerage does not. By proceeding in this way the agency or brokerage will be helping its insured obtain the information that they need to disclose in an accurate manner.

Submitted by:

James C. Keidel, Esq.

Howard S. Kronberg, Esq.

Keidel, Weldon & Cunningham, LLP

Keidel, Weldon & Cunningham, LLP concentrates its practice in the defense of insurance agents and broker's errors and omissions claims and litigation, errors and omissions loss control counsel and education, insurance coverage analysis and litigation and insurance regulatory matters. Please direct any comments or questions to James C. Keidel, Esq. by mail to the main office of Keidel, Weldon & Cunningham, LLP, at 925 Westchester Avenue, Suite 400, White Plains, NY 10604, telephone at (914) 948-7000 or e-mail at jkeidel@kwcllp.com. The law firm also maintains offices in Syracuse, New York; New York City, New York; Wilton, Connecticut; Fair Lawn, New Jersey; Warwick, Rhode Island, Philadelphia, Pennsylvania, Williston, Vermont and Naples, Florida.