2023 New York Laws › WKC - Workers' Compensation › Article 4 - Security for Compensation › 54 - The Insurance Contract.

§  54.  The  insurance contract. 1. Right of recourse to the insurance
carrier. Every  policy  of  insurance  covering  the  liability  of  the
employer  for  compensation  shall  be  issued  by  one  or  more  stock
companies, mutual corporations  or  reciprocal  insurers  authorized  to
transact workers' compensation insurance in this state. In the case of a
policy  with  multiple  insurers,  such insurers shall share one hundred
percent of the liabilities by subscription,  and  one  of  the  insurers
shall  serve  as  the lead insurer for notice and cancellation purposes.
Such a policy shall contain a provision setting forth the right  of  the
chair  to enforce in the name of the people of the state of New York for
the benefit of the person entitled to the compensation  insured  by  the
policy  either  by  filing  a  separate  application  or  by  making the
insurance carrier a party to the original application, the liability  of
the  insurance  carrier  in  whole  or  in  part for the payment of such
compensation; provided, however, that payment in whole  or  in  part  of
such  compensation by either the employer or the insurance carrier shall
to the extent thereof be a bar to the recovery against the other of  the
amount so paid.
2.  Knowledge  and  jurisdiction of the employer extended to cover the
insurance carrier. Every such policy shall contain a provision that,  as
between  the  employee  and  the  insurance  carrier,  the  notice to or
knowledge of the occurrence of the injury on the part  of  the  employer
shall  be deemed notice or knowledge, as the case may be, on the part of
the insurance carrier, or if more than one insurer,  the  lead  carrier;
that  jurisdiction  of  the  employer  shall,  for  the  purpose of this
chapter, be jurisdiction of the lead insurance  carrier  and  that  such
insurance  carrier  shall  in  all things be bound by and subject to the
orders, findings, decisions or awards rendered against the employer  for
the payment of compensation under the provisions of this chapter.
3.  Insolvency  of  employer  does  not release the insurance carrier.
Every such policy shall contain a  provision  to  the  effect  that  the
insolvency or bankruptcy of the employer shall not relieve the insurance
carrier from the payment of compensation for injuries or death sustained
by an employee during the life of such policy.
4.  Limitation of indemnity agreements. Every contract or agreement of
an employer the purpose of which is to indemnify him from loss or damage
on account of the injury of an  employee  by  accidental  means,  or  on
account  of  the  negligence  of  such employer or his officer, agent or
servant, shall be absolutely void unless it shall also  cover  liability
for the payment of the compensation and for the payment into the special
funds  provided for by this chapter. Every such contract or agreement of
insurance issued by an insurance carrier covering the  liability  of  an
employer  for  the  payment of the compensation and for the payment into
the special funds provided by this chapter shall be  deemed  to  include
all  employees  of  the  employer  employed at or in connection with the
business of the employer carried on,  maintained,  or  operated  at  the
location  or  locations  set  forth  in  such  contract or agreement and
employees for whose injuries a contractor may become  liable  under  the
provisions  of  section  fifty-six  of  this  chapter.  Any  employee or
employees or  class  of  employees  not  enumerated  in  section  three,
subdivision  one,  group  one  to  seventeen inclusive, of this chapter,
employed by a municipal corporation  or  political  subdivision  of  the
state,  may  by  the  terms  of  the  contract or agreement be expressly
excluded therefrom.
5.  (a)  Cancellation  and  termination  of  insurance  contracts.  No
contract  of  insurance issued by an insurance carrier against liability
arising under this chapter shall be cancelled within the time limited in
such contract for its expiration unless notice is given as  required  by

this  section.  When  cancellation is due to non-payment of premiums and
assessments, such cancellation shall not be effective until at least ten
days after a  notice  of  cancellation  of  such  contract,  on  a  date
specified  in such notice, shall be filed in the office of the chair and
also served on the employer. When cancellation  is  due  to  any  reason
other  than  non-payment  of premiums and assessments, such cancellation
shall not be effective until at least thirty  days  after  a  notice  of
cancellation of such contract, on a date specified in such notice, shall
be  filed  in  the  office of the chair and also served on the employer;
provided, however, in either case, that  if  the  employer  has  secured
insurance  with  another insurance carrier which becomes effective prior
to the expiration of the time stated in such  notice,  the  cancellation
shall  be  effective  as  of the date of such other coverage. No insurer
shall refuse to renew any  policy  insuring  against  liability  arising
under  this  chapter unless at least thirty days prior to its expiration
notice of intention not to renew has been filed in  the  office  of  the
chair and also served on the employer.
