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

David A. Paterson
Governor

Eric R. Dinallo
Superintendent

OGC Op. No. 08-07-01

The Office of General Counsel issued the following opinion on July 1, 2008, representing the position of the New York State Insurance Department.

Re: Property Damage Release

Question Presented:

Does the release set forth below comply with § 216.6(g) of N.Y. Comp. Codes R. & Regs. tit. 11, Part 216 (2003) (Regulation 64)?

Conclusion:

Yes. The release set forth below complies with 11 NYCRR § 216.6(g).

Facts:

The inquirer reports that he is counsel for ABC Insurance Company (“ABC”). The inquirer submitted a draft release for the Insurance Department’s review that reads in pertinent part as follows:

Property Damage Only Release

Policy Number: ______________ Claim Number:____________

Claimant: ___________________

 

RELEASE IN CONSIDERATION OF THE SUM OF $_________________________
DOLLARS ($__________________) to me paid, receipt of which is hereby acknowledged, I hereby release and discharge_______________________________, his or her heirs, executors, administrators, agents and assigns, and all other persons, ABC Insurance Company, its subsidiaries, affiliates, agents, assigned, firms or corporations for property damage including_______________________ which represents the total damages asserted, reduced by______, for known property damage sustained arising from a vehicle collision which occurred on or about the _____ day of ________, 200_, at or near ___________________________________________________________________________.

The inquirer asks whether the release conforms with the New York Insurance Law and regulations promulgated thereunder.

Analysis:

11 NYCRR § 216.6(g) is relevant to the inquirer’s query. That provision sets forth standards for prompt, fair, and equitable settlements, and reads as follows:

Checks or drafts in payment of claims; releases. No insurer shall issue a check or draft in payment of a first-party claim or any element thereof, arising under any policy subject to this Part, that contains any language or provision that expressly or impliedly states that acceptance of such check or draft shall constitute a final settlement or release of any or all future obligations arising out of the loss. No insurer shall require execution of a release on a first- or third-party claim that is broader than the scope of the settlement. (Emphasis added.)

Thus, with respect to both first- and third-party claims, an insurer may not require a claimant to execute a release that is broader than the scope of the settlement. The release must describe the claim with specificity, and include an explanation and calculation of the payment that the insurer will make to settle the claim. OGC Opinion 07-10-02 (Oct. 10, 2007); OGC Opinion 02-05-01 (May 1, 2002).

In the situation presented here, the draft release is limited to known property damage, and sets forth an area in which to describe the claim with specificity. Furthermore, the draft release provides an explanation and calculation of the payment that ABC will make to settle the claim, because it includes language stating that the insured and others are released “for property damage including _______________________ which represents the total damages asserted, reduced by______, for known property damage….” Accordingly, the draft release complies with 11 NYCRR § 216.6(g).

For further information, you may contact Attorney Joana Lucashuk at the New York City office.