N.Y. Insurance Law § 3427: Gap insurance; cancellation, renewal and other provisions

§ 3427. Gap insurance; cancellation, renewal and other provisions. (a)

Definitions. As used in this section:

(1) "Covered policy" means, for purposes of this section, a policy or

contract of gap insurance, issued or issued for delivery in this state,

on a risk located or resident in this state.

(2) "Nonpayment of premium" means the failure of the named insured to

discharge any obligations in connection with the payment of premiums on

a policy of insurance or any installment of such premium, whether the

premium is payable directly to the insurer or its agent, or indirectly

under any premium finance plan or extension of credit. Payment to the

insurer, or to an agent or broker authorized to receive such payment,

shall be timely, if made within fifteen days after the mailing to the

insured of a notice of cancellation for nonpayment of premium.

(b) Lessor gap insurance:

(1) A covered policy of lessor gap insurance shall be subject to all

the provisions of section three thousand four hundred twenty-six of this

article, except as otherwise provided in this section.

(2) Subject to the notice requirements of subsection (c) of section

three thousand four hundred twenty-six of this article, a covered policy

of lessor gap insurance may be cancelled only for:

(A) one or more of the bases for cancellation set forth in

subparagraphs (A) through (D), and (F) through (H) of paragraph one of

subsection (c) of section three thousand four hundred twenty-six of this

article;

(B) material change in the nature or extent of the risk, occurring

after issuance or last annual renewal anniversary date of the policy,

which causes the risk of loss to be substantially and materially

increased beyond that contemplated at the time the policy was issued or

last renewed; or

(C) if the policy automatically provides coverage for the gap amount

waived under new leases entered into by the lessor, or acquired by the

lessor's assignee, the lessor's or assignee's (whichever is the insured)

failure to provide, within sixty days or as otherwise specified in the

policy, the insurer with the name and address of each lessee and other

information reasonably required by the insurer.

(c) Lessee gap insurance: (1) Except as provided in this section, the

provisions of sections three thousand four hundred twenty-five and three

thousand four hundred twenty-six of this article shall not apply to a

covered policy of lessee gap insurance.

(2) During the first sixty days a covered policy of lessee gap

insurance is initially in effect, no cancellation shall become effective

until twenty days after written notice is mailed to the first named

insured at the mailing address shown in the policy, except for the bases

for cancellation set forth in subparagraphs (A) through (H) of paragraph

one of subsection (c) of section three thousand four hundred twenty-six

of this article for which fifteen days notice shall be given.

(3) After a covered policy of lessee gap insurance has been in effect

for sixty days, or on or after the effective date if the policy is a

renewal, no cancellation or nonrenewal shall become effective until

fifteen days after written notice is mailed or delivered to the first

named insured at the mailing address shown in the policy and

cancellation or nonrenewal is conditioned upon the termination of the

lease for reasons other than a total loss of the personal property

caused by its theft or physical damage, or is based on one or more of

the reasons set forth in subparagraphs (A) through (H) of paragraph one

of subsection (c) of section three thousand four hundred twenty-six of

this article; except that where the lease is for ten years or longer,

the policy may be cancelled or nonrenewed forty-five days after written

notice is mailed or delivered to the first named insured at the mailing

address shown in the policy if the cancellation or nonrenewal is to be

effective upon the tenth anniversary date of the policy or any

subsequent annual anniversary date.

(4) If the policy is not issued for a term coextensive with the length

of the lease, the insurer shall renew it for successive terms for the

duration of the lease, unless cancelled or nonrenewed in accordance with

the provisions of this subsection.

(d) Creditor gap insurance:

(1) A covered policy of creditor gap insurance shall be subject to all

the provisions of section three thousand four hundred twenty-six of this

article, except as otherwise provided in this section.

