OGC Op. No. 09-12-03

The Office of General Counsel issued the following opinion on December 21, 2009, representing the position of the New York State Insurance Department.

Re: Hurricane deductibles in policies covering owner-occupied condominium and co-operative units

Question Presented:

May a policy insuring an owner-occupied condominium or owner-occupied co-operative (“co-op”) apartment include a “hurricane” deductible (hereafter, referred to as “windstorm deductible”)?

Conclusion:

Pursuant to N.Y. Ins. Law § 2307(b) (McKinney Supplement 2009), most property/casualty insurance policy forms are subject to the Superintendent of Insurance’s approval prior to use. An insurer that seeks to include a windstorm deductible in a condominium or co-op homeowner’s insurance policy must submit that proposed policy form to the Superintendent for review and approval.

Facts:

The inquirer is the General Counsel for the ABC Board. The inquire asks generally, without reference to particular facts, whether a hurricane deductible may be applied to a policy insuring an owner-occupied condominium or to an owner-occupied co-op apartment.

Analysis:

The New York Insurance Law and regulations promulgated thereunder do not specifically address whether an insurer may include a windstorm deductible as part of a condominium or co-op homeowner’s insurance policy. However, Insurance Law § 2307(b) generally requires that any property/casualty policy form or endorsement thereto that is to be issued or delivered in New York State must be approved by the Superintendent of Insurance. Further, the Superintendent may disapprove the use of the policy form if he finds the form misleading or against public policy. Insurance Law § 2307(b) reads in pertinent part as follows:

Except as otherwise provided herein, no policy form shall be delivered or issued for delivery unless it has been filed with the superintendent and either he has approved it, or thirty days have elapsed and he has not disapproved it as misleading or violative of public policy.

With respect to windstorm deductibles in general, Circular Letter No. 11 (1993) provides guidance to insurers as to the factors that the Superintendent considers in reviewing policy form submissions, consistent with the standard of review set forth in Insurance Law § 2307.

For further information you may contact Senior Attorney Camielle A. Campbell at the New York City office.