Legislative Memo

Ken Pokalsky
Vice President
T 518.465.7511


A.4435 (Silver)



Homeowners' Bill of Rights



May 18, 2015


The Business Council opposes this bill which would amend the Insurance law to create a homeowners' bill of rights and consumer guide on insuring against catastrophic loss caused by natural disasters.

This bill is unnecessary and fails to bring any greater clarity to insurance policies as they are currently administered to policyholders. The bill essentially requires the same information that is contained in the homeowners or commercial property insurance policy to be reprinted in an easy to understand, plain language summary. Converting this technical policy language, crafted from government regulatory requirements and industry underwriting principles, into a simple easy to understand document is just not possible without leaving out significant information policy holders need to understand their policies. Insurance policies tend to be complex documents that require knowledge and experience to understand.

Current law already provides protections for residents and businesses when there is a lack of clarity over the meaning of insurance policy provisions. Insurance contracts must be read in favor of the policyholder and against the insurance company if there is any ambiguity in the policy provision at issue in a dispute. Breed v. Insurance Co. of N. Am., 46 NY 2nd 351, 353 (1978).

Courts across the country have shown some reluctance to hold insureds responsible for having read or having understood their policies. Couch on Insurance, 2d 15:79, p. 389.

A contract with any doubt or ambiguity in a policy provision will be resolved against the party that drafted it. Since the insurer drafted the policy, any question concerning its meaning will ordinarily be decided against the insurer and in favor of the insured. Courts across the country have essentially adopted this position. Fairness dictates that any doubt as to the meaning of the language used should be resolved in favor of the insured. To do otherwise, and employ a narrow and technical construction, would result in an injustice. Couch on Insurance, 2d 15:78, p. 386-387.

Another significant problem with the bill is that it authorizes in paragraph 4 of section 1 of the bill, the modification or change of an insurance policy's provisions pursuant to state or federal law when a local state or federal emergency is declared. This would not only lead to uncertainty in the insurance markets, with the ability of contracts to be changed at will, but the law would be challenged on constitutional grounds as well. The U.S. Constitution's article 1, section 10 expressly prohibits any state from passing a law impairing contracts.

New York should be careful not to overreact to post Superstorm Sandy demands for increased oversight and regulation of the insurance industry. This would ultimately lead to fewer insurers offering fewer products in New York, creating a less competitive coastal market with negative results for residents and businesses.

For these reasons, The Business Council opposes this legislation and respectfully urges that it not be enacted by the New York State Legislature.