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 April 16, 2003, representing the position of the New York State Insurance Department.

Re: Requiring Supplemental Spousal Liability Coverage To Be Included In All Motor Vehicle Policies Issued To A Single Household When Insured Requests Coverage Under One Policy

Question Presented:

Where an insurer writes single vehicle motor vehicle policies rather than one policy covering all of the vehicles in a household and the insured requests Supplemental Spousal Liability coverage on just one of the policies, may the insurer require the insured to obtain the coverage for all of the other policies?

Conclusion:

No, an insurer that writes single vehicle motor vehicle policies rather than one policy for all of the vehicles in a household may not require the insured to obtain Supplemental Spousal Liability coverage for all of the policies issued to a single household when the insured requests the coverage under just one of the policies.

Facts:

A company writes single vehicle motor vehicle insurance policies. This means that, rather than issuing one policy that covers all of the vehicles in a single household, a separate policy is issued for each vehicle. It was indicated that where an insured requests Supplemental Spousal Liability (SSL) coverage for one vehicle, it would be preferred to apply the coverage to all of the policies in the household, in the same manner as would be the case for a multi-vehicle policy, since the insured may drive any of the vehicles in the household.

Analysis:

Insurance Law § 3420(g) generally bars coverage under a liability policy for claims brought by a spouse against the other spouse unless the policy expressly provides coverage for such claims. However, Section 3420(g) was recently amended by Chapter 584 of the Laws of 2002, to provide, in pertinent part:

(g) No policy or contract shall be deemed to insure against any liability of an insured because of death of or injuries to his or her spouse or because of injury to, or destruction of property of his or her spouse unless express provision relating specifically thereto is included in the policy as provided in paragraphs one and two of this subsection. This exclusion shall apply only where the injured spouse, to be entitled to recover, must prove the culpable conduct of the insured spouse.

(1) Upon written request of an insured, and upon payment of a reasonable premium established in accordance with article twenty-three of this chapter, an insurer issuing or delivering any policy that satisfies the requirements of article six of the vehicle and traffic law shall provide coverage against liability of an insured because of death of or injuries to his or her spouse up to the liability insurance limits provided under such policy even where the injured spouse, to be entitled to recover, must prove the culpable conduct of the insured spouse. Such insurance coverage shall be known as "supplemental spousal liability insurance". [Language added by Laws of 2002 underscored.]

The 2002 amendment now requires an insurer to provide such coverage to an insured under a motor vehicle policy that satisfies the requirements of Article 6 of the Vehicle and Traffic Law where the insured requests the coverage. Insurance Law § 3420(g)(2) further requires the insurer to provide notice to the insured of the availability of the coverage.

Under the inquiry, the insured has more than one vehicle and the company insures each vehicle under a separate policy but the insured does not request SSL coverage for all of the policies. It is wished that the insured may be required to obtain the coverage for each policy. However, N.Y. Ins. Law § 2324 (McKinney 2000) provides, in pertinent part:

No authorized insurer, no licensed insurance agent, no licensed insurance broker, and no employee or other representative of any such insurer, agent or broker shall make, procure or negotiate any contract of insurance other than as plainly expressed in the policy or other written contract issued or to be issued as evidence thereof, or shall directly or indirectly, by giving or sharing a commission or in any manner whatsoever, pay or allow or offer to pay or allow to the insured or to any employee of the insured, either as an inducement to the making of insurance or after insurance has been effected, any rebate from the premium which is specified in the policy or any special favor or advantage in the dividends or other benefit to accrue thereon, or shall give or offer to give any valuable consideration or inducement of any kind, directly or indirectly, which is not specified in such policy or contract, other than any article of merchandise not exceeding fifteen dollars in value which shall have conspicuously stamped or printed thereon the advertisement of the insurer, agent or broker…

Requiring an insured that wants to purchase coverage under one policy to also purchase additional coverage in another policy constitutes an inducement to insure not specified in the policy, which is prohibited by § 2324. Accordingly, an insurer may not require SSL coverage to be purchased on a policy in order to purchase it on a different policy.

For further information you may contact Principal Attorney Paul A. Zuckerman at the New York City Office.