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 December 9, 2004, representing the position of the New York State Insurance Department.

RE: Meaning of "Engaged In Commerce" Under N.Y. Ins. Law § 3409

Question Presented:

Does the wording "policyholders engaged in commerce" contained in N.Y. Ins. Law § 3409 (McKinney 2000) include insureds that maintain policies providing fire insurance on cooperative or condominium developments, or rental apartment buildings?

Conclusion:

Yes, the wording "policyholders engaged in commerce" contained in N.Y. Ins. Law § 3409 (McKinney 2000) include insureds that maintain policies providing fire insurance on cooperative or condominium developments, or rental apartment buildings.

Facts:

No specific facts were provided.

Analysis:

N.Y. Ins. Law § 3409 (McKinney 2000) states:

The superintendent shall require every insurance company issuing a policy of fire insurance against a risk located in this state to annually issue to each of its fire insurance policyholders engaged in commerce in this state a suitable supply of forms, supplied by the office of fire prevention and control for reporting the presence of hazardous materials as required by section two-hundred nine-u of the general municipal law.

This statute was enacted in 1980 in conjunction with N.Y. Gen. Mun. Law § 209-u "to establish a process through which local fire departments can be regularly informed as to hazardous materials within their jurisdictions." Memorandum to Assembly Bill No. 2694-D, Bill Jacket NYS Laws of 1980, Chapter 870.

N.Y. Gen. Mun. Law § 209-u (McKinney 1999) states in part relevant to this discussion:

(1) The knowledge of the presence of hazardous materials is vital to meeting the contingencies of a fire or other emergency. It is the purpose of this section to secure the health, safety and welfare of the public, protect those called upon to respond to the emergency, encourage preparedness to meet any danger, and promote planning for future demands for emergency services by requiring the reporting of the presence of hazardous materials.

(2) As used in this section:

(a) the term "insured" or "policyholder" means the policyholder of a fire insurance policy insuring against a risk located in this state; and

(aa) the term "person" means any individual, partnership, corporation or association; and

(b) the term "insurer" means any insurance company authorized to do the business of fire insurance in this state; and

(c) for the purpose of this section hazardous materials shall be those which bear a label under requirements of the United States Department of Transportation or those listed on the form prescribed by the state fire administrator.

(3) Every person engaged in commerce in this state, excepting those operating as a farm, as defined by subdivision one of section six hundred seventy-one of the labor law who, based upon the experience of the business in the use of hazardous materials during the previous year, may have possession of hazardous materials at a permanent place of business, a construction site or a temporary storage depot, shall report the presence of such hazardous materials to the chief of the appropriate fire department, fire corporation, or fire company having responsibility for fire protection of each location at which any such hazardous material may be found. Upon receipt thereof, in counties which have an office of county fire coordinator, the fire department, fire corporation or fire company, shall forward a copy of said report to the office of the county fire coordinator.

Given that N.Y. Ins. Law § 3409 and N.Y. Gen. Mun. Law § 209-u were written in conjunction with each other, clearly the wording "engaged in commerce" has the same meaning under both sections.

Section 209-u is the result of several amendments since its enactment. At one point, it was proposed that the following definition be added to it: "The term ‘policyholder engaged in commerce’ means an insured engaged in business, corporate or otherwise, profit or nonprofit, but does not include insureds who own and occupy real property used predominantly for residential purposes which consists of not more than four dwelling units." Assembly Bill No. 7080, NYS Ins. Dep’t 1983 Diary, page 143.

Thus, it is evident that the Legislature intended "policyholders engaged in commerce" as used in N.Y. Ins. Law § 3409 (McKinney 2000) to include insureds that maintain policies providing fire insurance on, among other things, cooperative and condominium developments, and rental apartment buildings.

For further information you may contact Associate Attorney Sally Geisel at the New York City Office.