Current through Register Vol. 46, No. 39, September 25, 2024
Except as provided in section
73.2(d) of this
Part, no claims-made liability insurance policy shall be issued or renewed in
this State, unless the policy and the issuing insurer comply with the following
minimum standards:
(a) A claim will be
deemed first made when the insurer receives written notice of a claim or suit
from the insured or a third party, but this shall not preclude an insurer from
utilizing written notice of incident as the trigger of coverage under the
policy.
(b) A retroactive date may
not be changed during the term of the claims-made relationship and any extended
reporting period.
(c)
(1) Upon termination of coverage, extended
reporting period coverage required by this Part must be available for any
claims-made liability coverage provided under the policy.
(2) Upon termination of coverage pursuant to
section 73.1(n)(2) of
this Part, extended reporting period coverage when required shall apply only in
regard to that coverage terminated.
(3) For policies issued or renewed pursuant
to section
73.2(d)(1) of
this Part, extended reporting period coverage need not be offered upon
termination of coverage pursuant to section
73.1(n)(2) of
this Part.
(4) Except as otherwise
permitted by this Part, endorsements restricting extended reporting period
coverage are prohibited.
(d) Upon termination of coverage, a 60-day
automatic extended reporting period, or 90 days in case of public entity
liability insurance policies, must be provided by the insurer.
(e)
(1)
Within 30 days after termination of coverage, the insurer must advise the
insured in writing of the automatic extended reporting period coverage and the
availability of, the premium for, and the importance of purchasing additional
extended reporting period coverage. For policies subject to audit,
retrospective rating or experience rating, the premium for extended reporting
period coverage included in the above notices may be quoted on an estimated
basis.
(2) Upon cancellation due to
nonpayment of premium or fraud on the part of the insured, an insurer shall not
be required to provide a premium quotation for extended reporting period
coverage unless requested by the insured.
(3) The insured shall have the greater of the
following in which to submit written acceptance of extended reporting period
coverage:
(i) 60 days from the effective date
of termination of coverage; or
(ii)
30 days from the date of mailing or delivery of the advice required by
paragraph (1) of this subdivision.
(4) For the purpose of determining the length
of the extended reporting period, the coverage required by subdivision (d) of
this section shall be included.
(f) Except as provided in subdivision (g) of
this section, and sections 73.4 and
73.5 of this Part, upon
termination of coverage, an insurer must offer the insured a three-year
extended reporting period.
(g) Upon
termination of coverage for the following types of coverages or risks, the
insurer must offer a one-year extended reporting period:
(1) directors and officers liability, except
not-for-profit organizations;
(2)
employee benefits liability;
(3)
fiduciary liability;
(4) public
entity liability;
(5) pollution and
environmental impairment liability;
(6) ski resort liability subject to section
73.2(f) of this
Part;
(7) employment practices
liability; and
(8) policies issued
or renewed pursuant to section
73.2(d) of this
Part.
(h) Upon
termination of coverage:
(1) Except for the
coverages delineated in subdivision (g) of this section, where a claims-made
relationship has continued for at least three years and the policy contains an
annual aggregate liability limit, the aggregate liability limit, if any, for
the extended reporting period coverage shall be at least equal to 100 percent
of such policy's annual aggregate limit.
(2) Except for the coverages delineated in
subdivision (g) of this section, where a claims-made relationship has continued
for less than three years and the policy contains an annual aggregate liability
limit, the aggregate liability limit, if any, for the extended reporting period
coverage shall be at least equal to the greater of:
(i) the amount of coverage remaining in such
policy's annual aggregate liability limit; or
(ii) 50 percent of such policy's annual
aggregate liability limit.
(3) Where a policy as specified in
subdivision (g) of this section contains an annual aggregate liability limit,
the aggregate liability limit, if any, for the extended reporting period
coverage shall be at least equal to the amount of coverage remaining in such
policy's annual aggregate liability limit.
(4) Where termination of coverage is due only
to a decrease in the policy's annual aggregate liability limit, the aggregate
liability limit, if any, required by this subdivision for the extended
reporting period coverage shall be no greater than the amount of such
decrease.
(5) Where a policy has no
annual aggregate liability limit, the insurer shall provide extended reporting
period coverage without an aggregate liability limit.
(i) Upon termination of coverage, the
aggregate liability limit, if any, for the automatic extended reporting period
coverage required by subdivision (d) of this section shall be at least equal to
the amount of coverage remaining in the policy's annual aggregate liability
limit.
(j)
(1) Except as provided in paragraph (2) of
this subdivision, the premium charged for extended reporting period coverage
shall be based upon the rates for such coverage in effect on the date the
policy was issued or last renewed, and the insurer shall not charge a different
premium for such coverage due to any change in its rates, rating plans or
rating rules subsequent to issuance or last renewal of the policy.
(2) The premium charged for extended
reporting period coverage may be based upon the rates, rating plan or rating
rules in effect upon termination of coverage, if the claims-made policy:
(i) provides for extended reporting period
coverage of at least five years; and
(ii) if the claims-made policy contained an
annual aggregate limit, provides extended reporting period coverage having a
separate aggregate liability limit, if any, equal to at least 100 percent of
such policy's annual aggregate liability limit.
(3) The premium for extended reporting period
coverage shall be commensurate with the coverage provided. Upon termination of
coverage on a date other than the policy's anniversary date, the cost of
extended reporting period coverage shall be appropriately reduced.
(k) Where a claims-made
relationship has continued for less than one year, subdivisions (e) through (h)
and (j) of this section shall not apply upon termination of coverage for
nonpayment of premium or fraud.
(l)
Upon termination of coverage, other than for a policy rated on a retrospective
basis:
(1) Any return premium due the insured
shall be credited toward the premium for additional extended reporting period
coverage if the insured elects such coverage.
(2) Where premium is due to the insurer for
coverage during the claims-made relationship, any monies received by the
insurer from the insured as payment for the extended reporting period coverage
shall first be applied to such premium owing for the policy.
(m) During a claims-made
relationship and any extended reporting period, a person employed or otherwise
affiliated with the insured and covered by the insured's claims-made policy
during such affiliation, shall continue to be covered under such policy and any
extended reporting period after such affiliation has ceased for such person's
covered acts or omissions during such affiliation.
(n)
(1) A
claims-made policy issued to a corporation, partnership or other entity shall
provide extended reporting period coverage upon termination of coverage to any
person covered under the policy, if:
(i) such
entity has been placed in liquidation or bankruptcy or permanently ceases
operations;
(ii) the entity or its
designated trustee does not purchase extended reporting period
coverage;
(iii) such person
requests the extended reporting period coverage within 120 days of the
termination of coverage; and
(iv)
the coverage or risk is of the type enumerated in paragraph (2), (3), (4), (6)
or (10) of section
73.2(a) of this
Part.
(2) The insurer
shall have no obligation to provide any notice to any such person of the
availability of the extended reporting period coverage required by paragraph
(1) of this subdivision.
(3) The
insurer may charge the person for whom extended reporting period coverage is
provided a premium commensurate with such coverage.
(o) An insurer may issue a claims-made policy
with more liberal policy provisions than required by this Part, subject to
policy form approval by the superintendent.
