Coronavirus (COVID-19) Information for Consumers
Property/Casualty Emergency Regulations FAQs
On March 30, 2020, the New York State Department of Financial Services (the “Department”) promulgated an emergency regulation (the “Emergency Regulation”) to provide relief to New York consumers and small businesses experiencing financial hardship due to COVID-19. The Emergency Regulation prohibits New York State regulated issuers of property and casualty insurance from cancelling, non-renewing or conditionally renewing the policies of qualifying policyholders for a sixty (60) day moratorium period. Policyholders who demonstrate financial hardship due to COVID-19 may defer paying premiums during this period without penalty. The Emergency Regulation also applies to premium finance agencies.
On June 28, 2020, upon the expiration of the Emergency Regulation, the Department promulgated an emergency regulation extending the relief provided in the Emergency Regulation (the “Extended Emergency Regulation” and, together with the Emergency Regulation, the “Emergency Regulations”).
The Emergency Regulation was in effect from March 30, 2020 to June 28, 2020. The Extended Emergency Regulation expired on July 6, 2020.
- If you are an individual, most personal lines property/casualty insurance policies are covered by the Emergency Regulations, including auto, homeowners’ and renters’ insurance.
- If you are a small business, only certain types of commercial lines property/casualty insurance policies are covered by the Emergency Regulations, generally including property, fire, commercial general liability, special multiperil, medical malpractice, workers’ compensation, commercial auto (including livery and other for-hire vehicles), and commercial umbrella insurance.
For the purposes of the Emergency Regulations, a small business is any business that is resident in New York, is independently owned and operated, and employs 100 or fewer individuals. Please be aware that “residence” does not require a New York “domicile.” The Emergency Regulations apply to property/casualty insurance policies issued or delivered in New York State and where the business entity has a physical office or address in New York State. If a business entity is a subsidiary of another company, the business entity would not be independently owned and operated and therefore not a “small business” within the definition of the Emergency Regulations.
The precise categories of policies are set forth in detail in the Emergency Regulations. If you are an individual or small business, can demonstrate financial hardship as a result of the COVID-19 pandemic, and are uncertain whether your policy is covered, please contact your insurer or broker.
The moratorium and Emergency Regulations do not apply to a commercial lines insurance policy issued by an excess line insurer and will not affect any such policy’s cancellation provisions, except with respect to an excess line commercial fire insurance policy. Insurance Law § 3426, which sets forth cancellation and non-renewal requirements for commercial lines policies, specifically excludes excess line policies pursuant to subsection (l)(2). Insurance Law § 3404, however, sets forth cancellation requirements that apply to standard fire insurance policies, regardless of whether those policies were issued by an admitted or excess line insurer. See OGC Opinion No. 03-09-11 (Sept. 10, 2003). Thus, in a situation where a commercial lines insurance policy insures solely against the peril of fire, or against the peril of fire in combination with other kinds of insurance for an indivisible premium and where there is one cancellation provision applicable to the entire policy, the moratorium and Emergency Regulations apply to such policy in its entirety, even if it was issued on the excess lines market.
Insurers, premium finance agencies, and insurance producers were required to provide policyholders with notice of the Emergency Regulation that was in effect from March 30, 2020 to June 28, 2020. Guidance regarding the delivery of those notices was provided on the Department’s website for insurers and premium finance agencies and for insurance producers. No such notice obligations exist under the Extended Emergency Regulation that was promulgated on June 28, 2020.
For the purposes of the Emergency Regulations, policyholders may submit to their insurer or premium finance agency, as applicable, a statement that they swear or affirm in writing under penalty of perjury that they are experiencing financial hardship as a result of the COVID-19 pandemic. The statement is not required to be notarized.
The moratorium begins on the day on which, under the terms of an insurance policy, the insurer could have canceled, non-renewed, or conditionally renewed the policy for any reason. For a sixty (60) day period starting on that day, the moratorium protects the policyholder from cancellation, non-renewal, or conditional renewal by the insurer if the policyholder can demonstrate financial hardship due to COVID-19. During this period, the Emergency Regulations prohibit late fees and negative credit reports from unpaid premiums.
If a policy in effect on or after March 30, 2020 could have been terminated or conditionally renewed by the insurer for any reason, the moratorium extends the effective date of such termination or conditional renewal for sixty (60) days if the policyholder can demonstrate financial hardship due to COVID-19. In addition, the Emergency Regulations provide that, if a policyholder failed to make a timely premium payment due to financial hardship as a result of COVID-19, the insurer must give the policyholder the opportunity to repay such late premium in twelve (12) monthly installments if the policyholder can still demonstrate financial hardship due to COVID-19. In that situation, the insurer cannot terminate or conditionally renew the policy immediately after the expiration of the moratorium based on the policyholder’s past failure to pay the premium due to financial hardship as a result of COVID-19. However, if there is any other valid ground to terminate the policy, the insurer could do so after the moratorium expires.
The Emergency Regulation applies to covered property/casualty insurance policies in effect on or after March 30, 2020, regardless of whether a notice of cancellation, non-renewal, or conditional renewal was issued before such date.
See Question 1 regarding the moratorium on cancellation, non-renewal, and conditional renewal and the deferral of premium payments.
For individuals and small businesses who demonstrate financial hardship due to COVID-19 and do not make a timely premium payment, the Emergency Regulations also prohibit insurers from assessing late fees or reporting late payments to credit agencies.
The Emergency Regulations provide that the insurer must allow the policyholder to repay such unpaid premiums in over twelve (12) monthly installments after the moratorium expires if the policyholder can still demonstrate financial hardship due to COVID-19.
The Emergency Regulations only defer the effective date of an otherwise permitted cancellation, non-renewal, or conditional renewal and does not prescribe the creation of a new full policy term.
Yes, an insurer may cancel a policy after the 60-day moratorium ends if the policyholder misses one of the twelve (12) monthly installment payments and the installment payment pertains to the current policy period. However, if the insurer has already renewed the policy and the installment payment pertains to a prior policy period, then the insurer may not cancel the current policy if the policyholder misses one of the twelve (12) monthly installment payments and the policy is subject to a section of the law that only allows cancellation for certain specified reasons, such as Insurance Law § 3425 or 3426. See OGC Opinion No. 04-10-23 (October 22, 2004). If the policy is subject to a section of law that does not require cancellation for certain specified reasons, such as Workers’ Compensation Law § 54, then the insurer may cancel the current policy if the policyholder misses one of the twelve (12) monthly installment payments and the policy does not contain any limitations to the contrary, provided that the insurer complies with any and all applicable laws and regulations. See OGC Opinion No. 09-11-03 (November 12, 2009).
Any payment that became due while the Emergency Regulation was in effect, between March 30, 2020 and June 28, 2020, is eligible for a single 60-day moratorium, provided that the policyholder can demonstrate financial hardship due to COVID-19 (and, in the case of premium finance agencies, subject to the safety and soundness of the premium finance agency). For the avoidance of doubt, under the Emergency Regulation, individual (and periodic) payments due on a policy or premium finance contract are considered individual payments that qualify for independent moratoriums. However, once the moratorium applicable to any one payment expires, the policyholder is not entitled to a second moratorium for that same payment or any payment plan applied to it.
Similarly, any payment that became due while the Extended Emergency Regulation was in effect, between June 28, 2020 and July 6, 2020, is not eligible for an additional moratorium or further relief if the policyholder already received a moratorium for a specific policy or obtained relief for an amount due under the Emergency Regulation in effect between March 30, 2020 and June 28, 2020.