Such  notice  shall be served on the employer by delivering it to him,
her or it or by sending it by mail, by certified or  registered  letter,
return  receipt  requested, addressed to the employer at his, her or its
last known place of business;  provided  that,  if  the  employer  be  a
partnership,  then  such  notice  may  be  so given to any of one of the
partners, and if the employer be a corporation then the  notice  may  be
given to any agent or officer of the corporation upon whom legal process
may  be  served; and further provided that an employer may designate any
person or entity at any address to receive  such  notice  including  the
designation  of  one  person  or  entity  to receive notice on behalf of
multiple entities insured under one insurance policy and that service of
notice at the address  so  designated  upon  the  person  or  entity  so
designated  by  delivery  or by mail, by certified or registered letter,
return receipt requested, shall satisfy the notice requirement  of  this
section.  Provided,  however,  the  right to cancellation of a policy of
insurance in the state fund shall be exercised only for  non-payment  of
premiums  and  assessments or as provided in section ninety-four of this
chapter.
The provisions of this subdivision shall not  apply  with  respect  to
policies containing coverage pursuant to subsection (j) of section three
thousand  four  hundred  twenty  of  the insurance law relating to every
policy providing comprehensive personal liability insurance  on  a  one,
two, three or four family owner-occupied dwelling.
In the event such cancellation or termination notice is not filed with
the  chair  within  the  required  time period, the chair shall impose a
penalty in the amount of up to five hundred  dollars  for  each  ten-day
period  the insurance carrier or state insurance fund failed to file the
notification. All penalties collected pursuant to this subdivision shall
be deposited in the uninsured employers' fund.
(b) Conditional renewal for carriers under common control. A  contract
of  insurance  shall remain in full force and effect subject to the same
rates as the expiring contract of insurance rates, unless written notice
is mailed or delivered by the insurance carrier to the employer, at  the
address  shown on the policy, and to such employer's authorized agent or
broker,  indicating  the  insurance  carrier's  intention  to  condition
renewal  upon  issuance  of a policy that supersedes a policy previously
issued by another insurance  carrier  under  common  control  that  will
result  in  an  increased premium in excess of ten percent (exclusive of
any premium increase generated as a result of increased loss costs filed
and approved in accordance with subsection (e) of section  two  thousand
three hundred five of the insurance law, increased exposure units, or as

a  result  of  experience  rating, contractor credit adjustment program,
merit rating, retrospective rating or audit or removal or reduction of a
drug free credit, managed care credit, or deductible. Such notice  shall
be mailed or delivered at least thirty days in advance of the expiration
date  of  the  policy,  and  shall  set  forth the amount of the premium
increase (or, where such amount cannot reasonably be  determined  as  of
the  time  the  notice is provided due to failure of the policyholder to
provide to the insurance carrier the information necessary to  determine
the  premium,  a  reasonable estimate of the premium increase based upon
the information available  to  the  insurance  carrier  at  that  time).
Nothing  in  this  subdivision  shall  require  the insurance carrier to
provide such notice when the employer, an agent or broker authorized  by
the employer, or another insurance carrier of the employer has mailed or
delivered  written  notice  that  the  policy has been replaced or is no
longer desired.
5-a. Issuance, amendment, endorsement or  reinstatement  of  insurance
contracts.  a.  Any  insurance  carrier  or the state insurance fund who
issues, reinstates, amends or endorses  any  contract  of  insurance  or
rider  thereto  covering  the  liability of an employer for compensation
under this chapter shall file notification in the office  of  the  chair
within  thirty  days  after  such issuance, reinstatement, amendment, or
endorsement of the contract. Such notice shall be filed  in  the  manner
and form prescribed by the chair.
b.  In  the  event notice required under this subdivision is not filed
with the chair within the thirty-day  time  period,  or  notice  is  not
provided   by   a   group  self-insured  trust  pursuant  to  regulation
promulgated  by  the  board  regarding  notification  of   the   trust's
commencement  or termination of coverage for any employer, the chair may
impose a penalty of up to five hundred dollars for each  ten-day  period
the  insurance  carrier  or state insurance fund or group self-insurance
trust failed to file the notification. All penalties collected  pursuant
to this subdivision shall be deposited in the uninsured employers' fund.
c.  The provisions of this subdivision shall not apply with respect to
insurance policies containing coverage pursuant  to  subsection  (j)  of
section three thousand four hundred twenty of the insurance law relating
to  every policy providing comprehensive personal liability insurance on
a one, two, three or four family owner-occupied dwelling.
