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

George E. Pataki
Governor

Gregory V. Serio
Superintendent

The Office of General Counsel issued the following opinion on March 24, 2003 representing the position of the New York State Insurance Department.

Re: Jeweler’s Block Excess Lines Policy

Question Presented:

Where an insured suffers a loss during an extension period of a one year jeweler’s block excess line policy, and where the insurer had agreed to the conditional extension period on the condition that if the insured suffered a loss during the extension period, the insured would renew with the insurer in order for the claim to be paid, may the insurer refuse to pay the claim until the insured pays the full annual premium?

Conclusion:

In this situation where the policy is an excess line policy, N.Y. Ins. Law § 3426 (McKinney 2000) does not apply and no other provision of the Insurance Law or regulations promulgated thereunder would preclude such an agreement. Thus, this issue is a contractual issue between the insurer and insured, with which the Insurance Department does not become involved.

Facts:

An insured had a one year jeweler’s block excess line policy that expired. The insured and the insurer had agreed to a conditional extension period whereby if the insured suffered a loss during the extension period, the insured would renew with the insurer in order for the claim to be paid. The insured suffered a loss during the extension period and now refuses to renew the policy for another year pursuant to the extension agreement. However, the insured paid the premium for the extension period.

Analysis:

In this situation where the policy is an excess line policy, N.Y. Ins. Law § 3426 (McKinney 2000) does not apply and no other provision of the Insurance Law or regulations promulgated thereunder would preclude such an agreement.

N.Y. Comp. Codes R. & Regs. tit. 11 § 27.11 (1999) (Regulation 41) lists prohibited activities of an excess line broker. It states, in relevant part:

(a) No excess line broker shall procure coverage from an unauthorized insurer if such coverage is prohibited by law, including if such coverage:

(1) does not constitute insurance within the meaning of section 1101 or other sections of the Insurance Law;

(2) involves a kind of insurance not authorized under section 1113 or other sections of the Insurance Law;

(3) is not within the scope of section 2105 of the Insurance Law;

(4) is determined by any Appellate Division of the New York State Supreme Court or the New York State Court of Appeals to be against public policy in this State; or

    1. has been otherwise proscribed by law.

None of the above provisions apply to this situation. The present issue is a contractual issue between the insurer and insured, and the Insurance Department does not become involved in contractual disputes.

For further information, you may contact Associate Attorney Meredith S. Kaufer at the New York City Office.