The Office of General Counsel issued the following informal opinion on July 18, 2000, representing the position of the New York State Insurance Department.
RE: Professional Liability Insurance and the Property/Casualty Security Fund
Question Presented:
Is a professional liability insurance policy covered by the "Property/Casualty Security Fund" described in N.Y. Ins. Law Art. 76 (McKinney 1985 & Supp. 2000)?
Conclusion:
A professional liability insurance policy is covered by the "Property/Casualty Insurance Security Fund" described in N.Y. Ins. Law § 7603 (McKinney 1985 & Supp. 2000) if the requirements of N.Y. Ins. Law § 7603 are met.
Analysis:
N.Y. Ins. Law § 7603 (a) (1) (B) (McKinney 1985 & Supp. 2000) states:
(a)(1) The property/casualty insurance security fund shall be used in the payment of allowed claims remaining unpaid, in whole or in part, by reason of the inability due to insolvency of an authorized insurer to meet its insurance obligations under policies:
(B) for all of the kinds of insurance specified in paragraphs four through fourteen, sixteen, nineteen through twenty-one, twenty-four and subparagraphs (A) and (B) of paragraph twenty-six of subsection (a) of section one thousand one hundred thirteen of this chapter with respect to coverage of property or risks located or resident in this state, or outside this state but within the United States, its possessions and territories and Canada.
Thus, a professional liability insurance policy would be covered by the "Property/Casualty Insurance Security Fund" of N.Y. Ins. Law § 7603 (McKinney 1985 & Supp. 2000) if certain requirements were fulfilled. First, the location of the property or risk insured by a professional liability insurance policy must be in any of the locations enumerated in N.Y. Ins. Law § 7603 (a) (1) (B) (McKinney 1985 & Supp. 2000). Second, pursuant to § 7603 (a) (1) (B), a professional liability insurance policy must have been issued by an authorized insurer. Third, a professional liability insurance policy must be subject to one of the paragraphs of N.Y. Ins. Law § 1113 (McKinney 1985 & Supp. 2000), which are enumerated in § 7603 (a)(1)(B).
The third requirement is fulfilled because one of § 1113s enumerated paragraphs, referenced in § 7603(a)(1)(B), applies to professional liability insurance policies. N.Y. Ins. Law § 1113(a)(13) (McKinney 1985 & Supp. 2000) states:
(13) "Personal injury liability insurance," means insurance against legal liability of the insured, and against loss, damage or expense incident to a claim of such liability (including the insurer's obligation to pay medical, hospital, surgical and disability benefits to injured persons, and funeral and death benefits to dependents, beneficiaries or personal representatives of persons who are killed, irrespective of legal liability of the insured), arising out of death or injury of any person, or arising out of injury to the economic interests of any person, as the result of negligence in rendering expert, fiduciary or professional service, but excluding any kind of insurance specified in paragraph fifteen except insurance to protect an insured against liability for indemnification or contribution to a third party held responsible for injury to the insured's employee arising out of and in the course of employment when such insurance is written pursuant to this paragraph and not written pursuant to paragraph fifteen of this subsection.
Accordingly, if the three requirements listed above are fulfilled, the "Property/Casualty Insurance Security Fund" of N.Y. Ins. Law § 7603 (McKinney 1985 & Supp. 2000) covers a professional liability insurance policy.
For further information you may contact Senior Attorney Robert Freedman at the New York City Office.