N.Y. Comp. Codes R. & Regs. tit. 11 § 73.3

Current through Register Vol. 46, No. 51, December 18, 2024

Section 73.3 - Terms and conditions of claims-made policies

Except as provided in section 73.2(d) of this Part, no claims-made liability insurance policy shall be issued or renewed in this State, unless the policy and the issuing insurer comply with the following minimum standards:

(a) A claim will be deemed first made when the insurer receives written notice of a claim or suit from the insured or a third party, but this shall not preclude an insurer from utilizing written notice of incident as the trigger of coverage under the policy.

(b) A retroactive date may not be changed during the term of the claims-made relationship and any extended reporting period.

(c)

(1) Upon termination of coverage, extended reporting period coverage required by this Part must be available for any claims-made liability coverage provided under the policy.

(2) Upon termination of coverage pursuant to section 73.1(n)(2) of this Part, extended reporting period coverage when required shall apply only in regard to that coverage terminated.

(3) For policies issued or renewed pursuant to section 73.2(d)(1) of this Part, extended reporting period coverage need not be offered upon termination of coverage pursuant to section 73.1(n)(2) of this Part.

(4) Except as otherwise permitted by this Part, endorsements restricting extended reporting period coverage are prohibited.

(d) Upon termination of coverage, a 60-day automatic extended reporting period, or 90 days in case of public entity liability insurance policies, must be provided by the insurer.

(e)

(1) Within 30 days after termination of coverage, the insurer must advise the insured in writing of the automatic extended reporting period coverage and the availability of, the premium for, and the importance of purchasing additional extended reporting period coverage. For policies subject to audit, retrospective rating or experience rating, the premium for extended reporting period coverage included in the above notices may be quoted on an estimated basis.

(2) Upon cancellation due to nonpayment of premium or fraud on the part of the insured, an insurer shall not be required to provide a premium quotation for extended reporting period coverage unless requested by the insured.

(3) The insured shall have the greater of the following in which to submit written acceptance of extended reporting period coverage:

(i) 60 days from the effective date of termination of coverage; or

(ii) 30 days from the date of mailing or delivery of the advice required by paragraph (1) of this subdivision.

(4) For the purpose of determining the length of the extended reporting period, the coverage required by subdivision (d) of this section shall be included.

(f) Except as provided in subdivision (g) of this section, and sections 73.4 and 73.5 of this Part, upon termination of coverage, an insurer must offer the insured a three-year extended reporting period.

(g) Upon termination of coverage for the following types of coverages or risks, the insurer must offer a one-year extended reporting period:

(1) directors and officers liability, except not-for-profit organizations;

(2) employee benefits liability;

(3) fiduciary liability;

(4) public entity liability;

(5) pollution and environmental impairment liability;

(6) ski resort liability subject to section 73.2(f) of this Part;

(7) employment practices liability; and

(8) policies issued or renewed pursuant to section 73.2(d) of this Part.

(h) Upon termination of coverage:

(1) Except for the coverages delineated in subdivision (g) of this section, where a claims-made relationship has continued for at least three years and the policy contains an annual aggregate liability limit, the aggregate liability limit, if any, for the extended reporting period coverage shall be at least equal to 100 percent of such policy's annual aggregate limit.

(2) Except for the coverages delineated in subdivision (g) of this section, where a claims-made relationship has continued for less than three years and the policy contains an annual aggregate liability limit, the aggregate liability limit, if any, for the extended reporting period coverage shall be at least equal to the greater of:

(i) the amount of coverage remaining in such policy's annual aggregate liability limit; or

(ii) 50 percent of such policy's annual aggregate liability limit.

(3) Where a policy as specified in subdivision (g) of this section contains an annual aggregate liability limit, the aggregate liability limit, if any, for the extended reporting period coverage shall be at least equal to the amount of coverage remaining in such policy's annual aggregate liability limit.

(4) Where termination of coverage is due only to a decrease in the policy's annual aggregate liability limit, the aggregate liability limit, if any, required by this subdivision for the extended reporting period coverage shall be no greater than the amount of such decrease.

(5) Where a policy has no annual aggregate liability limit, the insurer shall provide extended reporting period coverage without an aggregate liability limit.

(i) Upon termination of coverage, the aggregate liability limit, if any, for the automatic extended reporting period coverage required by subdivision (d) of this section shall be at least equal to the amount of coverage remaining in the policy's annual aggregate liability limit.

(j)

(1) Except as provided in paragraph (2) of this subdivision, the premium charged for extended reporting period coverage shall be based upon the rates for such coverage in effect on the date the policy was issued or last renewed, and the insurer shall not charge a different premium for such coverage due to any change in its rates, rating plans or rating rules subsequent to issuance or last renewal of the policy.

(2) The premium charged for extended reporting period coverage may be based upon the rates, rating plan or rating rules in effect upon termination of coverage, if the claims-made policy:

(i) provides for extended reporting period coverage of at least five years; and

(ii) if the claims-made policy contained an annual aggregate limit, provides extended reporting period coverage having a separate aggregate liability limit, if any, equal to at least 100 percent of such policy's annual aggregate liability limit.

(3) The premium for extended reporting period coverage shall be commensurate with the coverage provided. Upon termination of coverage on a date other than the policy's anniversary date, the cost of extended reporting period coverage shall be appropriately reduced.

(k) Where a claims-made relationship has continued for less than one year, subdivisions (e) through (h) and (j) of this section shall not apply upon termination of coverage for nonpayment of premium or fraud.

(l) Upon termination of coverage, other than for a policy rated on a retrospective basis:

(1) Any return premium due the insured shall be credited toward the premium for additional extended reporting period coverage if the insured elects such coverage.

(2) Where premium is due to the insurer for coverage during the claims-made relationship, any monies received by the insurer from the insured as payment for the extended reporting period coverage shall first be applied to such premium owing for the policy.

(m) During a claims-made relationship and any extended reporting period, a person employed or otherwise affiliated with the insured and covered by the insured's claims-made policy during such affiliation, shall continue to be covered under such policy and any extended reporting period after such affiliation has ceased for such person's covered acts or omissions during such affiliation.

(n)

(1) A claims-made policy issued to a corporation, partnership or other entity shall provide extended reporting period coverage upon termination of coverage to any person covered under the policy, if:

(i) such entity has been placed in liquidation or bankruptcy or permanently ceases operations;

(ii) the entity or its designated trustee does not purchase extended reporting period coverage;

(iii) such person requests the extended reporting period coverage within 120 days of the termination of coverage; and

(iv) the coverage or risk is of the type enumerated in paragraph (2), (3), (4), (6) or (10) of section 73.2(a) of this Part.

(2) The insurer shall have no obligation to provide any notice to any such person of the availability of the extended reporting period coverage required by paragraph (1) of this subdivision.

(3) The insurer may charge the person for whom extended reporting period coverage is provided a premium commensurate with such coverage.

(o) An insurer may issue a claims-made policy with more liberal policy provisions than required by this Part, subject to policy form approval by the superintendent.

N.Y. Comp. Codes R. & Regs. Tit. 11 § 73.3