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 July 28, 2003, representing the position of the New York State Insurance Department.

Re: Supplemental spousal liability coverage on a business auto nonowner’s insurance policy

Question Presented

Must an insurer offer supplemental spousal liability insurance on policies covering only hired and nonowned automobiles?

Conclusion

No, an insurer does not have to offer supplemental spousal liability insurance on policies covering only hired and nonowned automobiles, where such policy is not used for the purposes of satisfying the requirements of Article 6 of the Vehicle and Traffic Law.

Facts

No specific facts were provided. The inquirer states that the inquirer’s company writes policies covering coops and condominiums that provide coverage for only hired and nonowned automobiles.

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 reason- able 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.]

Section 3420(g) 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 (VTL) concering financial responsibility, where the insured requests the coverage. However, policies providing coverage for only hired and nonowned automobiles generally are not used for the purposes of satisfying the VTL financial responsibility requirements. In such cases, supplemental spousal liability coverage is not required to be offered, although an insurer may voluntarily do so.

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