Insurance Circular Letter No. 8 (2023)
December 18, 2023

TO:  All Insurers Authorized to Write Motor Vehicle Insurance in New York State, the New York Automobile Insurance Plan, Rate Service Organizations, and Licensed Insurance Producers

RE:  Supplemental Spousal Liability Insurance

STATUTORY AND REGULATORY REFERENCES:  N.Y. Insurance Law § 3420(g) and 11 NYCRR 60-1 (Insurance Regulation 35-A)

I.   Purpose

The purpose of this Circular Letter is to advise all insurers authorized to write motor vehicle insurance in New York State, the New York Automobile Insurance Plan, rate service organizations, and licensed insurance producers of amendments to Insurance Law § 3420(g) made by Chapter 735 of the Laws of 2022 and Chapter 108 of the Laws of 2023 (collectively, the “chapters”) regarding supplemental spousal liability (“SSL”) insurance.  This Circular Letter replaces Insurance Circular Letter No. 23 (2002), which has been withdrawn.

II.   Discussion

Insurance Law § 3420(g) defines SSL insurance as coverage for the liability of an insured because of death of, or injury to, the insured’s spouse up to the liability insurance limits provided under the policy even where the injured spouse, to be entitled to recover, must prove the culpable conduct of the insured spouse.  SSL insurance, which applies to all motor vehicles covered under the policy, only covers a spouse and not a person with whom the insured has a domestic partnership or civil union.  A domestic partner or a person in a civil union would be covered under the liability section of the motor vehicle policy.

Prior to the enactment of the chapters, Insurance Law § 3420(g) required a motor vehicle liability insurer to offer SSL insurance on an optional basis to all insureds in New York State who were covered under motor vehicle liability insurance policies that satisfied the requirements of New York Vehicle and Traffic Law Article 6, and a named insured had to request the insurance in writing.  The chapters amended Insurance Law § 3420(g) to require motor vehicle liability insurers to provide SSL insurance to all such insureds, unless a named insured elects, in writing, and in such form as the Superintendent of Financial Services (“Superintendent”) determines, to decline and refuse such insurance in the policy.  The Department of Financial Services (“Department”) subsequently amended 11 NYCRR 60-1 (Insurance Regulation 35-A) to conform to the amendments made by the chapters.  The revised law and regulation apply to all policies issued, renewed, or modified^[1] on or after August 1, 2023 and to all insureds, regardless of marital status or whether the insured is a business entity or natural person.  The law and regulation do not apply to umbrella liability insurance policies or for-hire motor vehicle liability policies. See 11 NYCRR § 60-1.6(a)(2).

It has come to the Department’s attention that some insurers are not specifying a premium for SSL insurance or permitting a named insured to decline the insurance with an appropriate premium reduction.  As discussed further below, an insurer must specify the premium for SSL insurance and provide an appropriate premium reduction when a named insured declines the SSL insurance.

A.   SSL Insurance Notification

Insurance Law § 3420(g)(2)(B) and 11 NYCRR § 60-1.6(b) provide that upon issuance, renewal, or amendment^[2] of a motor vehicle liability policy, the insurer must notify the named insured, in writing, that the policy includes SSL insurance unless the named insured declines and refuses such insurance, in writing, on a form the Superintendent determines.  Pursuant to the law and regulation, the notification must be on the front of the premium notice in boldface type and include a concise statement that SSL insurance is provided unless declined by the named insured, an explanation of the SSL insurance, and the insurer’s premium for the SSL insurance.  Section 60-1.6(b)(6) of 11 NYCRR 60-1 sets forth a sample notification that an insurer may use.  If an insurer uses a different notice from the one contained in the regulation, the notice must contain substantially the same information in a clear and readable manner. 

The law and regulation require that the SSL insurance notification include the insurer’s premium for the insurance.  Therefore, an insurer must include the premium for the SSL insurance in the SSL insurance notification.  An insurer may not inform a named insured that there is no charge for the SSL insurance or otherwise specify “$0.00” on the notification. The premium for SSL insurance should be based on the bodily injury limits if there are split limits under the policy or the total liability limits if there is a combined single limit under the policy. An insurer may not charge a flat dollar amount for SSL insurance for all policies regardless of each policy’s liability coverage limits.  In addition, if a named insured declines the SSL insurance, then the insurer must provide the named insured with a premium reduction, even if the insurer considers the premium reduction to be nominal.  An insurer may not combine the SSL insurance declination form and the SSL insurance notification on a single form.

B.  SSL Insurance Declination

SSL insurance is an optional coverage.  If a named insured elects, in writing, and in such form as the Superintendent determines, to decline and refuse SSL insurance, the policy may not include SSL insurance and an insurer may not prohibit a named insured from declining the coverage.  See 11 NYCRR § 60-1.6(a)(3).  The Superintendent has created a declination form that insurers must use to allow a named insured to decline SSL insurance.  An insurer may modify the declination form only to make ministerial changes, such as adding the insurer’s name and contact information, except as set forth in 11 NYCRR § 60-1.6(b)(7). 

An insurer may obtain an electronic written declination if the insurer adheres to the requirements of Insurance Law § 3458 regarding electronic notices and documents.  See 11 NYCRR § 60-1.6(a)(3).  Regarding a motor vehicle liability policy issued to a business entity, the business entity representative that signed the application for insurance or another authorized representative may sign the declination form on behalf of the business entity.

An insurer should use, as the declination’s effective date, the date the insurer receives the declination form if the form is submitted electronically or the post marked date if the form is sent via postal mail.  An insurer is not required to obtain a written declination at each renewal or amendment of the policy if a named insured previously submitted a written declination of SSL insurance, and a signed declination is effective until rescinded in writing by a named insured.  See 11 NYCRR § 60-1.6(a)(3).  Once rescinded, the insurer must provide the declination form at each policy renewal or amendment. 

III.  Conclusion

The Department expects insurers to comply with the amendments to Insurance Law § 3420(g) and 11 NYCRR 60-1 and with the guidance set forth in this Circular Letter.  If necessary, an insurer should submit a SERFF filing to revise its policy forms and rates for the Department’s approval as soon as possible

Please direct any questions regarding this circular letter by email to [email protected].

Very truly yours,

Avani Shah
Deputy Superintendent of Insurance