New York Codes, Rules and Regulations
Title 11 - INSURANCE
Chapter III - Policy and Certificate Provisions
Subchapter B - Property and Casualty Insurance
Part 71 - Legal Defense Costs In Liability Policies
Section 71.5 - Required notification
Universal Citation: 11 NY Comp Codes Rules and Regs ยง 71.5
Current through Register Vol. 46, No. 12, March 20, 2024
(a) Any policy issued or renewed in this State permitted pursuant to this Part must print a conspicuous notice of its defense cost offset provisions on the face of the application for insurance and on the face of the policy.
(b)
(1)
Except as provided in paragraph (4) of this subdivision, any policy containing
legal defense cost offset provisions specified in section
71.3(a)
of this Part must contain a statement signed by the insured acknowledging that
the insured is aware that the limits of liability contained in the policy shall
be reduced up to the amount or percentage stated in the policy by legal defense
costs and, in such event, the insurer shall be liable for legal defense costs
(except those due to any offset against the deductible) exceeding that amount
or percentage.
(2) Any policy
containing the legal defense cost offset provisions specified in section
71.3(a)
of this Part where the percentage limitation may be omitted pursuant to section
71.3(c)
must contain a statement signed by the insured acknowledging that the insured
is aware that the limits of liability contained in the policy shall be reduced,
and may be completely exhausted, by legal defense costs and, to the extent that
policy limits are thereby exceeded, the insurer shall not be liable for legal
defense costs or for the amount of any judgment or settlement.
(3) Any policy containing the legal defense
cost offset provisions specified in section
71.3(b)
of this Part must contain a statement signed by the insured acknowledging that
the insured is aware that legal defense costs that are incurred shall be
applied against the deductible up to the amount or percentage stated in the
policy and, in such event, that the insurer shall be liable for legal defense
costs (except for those due to any offset against liability limits) exceeding
that amount or percentage.
(4) Any
policy containing the separate defense limit provisions specified in section
71.4 of
this Part shall contain a statement signed by the insured, describing the
separate defense limit, and acknowledging that the insured is aware that the
amounts available for the payment of legal defense costs are limited and may be
exhausted and, in that event or in the event that the separate liability limits
are exhausted, the insurer shall not be liable for any further legal defense
costs.
(5) Any policy issued
pursuant to section
71.3(e)(1)(ii)
through (iv) of this Part shall contain a
statement signed by the insured, acknowledging that the insured is aware of the
extent to which legal defense costs that are incurred shall be offset against
the limits of liability or the deductible and, if such limits can be completely
exhausted by the payment of legal defense costs, that the insurer in the event
of such exhaustion shall not be liable for further legal defense costs or for
the amount of any judgment or settlement.
(c) The signed statement required by subdivision (b) of this section shall be attached to, and made a part of, the policy.
(d) In lieu of the signed disclosure statements required by subdivision (b) of this section, an insurer may include the following in the notice required by subdivision (a) of this section:
(1) The notice shall specify the
amount or percentage by which legal defense cost will reduce the limits of
liability or deductible. If the limits of liability may be completely exhausted
by legal defense costs, the notice must state that the insurer shall not be
liable for legal defense costs or for the amount of any judgment or settlement
after exhaustion of the liability limit.
(2) If the notice applies to a policy
containing separate defense limits as specified in section
71.4 of
this Part, the notice shall describe the separate defense limit and shall
specify that in the event that either the separate defense limit or the
liability limit is exhausted, the insurer shall not be liable for any further
legal defense costs.
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