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The Business Council opposes this bill which would prohibit an insurance company from denying a claim when the denial is based on a contributing risk factor not covered in the policy. This is an unwise intrusion into contractual agreements that will raise insurance premiums for consumers.
The purpose of concurrent causation clauses is to prevent insurers from being responsible for covering damage for a risk that was not covered in the premium. In some instances property is damaged by more than one event simultaneously. An insurance company should not be forced to cover a property damaged by wind and flooding when the property's policy only covers wind damage. Payment should be limited only to those damages contemplated by the policy.
Passage of this legislation will inevitably increase the costs for providing insurance which will ultimately result in higher premiums for consumers. Increased costs are bad for the industry and bad for policyholders trying to recover from the effects of Sandy. This is the worst time to see a spike in premiums.
This bill would also seek to nullify current contractual agreements. If enacted, this bill would apply to claims made on or after the effective date. Presumably, many of the claims are from policies that were created many years earlier. This would empower the state of New York to interfere and change current contracts. This is unconstitutional as established by article 1, section 10 of the U.S Constitution.
For these reasons we urge the legislature to decline enactment of A.7455/S.5581.