6. a. Insurance of officers of corporations. Every  executive  officer
of  a  corporation  shall  be  deemed to be included in the compensation
insurance contract or covered  under  a  certificate  of  self-insurance
unless   that   person   is   an   unsalaried  executive  officer  of  a
not-for-profit  corporation  or  unincorporated  association  and   such
corporation  or  association  elects  to  exclude  that  person from the
coverage of this chapter. Such election to exclude such person shall  be
made  in  writing  on  a form prescribed by the chair and filed with the
insurance carrier. Such election shall be effective with respect to  all
of  the  policies  issued  to  the  corporation  or  association by such
insurance  carrier  as  long  as  it  shall  continuously   insure   the
corporation   or  association,  provided  that  written  notice  of  the
continuation of the election to exclude any or all executive officers is
given to the corporation or association with each renewal notice of  the
policy.  If  such  election is revoked, it shall be in writing on a form
prescribed by the chair, and shall be  filed  with  the  chair  and  the
insurance  carrier.  Such revocation shall not be effective until thirty
days after such filing.  Any  executive  officer  whose  corporation  or
association  files  an  election  not  to be included under this chapter
shall be deemed not to be an employee within the intent of this chapter;

however, if not excluded, such officers and their  dependents  shall  be
entitled to compensation as provided by this chapter.
b. An executive officer of any corporation who at all times during the
period  involved  owns  all  of  the issued and outstanding stock of the
corporation and holds all of the offices pursuant to  paragraph  (e)  of
section seven hundred fifteen of the business corporation law and who is
the  executive  officer  of  a  corporation having other persons who are
employees required to be covered under this chapter shall be  deemed  to
be  included  in  the compensation insurance contract or covered under a
certificate of self-insurance unless the officer elects to  be  excluded
from  the  coverage  of this chapter. Such election shall be made by the
corporation filing a notice that the corporation elects to  exclude  the
executive  officer of such corporation named in the notice from coverage
of this chapter. Such election shall be filed with the insurance carrier
or the chair in the case of self-insurance upon a form prescribed by the
chair of  the  workers'  compensation  board.  Such  election  shall  be
effective  with  respect  to  all policies issued to such corporation by
such insurance carrier as long  as  it  shall  continuously  insure  the
corporation  and  shall  be final and binding upon the executive officer
named in the notice until revoked by the corporation in accordance  with
paragraph a of this subdivision.
(c)  An  executive  officer of any corporation who at all times during
the period involved owns all of the issued and outstanding stock of  the
corporation  and  holds  all of the offices pursuant to paragraph (e) of
section seven hundred fifteen of the business corporation law and who is
the executive officer of a corporation that has no other persons who are
employees required to be covered under this chapter shall be  deemed  to
be  excluded from coverage under this chapter unless such officer elects
to be covered. Such coverage may be effected by obtaining  an  insurance
policy  or in the case of self-insurance by the corporation submitting a
form prescribed by the chair of the workers' compensation board,  giving
notice  that  the  corporation  elects to bring the executive officer of
such corporation named  in  the  notice  within  the  coverage  of  this
chapter.
d. Any two executive officers of a corporation who at all times during
the  period  involved between them own all of the issued and outstanding
stock of the corporation and hold all such  offices,  provided,  however
that  each  officer  must  own  at least one share of stock, who are the
executive officers of such corporation  having  other  persons  who  are
employees  required  to be covered under this chapter shall be deemed to
be included in the compensation insurance contract or  covered  under  a
certificate  of  self-insurance unless one or both the officers elect to
be excluded from the coverage of this chapter. Such  election  shall  be
made  by  any  such corporation filing a form prescribed by the chair of
the workers' compensation board with the insurance carrier or the  chair
in  the case of self-insurance giving notice that the corporation elects
to exclude one or both of the executive  officers  of  such  corporation
named  in  the  notice  from the coverage of this chapter. Such election
shall  be  effective  with  respect  to  all  policies  issued  to  such
corporation  by  such insurance carrier as long as it shall continuously
insure the corporation and shall be final and binding upon the executive
officers as named in the notice until revoked  by  the  corporation.  If
such election is revoked, it shall be in writing on a form prescribed by
the  chair  and shall be filed with the chair and the insurance carrier.
