The Office of General Counsel issued the following informal opinion on December 23, 2002, representing the position of the New York State Insurance Department.
Re: Property/Casualty Insurance Form Endorsements
1. May an insurer use an endorsement to an insurance policy without the approval of the Insurance Department?
2. May an insurance agent add an endorsement to an insurance policy that has not been authorized by the insurer?
1. No. An insurer may not use an endorsement to an insurance policy unless the endorsement form has previously been filed and approved by the Insurance Department, pursuant to N.Y. Ins. Law § 2307(b) (McKinney Supp. 2002), except under certain circumstances that do not appear to be relevant herein.
2. No. An insurance agent may not add an endorsement to an insurance policy unless authorized by the insurer. Such endorsement would have to be approved by the Insurance Department pursuant to N.Y. Ins. Law § 2307(b) (McKinney Supp. 2002).
According to the inquirer, the Small Business Administration ("SBA") is requiring insurance agents to add certain language to commercial insurance policies to protect the interests of lenders and the SBA. 1 The relevant question is whether or not the agents have the authority to add this language to the policy as an endorsement.
N.Y. Ins. Law § 2307(b) (McKinney Supp. 2002) provides in relevant part:
Except as otherwise provided herein, no policy form shall be delivered or issued for delivery unless it has been filed with the superintendent and either he has approved it, or thirty days have elapsed and he has not disapproved it as misleading or violative of public policy.2
An endorsement is a policy form. Thus an insurer may not use an endorsement to add, amend, expand, or otherwise alter the terms of an insurance policy unless the endorsement form has previously been filed and approved by the Insurance Department. (While there are certain exceptions to the filing and approval requirements, none of them appear to apply herein).
In addition, an insurance agent may not add an endorsement to an insurance policy unless authorized by the insurer. In any event, the form must have been approved by the Insurance Department.
Therefore, the insurer, not the insurance agent, must file the new language endorsement with the Superintendent, in accordance with N.Y. Ins. Law § 2307(b), before a policy with the new language endorsement may be delivered or issued for delivery in this state.
For further information you may contact Senior Attorney Meredith S. Kaufer at the New York City Office.
1 The language that the SBA requires to be added to insurance policies is as follows: "The interest of the lender and the SBA shall not be invalidated by any act or neglect of the mortgagor or owner of the insured property."
2 N.Y. Ins. Law § 2302(a) (McKinney 2000) states that Article 23 applies to all kinds of insurance written on risks or operations in this state by an authorized insurer. It also lists certain exceptions, none of which are relevant to this inquiry.