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

Eliot Spitzer
Governor

Eric R. Dinallo
Superintendent

The Office of General Counsel issued the following opinion on November 27, 2007, representing the position of the New York State Insurance Department, and superseding the opinion dated July 25, 2007.

Re: Anti-Arson Application

Question Presented:

With respect to the anti-arson application exception, does the term “owner-occupied” include an occupancy by a member of the owner’s immediate family only, even where the relative leases the residence from the owner?

Conclusion:

No. There is nothing in the applicable statute or regulation to extend the exemption from filing an anti-arson application to a situation where it is a relative of the owner, and not the owner personally, who is in occupation.

Facts:

The inquiry is of a general nature, without reference to particular facts. However, certain hypothetical examples are provided for the Department’s consideration, such as the owner of a primary home and secondary home where a child or parent of the owner is the primary occupant of the second home; a two-family home where the relative occupies one unit and the other unit is rented to someone else; the owner buys a home for the relative to live in; and parents, pursuant to an estate plan, transfer the ownership of the home to their children but continue to occupy it as tenants without the children, as new owners, occupying same.

Analysis:

To help guard against arson, N.Y. Ins. Law § 3403 (McKinney 2007) generally requires additional information from an insured on an application for insurance (i.e., the “anti-arson application”). The statute applies to real property and buildings and improvements, but only in New York City and the cities of Buffalo and Rochester, pursuant to Insurance Law § 3403(g)(2).1 Insurance Law § 3403(b) states: “Except as provided in subsection (g) of this section the use of the anti-arson application shall be mandatory for all property insurance policies covering the peril of fire or explosion.” Insurance Law § 3403(a)(3), in turn, defines “property” as “real property and the buildings and improvements thereon.” Moreover, Insurance Law § 3403(g)(1) states:

The provisions of this section shall not apply to any insurance policy or contract covering the peril of fire or explosion with respect to owner-occupied real property used predominantly for residential purposes which consists of not more than four dwelling units.

The term “owner-occupied” means just that: an owner that occupies a building. There is no exemption from filing the anti-arson application where a family member who is not also an owner is the occupant of the applicable property.

For further information you may contact Associate Attorney Jeffrey A. Stonehill at the New York City Office.

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1 Section 3403(g)(2) requires the use of the anti-arson application in any city that had a population of over 400,000, as per the 1970 census.  This includes New York City and Buffalo, even though the latter’s population is now less than 400,000.  Additionally, any city may petition the Superintendent to require the use of the anti-arson application.  The city of Rochester is the only city to have done so.