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

Eliot Spitzer
Governor

Louis Pietroluongo
Acting Superintendent

The Office of General Counsel issued the following opinion on January 12, 2007, representing the position of the New York State Insurance Department.

Re: N.Y. Ins. Law § 3425(d)

Question Presented:

When may an insurer use the 20-day notice requirement of N.Y. Ins. Law § 3425(d)(2) (McKinney’s Supp. 2007) as opposed to the 45 to 60-day notice requirement of N.Y. Ins. Law § 3425(d)(1) (McKinney’s Supp. 2007)?

Conclusion:

See analysis for general answer.

Facts:

No facts were provided.

Analysis:

N.Y. Ins. Law § 3425(d)(1) states:

Unless the insurer, at least forty-five but no more than sixty days in advance of the end of the policy period, mails or delivers to the named insured, at the address shown in the policy, or to condition its renewal upon change of limits or elimination of any coverages, the named insured shall be entitled to renew the policy upon timely payment of the premium billed to the insured for the renewal. The specific reason or reasons for nonrenewal or conditioned renewal shall be stated in or shall accompany the notice. This paragraph shall not apply when the named insured, or an insurer of the named insured, has mailed or delivered written notice to the insurer that the policy has been replaced or is no longer desired.

The above section is applicable when an insured’s policy coverage is about to expire, since the notice is to be produced "in advance of the end of the policy period," and the insurer either renews with a change of limits or elimination of any coverage or non-renews the policy.

N.Y. Ins. Law § 3425(d)(2) states:

If an insurer has the right to cancel a policy it may, in lieu of cancellation, condition continuation of such policy upon change of limits or elimination of any coverage not required by law, if written notice of such intention is mailed or delivered to the insured at the address shown in the policy at least twenty days prior to the effective date of such action.

As opposed to N.Y. Ins. Law § 3425(d)(1), the above section is applicable not when a policy period is about to expire, but when the insurer has the right to cancel the policy pursuant to N.Y. Ins. Law § 3425(b) or (c) (McKinney’s Supp. 2007). In this situation, the insurer has the option of continuing the policy, rather than canceling it, under changed limits or elimination of coverage, if it mails a letter to the insured twenty days prior to the effective date of the change.

In conclusion, N.Y. Ins. Law § 3425(d)(1) is applicable at the end of a policy period, while N.Y. Ins. Law § 3425(d)(2) is applicable during the policy period, when the insurer has the right to cancel the policy. Additionally, please note that N.Y. Ins. Law § 3425(d)(1) applies to automobile insurance subject to N.Y. Ins. Law § 3425 only upon the expiration of the annual required policy period and to all other personal lines insurance subject to N.Y. Ins. Law § 3425 upon the expiration of the three years required policy period except if based upon grounds for which the policy could have been cancelled.

For further information you may contact Associate Attorney Samuel Wachtel at the New York City Office.