N.Y. Comp. Codes R. & Regs. tit. 11 § 71.5

Current through Register Vol. 46, No. 43, October 23, 2024

Section 71.5 - Required notification

(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.

N.Y. Comp. Codes R. & Regs. Tit. 11 § 71.5