News

Legislation Proposed to Ban Anti-Concurrent Causation Clauses in New York

Anti-concurrent causation clauses are currently valid and enforceable in New York. While there is scant case law analyzing ACC clauses in the context of Superstorm Sandy (given that New York has been spared, for the most part, a catastrophic hurricane-like event until Sandy), New York Courts have upheld such clauses in the context of other types of property damage. See, Kula v. State Farm Fire & Casualty Co., 628 N.Y.S.2d 988 (4th Dep't. 1995). While the Court in Kula upheld the policy's ACC clause to bar coverage, that Court also noted that New York, unlike California, does not have any legislation that would circumvent the application of ACC language.

However, on May 17, 2013, N.Y. State Assemblyman Phil Goldfeder introduced legislation (A. 07455) that would expressly prohibit insurers from denying or excluding coverage based on ACC clauses. As justification for the proposed amendment, the memorandum accompanying the proposal explains, in relevant part:

"In the aftermath of Superstorm Sandy, many homeowners were surprised when insurance companies denied their claims for perils that should have been covered under the policy (such as windstorm damage) because the perils occurred at the same time as a flood, which is excluded under most homeowners policies. As a result, these homeowners found themselves without adequate insurance coverage at a time when they needed it the most. This bill would rectify this by prohibiting insurance companies from denying claims under these circumstances."

The proposed legislation provides as follows:

S T A T E O F N E W Y O R K
___________________________________________________________

7455

2013-2014 Regular Sessions

I N A S S E M B L Y

May 17, 2013
___________

Introduced by M. of A. GOLDFEDER -- read once and referred to the Committee on Insurance

AN ACT to amend the insurance law, in relation to anti-concurrent causation clauses

THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

Section 1. The insurance law is amended by adding a new section 3455 to read as follows:

S 3455. ANTI-CONCURRENT CAUSATION CLAUSES. AN INSURER SHALL NOT DENY OR EXCLUDE COVERAGE FOR ANY CLAIM FOR LOSS OR DAMAGE THAT WOULD OTHERWISE BE COVERED BY A POLICY SOLELY BECAUSE AN EVENT OR PERIL NOT COVERED UNDER THE POLICY OR SPECIFICALLY EXCLUDED UNDER THE POLICY WAS A CONTRIBUTING FACTOR IN SUCH LOSS OR DAMAGE OR OCCURRED SIMULTANEOUSLY WITH THE EVENT OR PERIL THAT WAS COVERED.

S 2. This act shall take effect immediately and shall apply to claims made on or after such effective date.
__________________________________________________________

We shall monitor this important piece of legislation and advise you of its status in the legislature.