|George E. Pataki
Gregory V. Serio
The Office of General Counsel issued the following opinion on February 11, 2003, representing the position of the New York State Insurance Department.
Re: Alternative Renewal Notice
1. Is an alternative renewal notice, which fulfills the explicit statutory requirements of N.Y. Ins. Law § 3426(e)(1)(C) (McKinney 2000), valid if it cites "3246(e)(1) of the New York Insurance Law,"1 rather than N.Y. Ins. Law § 3426(e)(1) (McKinney 2000), as the statute with which it complies, and contains a displayed heading entitled "Alternative Conditional Renewal Notice" immediately before the body of the notice, but after a reference heading entitled "ALTERNATIVE RENEWAL NOTICE"?
2. After the mailing or delivery of such alternative renewal notice, when must an insurer mail or deliver the second notice as required by N.Y. Ins. Law § 3426(e)(5)(A) (McKinney 2000)?
1. Yes. Notwithstanding the inaccurate citation and displayed heading, the notice is valid because it complies with the expressly stated statutory requirements for alternative renewal notices within N.Y. Ins. Law § 3426(e)(1)(C) (McKinney 2000).
2. The New York Insurance Law does not require the insurer to mail or deliver such second notice before the expiration date of the policy. However, the second notice should be issued as soon as possible after the issuance of the alternative renewal notice.
On July 15, 2002, a New York insurer (the "Insurer") mailed to the insured (the "Insured") a notice (the "Notice")2 regarding a commercial line insurance policy (the "Policy"), which was subject to N.Y. Ins. Law § 3426(e)(1) (McKinney 2000) and due to expire on October 17, 2002. The Insurer issued the Notice pursuant to the statutory requirements of N.Y. Ins. Law § 3426(e)(1) (McKinney 2000), but cited "3246(e)(1) of the New York Insurance Law" - a section that doesnt exist - as the statute with which it purportedly complied. In addition, after referencing a heading entitled "ALTERNATIVE RENEWAL NOTICE," the Notice also contained a displayed heading entitled "Alternative Conditional Renewal Notice" immediately before the body of the Notice. As of February 1, 2003, the Insurer has neither mailed, nor delivered the second notice to the Insured, or its authorized agent or broker, as required by N.Y. Ins. Law § 3426(e)(1)(C) (McKinney 2000).
A covered policy, as defined by N.Y. Ins. Law 3426(a)(1),3 shall remain in full force and effect with the same terms, conditions and rates unless an insurer mails or delivers, to the first-named insured, at the address shown on the policy, and to such insureds authorized agent or broker, written notice of such insurers intention:
(A) not to renew such policy; or
(B) to condition its renewal upon change of limits, change in type of coverage, reduction of coverage, increased deductible or addition of exclusion, or upon increased premiums in excess of ten percent (exclusive of any premium increase generated as a result of increased exposure units, pursuant to subsection (d) of this section, or as a result of experience rating, loss rating, retrospective rating or audit), except that with respect to an excess liability policy, the insurer may also, consistent with regulations promulgated by the superintendent, condition its renewal upon requirements relating to the underlying coverage, in which event the conditional renewal notice shall be treated as an effective notice of nonrenewal if such requirements are not satisfied as of the later of the expiration date of the policy or sixty days after mailing or delivery of such notice; or
(C) that the policy will not be renewed or will not be renewed upon the same terms, conditions or rates; such alternative renewal notice must be mailed or delivered on a timely basis and advise the insured that a second notice shall be mailed or delivered at a later date indicating the insurer's intention as specified in subparagraph (A) or (B) of this paragraph and that coverage shall continue on the same terms, conditions and rates as the expiring policy, until the later of the expiration date or sixty days after the second notice is mailed or delivered; such alternative renewal notice also shall advise the insured of the availability of loss information pursuant to subsection (g) of this section and, upon written request, the insurer shall furnish such loss information within twenty days consistent with the provisions of such subsection.
N.Y. Ins. Law § 3426(e)(1)(A)-(C) (McKinney 2000).
§ 3426(e)(1)(C) does not require an alternative renewal notice to cite a section of the Insurance Law. Thus, the Insurers inclusion of the incorrectly cited statute, which would be a correct citation but for the exchange of two numerals, does not violate the Insurance Law or invalidate the Notice. Similarly, the placement of the "Alternative Conditional Renewal Notice" heading, which is located below the more prominent "ALTERNATIVE RENEWAL NOTICE" heading, does not appear to be material. In all other respects, the Insurer appears to have properly issued an alternative renewal notice in accordance with § 3426(e)(1)(C) by: (i) stating that the Policy will not be renewed, or will not be renewed with the same terms, conditions or rates; (ii) mailing the Notice on a timely basis; (iii) advising the Insured that a second notice will be mailed at a later date, which will indicate the Insurers intention not to renew such policy, or to condition its renewal upon different terms, conditions, rates or premiums; (iv) informing the Insured that coverage shall continue on the same terms, conditions and rates as the expiring policy until the later of the expiration date or sixty days after the Insurer mails or delivers the second notice; and (v) advising the Insured of the availability of loss information upon written request. Accordingly, the two errors on the Notice are sufficient to invalidate it.
As more fully discussed in the attached 2/14/02 opinion,4 the second notice is not required to be issued prior to the policy expiration date. The second notice should, however, be issued as soon as possible after the first notice. In the absence of such second notice, the Policy remains in effect at the same terms, conditions and premium.
For further information you may contact Senior Attorney Kristian Earl Lynch at the New York City Office.
1 There is no such statute in the New York Insurance Law.2 This opinion is based strictly on the presumption that the Insurer employed the Notice as an alternative renewal notice, and not as a conditional renewal notice. 3 "Covered Policy means, for purposes of this section, a policy of commercial risk insurance, professional liability insurance or public entity insurance, and shall include any contract, certificate or other evidence of such insurance." N.Y. Ins. Law § 3426(a)(1) (McKinney 2000). 4 See the attached Office of General Counsel Opinion No. 02-02-17 (2002) for a detailed analysis.