New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

The Office of General Counsel issued the following informal opinion on December 7, 2001, representing the position of the New York State Insurance Department.

RE: Directors and Officers liability insurance policy extended reporting period coverage

Question Presented:

Whether the insured of a Directors and Officers liability insurance policy issued in New York State has the right to purchase the extended reporting period coverage endorsement through the end of the next business day following the 60th day after expiration of the policy that ended on a weekend date?

Conclusions:

Yes. If the insured's policy expired at a specific time on the weekend, the insured may purchase the extended reporting period coverage endorsement at or before the same time on the following business day. Where the policy expiration ends at the end of the day on the weekend, the right to purchase such coverage will be in effect until the end of the workday on the following business day.

Facts:

Monday, October 22, 2001 was the business day following the 60th day after expiration of the policy which occurred on a weekend. The facts did not provide the time of expiration of the expired policy.

Analysis:

The question is limited to the time period in which the insured of an expired Directors and Officers liability insurance policy issued in New York State has the right to purchase extended reporting period coverage. The inquiry is specifically directed to a Directors and Officers liability insurance policy which is a permissible Claims-Made policy. N.Y. Comp. Codes R. & Regs. tit. 11, §§ 73.0-73.10 (2000) (Regulation 121) generally regulates Claims-Made policies. An insurer was required to offer a terminated insured the extended reporting period coverage endorsement pursuant to N.Y. Comp. Codes R. & Regs. tit. 11, § 73.3(c) (2000) (Regulation 121).

N.Y. Comp. Codes R. & Regs. tit. 11, § 73.3(e)(1) (2000) (Regulation 121) states in pertinent part that "[w]ithin 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." Regulation 121 further provides in § 73.3(e)(3) that:

(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.

Based upon the inquiry, it is assumed that the time period for the insured to submit written acceptance of extended reporting period coverage was 60 days from the effective date of termination of coverage. However, Regulation 121 is silent concerning a situation in which the 60th day from the effective date of termination of coverage falls on a weekend.

The extended reporting period coverage endorsement essentially is a contract whose offer is required by law. An insurer must offer the extended reporting period coverage endorsement to a terminated insured pursuant to N.Y. Comp. Codes R. & Regs. tit. 11, §§ 73.3(c)&(e) (2000) (Regulation 121). The extended reporting period coverage endorsement provides for an extended contractual relationship after termination of the original policy. The New York State General Construction Law applies to the question presented.

N.Y. Gen. Constr. Law § 25-a(1) (McKinney Supp. 2001) states:

1. When any period of time, computed from a certain day, within which or after which or before which an act is authorized or required to be done, ends on a Saturday, Sunday or a public holiday, such act may be done on the next succeeding business day and if the period ends at a specified hour, such act may be done at or before the same hour of such next succeeding business day, except that where a period of time specified by contract ends on a Saturday, Sunday or a public holiday, the extension of such period is governed by section twenty-five of this chapter.

N.Y. Gen. Constr. Law § 25(1) (McKinney Supp. 2001) states:

1. Where a contract by its terms authorizes or requires the payment of money or the performance of a condition on a Saturday, Sunday or a public holiday, or authorizes or requires the payment of money or the performance of a condition within or before or after a period of time computed from a certain day, and such period of time ends on a Saturday, Sunday or a public holiday, unless the contract expressly or impliedly indicates a different intent, such payment may be made or condition performed on the next succeeding business day, and if the period ends at a specified hour, such payment may be made or condition performed, at or before the same hour of such next succeeding business day, with the same force and effect as if made or performed in accordance with the terms of the contract.

Applying the statute to the question you raised, whether the insured's policy expires at a specific time on a Saturday, Sunday, or public holiday, or at the close of business on those days, the insured may purchase the extended reporting period coverage endorsement until the commensurate time on the following business day.

For further information, you may contact Senior Attorney Robert Freedman at the New York City Office.