The Office of General Counsel issued the following opinion on September 2, 2003, representing the position of the New York State Insurance Department.
Re: Property/Casualty Insurance Security Fund
Are claims arising under an excess liability insurance policy that remain unpaid due to the inability of an authorized insurer to meet its obligations due to its insolvency covered by the Property/Casualty Insurance Security Fund ("Fund")?
Yes; claims arising under an excess liability insurance policy, excepting claims for employers liability insurance, that remain unpaid due to the inability of an authorized insurer to meet its obligations due to its insolvency are covered by the Fund.
An inquirer posited that an excess liability insurance policy is a kind that is authorized under N.Y. Ins. Law § 1113 (a)(13) and (14) (McKinney Supp. 2003), and, therefore, falls within the description of policies covered under N.Y. Ins. Law § 7603 (McKinney 2000).
N.Y. Ins. Law § 1113 sets forth the kinds of insurance that are authorized. N.Y. Ins. Law § 1113 (a)(13) and (14) state:
(a)(13) "Personal injury liability insurance," means insurance against legal liability of the insured, and against loss, damage or expense incident to a claim of such liability (including the insurer's obligation to pay medical, hospital, surgical and disability benefits to injured persons, and funeral and death benefits to dependents, beneficiaries or personal representatives of persons who are killed, irrespective of legal liability of the insured), arising out of death or injury of any person, or arising out of injury to the economic interests of any person, as the result of negligence in rendering expert, fiduciary or professional service, but excluding any kind of insurance specified in paragraph fifteen except insurance to protect an insured against liability for indemnification or contribution to a third party held responsible for injury to the insured's employee arising out of and in the course of employment when such insurance is written pursuant to this paragraph and not written pursuant to paragraph fifteen of this subsection.
(a)(14) "Property damage liability insurance," means insurance against legal liability of the insured, and against loss, damage or expense incident to a claim of such liability, arising out of the loss or destruction of, or damage to, the property of any other person, but not including any kind of insurance specified in paragraph thirteen, fifteen or twenty-eight of this subsection.
Thus, the inquirer is correct that excess liability insurance is authorized as a kind of insurance under these provisions. In addition, excess liability insurance is authorized as a kind of insurance under N.Y. Ins. Law § 1113 (a) (20) and (21), which state as follows:
(a)(20) Marine and inland marine insurance," means insurance against any and all kinds of loss of or damage to:
(A) Vessels, hulls, craft, aircraft, cars, automobiles, trailers and vehicles of every kind, and all goods, freights, cargoes, merchandise, effects, disbursements, profits, moneys, bullion, precious stones, securities, choses in action, evidences of debt, valuable papers, bottomry and respondentia interests and all other kinds of property and interests therein, in respect to, appertaining to or in connection with any and all risks or perils of navigation, transit, or transportation, including war risks, on or under any seas or other waters, on land or in the air, or while being assembled, packed, crated, baled, compressed or similarly prepared for shipment or while awaiting the same or during any delays, storage, transshipment, or reshipment incident thereto, including marine builder's risks and all personal property floater risks;
(B) Person or property in connection with or appertaining to marine, inland marine, transit or transportation insurance, including liability for loss of or damage to either, arising out of or in connection with the construction, repair, operation, maintenance or use of the subject matter of such insurance (but not including life insurance or surety bonds nor insurance against loss by reason of bodily injury to the person arising out of ownership, maintenance or use of automobiles);
(C) Precious stones, jewels, jewelry, gold, silver and other precious metals, whether used in business or trade or otherwise and whether the same be in course of transportation or otherwise; and
(D) Bridges, tunnels and other instrumentalities of transportation and communication (excluding buildings, their improvements and betterments, furniture and furnishings, fixed contents and supplies held in storage), including auxiliary facilities and equipment attendant thereto; piers, wharves, docks and slips; other aids to navigation and transportation, including dry docks and marine railways.
(E) In this chapter "inland marine" insurance shall not include insurance of vessels, crafts, their cargoes, marine builders' risks, or other similar risks, commonly insured only under ocean marine insurance policies.
(21) "Marine protection and indemnity insurance," means insurance against, or against legal liability of the insured for, loss, damage or expense arising out of, or incident to, the ownership, operation, chartering, maintenance, use, repair or construction of any vessel, craft or instrumentality in use in ocean or inland waterways, including liability of the insured for personal injury, illness or death or for loss of or damage to the property of another person.
N.Y. Ins. Law § 7603 (a)(1)(B) states in relevant part:
(a)(1) The property/casualty insurance security fund shall be used in the payment of allowed claims remaining unpaid, in whole or in part, by reason of the inability due to insolvency of an authorized insurer to meet its insurance obligations under policies:
(B) for all of the kinds of insurance specified in paragraphs four through fourteen, sixteen, nineteen through twenty-one, twenty-four and subparagraphs (A) and (B) of paragraph twenty-six of subsection (a) of section one thousand one hundred thirteen of this chapter with respect to coverage of property or risks located or resident in this state, or outside this state but within the United States, its possessions and territories, and Canada[.]
N.Y. Ins. Law § 7603 (a)(1)(B) thus covers excess liability insurance since this section makes no distinction between primary or excess writing of N.Y. Ins. Law § 1113 (a)(13), (14), (20), and (21) lines of insurance. Authorized insurers that write excess liability insurance, excepting employers liability insurance, are assessed for their contributions to the Fund as required under N.Y. Ins. Law § 7603(b). Employers liability insurance is authorized as a kind of insurance pursuant to N.Y. Ins. Law § 1113 (a)(15), however, it is specifically omitted from the kinds of insurance that are covered by the Fund under N.Y. Ins. Law § 7603 (a)(1)(B).
Hence, claims arising under an excess liability insurance policy, excepting employers liability insurance, that remain unpaid due to the inability of an authorized insurer to meet its obligations due to its insolvency are covered by the Fund.
For further information you may contact Associate Attorney Sally Geisel at the New York City Office.