The Office of General Counsel issued the following informal opinion on July 18, 2000, representing the position of the New York State Insurance Department.

RE: Property/Casualty Security Funds

Questions Presented:

1) Is there a fund in New York State that will pay insurance claims against insurers that become insolvent?

2) Does this fund apply to all insurance companies that write policies in New York State or just to insurers that are licensed in New York State?

3) Are insurers that underwrite through the "Free Trade Zone" covered by a security fund?


Generally speaking, the provisions regarding New York State’s insurance security funds are contained in N.Y. Ins. Law Arts. 76 and 77 (McKinney 1985 & Supp. 2000).

N.Y. Ins. Law Art. 77 (McKinney 1985 & Supp. 2000), also known as "The Life Insurance Company Guaranty Corporation of New York Act", provides for a security fund for policies issued by authorized life insurance companies. The scope of this act is contained in N.Y. Ins. Law § 7703 (McKinney 1985 & Supp. 2000).

N.Y. Ins. Law Art. 76 (McKinney 1985 & Supp. 2000) authorizes two property/casualty security funds: "The Property/Casualty Insurance Security Fund" and "The Public Motor Vehicle Liability Security Fund". The two security funds of Article 76 apply to authorized property/casualty insurers. See N.Y. Ins. Law §§ 7603 (a)(1) and 7604 (a) (McKinney 1985 & Supp. 2000). However, certain kinds of insurance issued by such insurers are not covered by these funds. There is no security fund in New York State for policies or certificates issued by health insurers and managed care organizations, financial guaranty insurers, mortgage guaranty insurers or title insurers. The reader is advised to examine N.Y. Ins. Law §§ 7603 and 7604 (McKinney 1985 & Supp. 2000) to determine each security fund's applicability to a given circumstance.

Article 76 also applies to authorized property/casualty insurers that issue special risk insurance policies (also known as the "Free Trade Zone") pursuant to N.Y. Ins. Law Art. 63 (McKinney 1985 & Supp. 2000) and sections 16.0-16.13 of Title 11 of the Official Compilation of Codes, Rules and Regulations of the State of New York.

For further information you may contact Senior Attorney Robert Freedman at the New York City Office.