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Jan 16
New Law: Auto Policies To Include Supplemental Spousal Liability Coverage

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A law that took effect January 1 requires all New York automobile insurance policies to include supplemental spousal liability insurance coverage. Insureds may opt out of purchasing the coverage. Big I New York members should prepare now to begin informing their personal and commercial auto insurance clients of this change.

The measure, sponsored by former Assembly Insurance Committee Chair Kevin Cahill (Democrat from Kingston,) passed the State Assembly by a vote of 110 to 39 on May 31, 2022. The State Senate approved it the following day by a vote of 60 to 3. Gov. Kathy Hochul signed it into law on December 23 on the condition that the two houses would immediately enact amendments pushing back the effective date and permitting it to expire.

Supplemental spousal liability insurance is coverage for an insured's legal liability for the death of or injuries to a spouse, even where the injured spouse must prove the other spouse's culpable conduct before recovering damages. It applies only to primary auto liability coverage, not to umbrella liability coverage. We have not heard of instances where one spouse sued another, but the coverage could become important when an insurer for another driver pays for damages and subrogates against the insured driver. It might also become important in relation to a supplementary uninsured/underinsured motorist claim.

Previous law required insurers to offer the coverage to all insureds at the inception of new policies and on renewals. Industry data standards setting organization ACORD published a form in 2003, ACORD 65 NY (2003/01), to enable documentation of the insured’s acceptance or rejection of the coverage.

The amended law strikes the requirement that the insured must make a written request for the coverage. It now says that every insurer issuing or delivering an automobile liability policy that meets New York requirements must provide the coverage unless the insured “elects, in writing and in such form as the superintendent (of financial services) determines, to decline and refuse (the) coverage.” All new and renewal policies must inform the insured of this.

The law took effect on January 1, 2023. However, the governor signed it on the condition that the legislature would change the effective date to later in the year and make the change expire at a future date. “I recognize the importance of this legislation, and have reached an agreement with the Legislature to move back its effective date in order to give the Department of Financial Services adequate time to update its regulations and forms in order to fully comply with the requirements created by this legislation,” she wrote. “The agreement also includes a sunset date at which time the law can be re-authorized, consistent with how the State has handled other supplemental insurance provisions.”

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