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Dec 20
NYSDFS Says Auto Carriers Must Refund SSL Premium When Insured Rejects

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Insurers writing auto insurance coverage in New York must refund premiums to insureds who have rejected Supplemental Spousal Liability Insurance coverage, the New York State Department of Financial Services (DFS) said Monday. The announcement came in a circular letter the department published late on December 18 addressed to carriers, producers, the New York Automobile Insurance Plan, and ​others.

The letter, signed by Deputy Superintendent of Insurance​ Avani Shah, stated:

"It has come to the Department’s attention that some insurers are not specifying a premium for SSL insurance or permitting a named insured to decline the insurance with an appropriate premium reduction.  As discussed further below, an insurer must specify the premium for SSL insurance and provide an appropriate premium reduction when a named insured declines the SSL insurance. …

The law and regulation require that the SSL insurance notification include the insurer’s premium for the insurance.  Therefore, an insurer must include the premium for the SSL insurance in the SSL insurance notification.  An insurer may not inform a named insured that there is no charge for the SSL insurance or otherwise specify “$0.00” on the notification. The premium for SSL insurance should be based on the bodily injury limits if there are split limits under the policy or the total liability limits if there is a combined single limit under the policy. An insurer may not charge a flat dollar amount for SSL insurance for all policies regardless of each policy’s liability coverage limits.  In addition, if a named insured declines the SSL insurance, then the insurer must provide the named insured with a premium reduction, even if the insurer considers the premium reduction to be nominal. …

SSL insurance is an optional coverage.  If a named insured elects, in writing, and in such form as the Superintendent determines, to decline and refuse SSL insurance, the policy may not include SSL insurance and an insurer may not prohibit a named insured from declining the coverage. …

The Department expects insurers to comply with the amendments to Insurance Law § 3420(g) and 11 NYCRR 60-1 and with the guidance set forth in this Circular Letter."

This will mark a change in procedure for some carriers, so will likely not see immediate changes. However, once carriers receive approval for new rate filings from DFS, you can expect to see refunds being credited to insureds who reject the coverage. 

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