(2) Subject to the notice requirements of subsection (c) of section

three thousand four hundred twenty-six of this article, a covered policy

of creditor gap insurance may be cancelled only for:

(A) One or more of the bases for cancellation set forth in

subparagraphs (A) through (D), and (F) through (H) of paragraph one of

subsection (c) of section three thousand four hundred twenty-six of this

article;

(B) Material change in the nature or extent of the risk, occurring

after issuance or last annual renewal anniversary date of the policy,

which causes the risk of loss to be substantially and materially

increased beyond that contemplated at the time the policy was issued or

last renewed; or

(C) If the policy automatically provides coverage for the gap amount

waived under new loans or other credit transactions entered into by the

creditor or acquired by the creditor's assignee, the creditor's or

assignee's (whichever is the insured) failure to provide, within sixty

days or as otherwise specified in the policy, the insurer with the name

and address of each debtor and other information reasonably required by

the insurer.

(e) Debtor gap insurance:

(1) Except as provided in this section, the provisions of sections

three thousand four hundred twenty-five and three thousand four hundred

twenty-six of this article shall not apply to a covered policy of debtor

gap insurance.

(2) During the first sixty days a covered policy of debtor gap

insurance is initially in effect, no cancellation shall become effective

until twenty days after written notice is mailed to the first named

insured at the mailing address shown in the policy, except for the bases

for cancellation set forth in subparagraphs (A) through (H) of paragraph

one of subsection (c) of section three thousand four hundred twenty-six

of this article for which fifteen days notice shall be given.

(3) After a covered policy of debtor gap insurance has been in effect

for sixty days, or on or after the effective date if the policy is a

renewal, no cancellation or nonrenewal shall become effective until

fifteen days after written notice is mailed or delivered to the first

named insured at the mailing address shown in the policy and

cancellation or nonrenewal is conditioned upon the termination of the

loan for reasons other than a total loss of the personal property caused

by its theft or physical damage, or is based on one or more of the

reasons set forth in subparagraphs (A) through (H) of paragraph one of

subsection (c) of section three thousand four hundred twenty-six of this

article; except that where the loan or other credit transaction is for

ten years or longer, the policy may be cancelled or nonrenewed

forty-five days after written notice is mailed or delivered to the first

named insured at the mailing address shown in the policy if the

cancellation or nonrenewal is to be effective upon the tenth anniversary

date of the policy or any subsequent annual anniversary date.

(4) If the policy is not issued for a term coextensive with the length

of the loan or other credit transaction, the insurer shall renew it for

successive terms for the duration of the loan or other credit

transaction, unless cancelled or nonrenewed in accordance with the

provisions of this subsection.

(f) For purposes of this section, "property insured", as used in

subparagraphs (E) and (H) of paragraph one of subsection (c) of section

three thousand four hundred twenty-six of this article, means the

property which is the subject of the lease or loan or other credit

transaction.

(h) Every notice of cancellation issued pursuant to this section shall

specify the grounds for cancellation.

(i) If a lessor, creditor or assignee charges the lessee or debtor for

the waiver of the gap amount, the lessor or creditor, or, in the absence

of a waiver by the creditor or lessor, the assignee, as part of the

waiver offer, shall provide the lessee or debtor with a notice

specifying the name of the insurer that has issued the lessor or

creditor gap insurance policy, the cost of the lessor or creditor gap

insurance coverage, and the charge for the waiver. Any person having

been found, after notice and hearing, to have wilfully violated this

subsection shall be liable to the people of this state for a civil

penalty in a sum not exceeding five hundred dollars for each violation.

(j) Notwithstanding any other provision of this chapter, the

cancellation and nonrenewal provisions of this section shall apply only

to the gap insurance provisions of a policy or contract that also

provides other coverages and the gap insurance coverage shall be

severable from the other coverages for the purposes of cancellation and

nonrenewal; except that lessor or debtor gap insurance coverage included

within a policy insuring a mobile home shall be subject to the

cancellation and nonrenewal requirements applicable to the mobile home

policy.

(k) Notwithstanding section three thousand four hundred thirty-five of

this article, a covered policy of lessor or creditor gap insurance that

insures a lessor or creditor and the lessor's or creditor's assignees

shall not be considered a group insurance policy.

(l) The superintendent may prescribe by regulation minimum policy

provisions for gap insurance which the superintendent deems to be

necessary or appropriate for lessor gap insurance, creditor gap

insurance, lessee gap insurance and debtor gap insurance contracts or

policies.