Extreme Weather Events Spur Stronger Consumer Protections through New Insurance Company Disclosure Requirements and an Online Guide to Securing Catastrophic Insurance Coverage
Additional Measure to Establish a Task Force to Examine the Disaster Response Efforts of
Insurance Carriers and First Responder Agencies also Passes Assembly
WASHINGTON, D.C. – June 20, 2014 – (RealEstateRama) — Assembly Speaker Sheldon Silver and Insurance Committee Chair Kevin Cahill announced the passage of legislation this week to establish the Homeowners Bill of Rights to protect insurance policyholders from the problems experienced by individuals who suffered significant property losses and damages during Superstorm Sandy and Tropical Storms Irene and Lee.
“The objective of this bill is to minimize surprise gaps in insurance coverage which too many New Yorkers encountered in the aftermath of the state’s most recent natural disasters,” said Silver. “The consumer guide and new insurer disclosure requirements called for in this measure will protect policyholders and help them better understand their rights and coverage so they can rebuild sooner and restore normalcy back to their lives and that of their families.”
“With this bill, we aim to drastically reduce the number of times a property owner, as they are standing in the ruins of their home after a storm, learn what their insurance policy doesn’t cover,” said Cahill. “This legislation empowers consumers with information about the steps they need to take to purchase the right insurance coverage that will adequately insure them against catastrophic losses, and it requires insurers to fully detail the coverage they are selling.”
Guide to Catastrophic Insurance Coverage
The Assembly Homeowners Bill of Rights (A.2287-A,Silver) would require the state Department of Financial Services (DFS) to create a consumer’s guide titled “Insuring Against Catastrophic Losses.” This online publication would inform consumers about the protections provided to them under the law and also outline the various types of insurance coverage they can purchase to insure themselves against losses caused by storms and extreme weather events.
Under the bill, the consumer guide is required to include information about the types of catastrophic losses that are frequently excluded from insurance coverage and where consumers can find insurance products that cover such exclusions. The publication also will identify the various preparations individuals can make to help protect human life and property during a natural disaster and explain the rights of policyholders. In addition, a toll-free hotline and website address operated and maintained by DFS to accommodate consumer complaints and provide general information also must be listed in the guide.
New Insurance Policy Disclosure Requirements
The legislation, which the Assembly passed last year but the Senate did not, also would mandate that policyholders and prospective insurance customers receive a written disclosure from insurers about a policy’s catastrophic coverage, including information about the limitations on losses, investigative procedures and processing claims. The bill also directs the disclosure to note that the provisions of a policy may be modified at the discretion of state or federal law following a natural disaster or emergency.
To ensure flood-zone property owners receive truthful and reliable policy information from insurance carriers and that they understand the various types of coverage being offered by the industry, the measure would:
require brokers to notify policyholders about the most up to date level of risk assigned to flood zones as determined by the Federal Emergency Management Agency;
mandate that consumers acknowledge in writing or electronic signature their receipt of flood zone updates from their insurance carrier; and
direct insurance agents to inform policyholders about the policy options that are available to cover damages caused by natural disasters, flooding and other such occurrences through the New York Property Insurance Underwriting Association, Coastal Market Assistance Program, and the National Flood Insurance Program.
“From representing constituents impacted by Superstorm Sandy’s destruction, I am familiar with the confusion and frustration property owners grapple with as they try to get answers from insurance carriers. This bill addresses those difficulties by ensuring consumers have access to the information they need to purchase appropriate insurance coverage; insurance companies fully disclose the extent of the coverage they are selling; and property owners know they can reach out to DFS and other state agencies for assistance,” added Silver.
Task Force Established to Review Insurance Carrier Disaster Claim Response
The Assembly also approved legislation (A.1093,Skoufis) today to establish a task force to examine how insurers respond to disasters.
The task force, comprised of the DFS, the Division of Homeland Security and Emergency Services, insurance industry representatives, local disaster response officials, adjusters and consumer groups, also would help determine whether policyholders and communities have adequate insurance.
Another provision of the bill requires the task force to evaluate and identify steps disaster response officials can implement to ensure every community in the state is prepared to provide the most effective and efficient response to any future natural disaster