Such revocation shall not be effective  until  thirty  days  after  such
filing.
e. Any two executive officers of a corporation who at all times during
the  period  involved between them own all of the issued and outstanding

stock of such corporation and hold all such offices,  provided,  however
that  each  officer  must  own  at least one share of stock, who are the
executive officers of such corporation that has no other persons who are
employees  required  to be covered under this chapter shall be deemed to
be excluded from coverage under this chapter unless one or both officers
elect to be covered. Such coverage  may  be  effected  by  obtaining  an
insurance  policy  or, in the case of self-insurance, by the corporation
submitting a form prescribed by the chair of the  workers'  compensation
board,  giving  notice  that the corporation elects to bring one or both
executive officers of  such  corporation  named  in  the  notice  within
coverage of this chapter.
f.  Notwithstanding  the provisions of paragraph a of this subdivision
or any other provision of this  chapter,  any  executive  officer  of  a
religious,  charitable  or educational corporation and the officers of a
municipal  corporation,  and  officers  of  any  post  or   chapter   of
organizations of veterans of any war of the United States may be brought
within  the coverage of the insurance contract as if they were employees
by any such corporation filing with the insurance carrier, upon  a  form
prescribed  by  the  chair  of the workers' compensation board, a notice
that the corporation elects to bring one or more executive  officers  of
such  corporation  named  in  the  notice  within  the  coverage of this
chapter. Such election shall be effective with respect to  all  policies
issued to such corporation by such insurance carrier as long as it shall
continuously  insure  the  corporation.  If such election is revoked, it
shall be in writing on a form prescribed by the chair and filed with the
chair and with the insurance carrier and a  copy  thereof  furnished  to
each  officer  as  to  whom  such  revocation is applicable, upon a form
prescribed by the chair. Such revocation shall not  be  effective  until
thirty  days  after  such  filing.  The estimation of the wage values of
executive officers within the coverage of the insurance  contract  shall
be  reasonable  and  separately stated and added to the valuation of the
payrolls upon which the premium is computed.
g. The executive officers brought within the coverage of the insurance
contract, and the dependents of any such executive  officers,  including
executive  officers of religious, charitable or educational corporations
and officers of municipal corporations, and  officers  of  any  post  or
chapter  of  organizations  of  veterans of any war of the United States
that have elected to bring their officers within  the  coverage  of  the
policy,  shall  have  the  same  rights and remedies as any employee and
shall be entitled to compensation and medical care as provided  by  this
chapter,  and  the  insurance  carrier  shall be liable therefor and for
payments into the special funds provided in this chapter as in the  case
of  an  employee.  The  executive officers who may be brought within the
coverage of  an  insurance  contract  shall  include  an  officer  of  a
corporation  who  at  all  times during the period involved between them
owns all of the issued and outstanding  stock  of  the  corporation  and
holds  all  of  the  offices  pursuant to paragraph (e) of section seven
hundred fifteen  of  the  business  corporation  law  or  two  executive
officers  of  a  corporation who at all times during the period involved
between them own all  of  the  issued  and  outstanding  stock  of  such
corporation  and  hold all such offices and who is the executive officer
or who are the executive officers of a corporation  that  has  no  other
persons who are employees required to be covered under this chapter.
h.  Any  officer  or  officers, elective or appointive, of a municipal
corporation or other political subdivision of the state  complying  with
the  provisions of group nineteen of subdivision one of section three of
this  chapter  shall  be  deemed  executive  officers  subject  to   the
provisions of this subdivision.
6-a.   Insurance   contracts   with   fire   or  ambulance  districts.
Notwithstanding any other provision of this section or of this  chapter,
any  insurance  contract  to  secure workers' compensation for a fire or
ambulance district pursuant to subdivision one  or  subdivision  two  of
section  fifty  of  this  chapter issued to take effect on or after July
first, nineteen hundred sixty,  in  relation  to  a  fire  district  and
January  first,  in  the  year  next  succeeding  the year in which this
subdivision as hereby amended  becomes  effective,  in  relation  to  an
ambulance district or any such contract renewed to continue in effect on
or  after  such  dates, shall provide workers' compensation coverage for
all fire or ambulance district officers, whether elective or appointive,
and all fire or ambulance district employees, whether or  not  they  are
compensated  for  their  services, unless the board of fire or ambulance
commissioners of the fire district or ambulance district  by  resolution
elects not to provide such coverage for any one or more of such officers
or  employees,  or  class  thereof.  Such  election  not to provide such
coverage shall be effective with respect to all such insurance contracts
thereafter issued to such fire or ambulance district  by  any  insurance
carrier  until revoked in whole or in part by resolution of the board of
fire or ambulance commissioners of the fire or ambulance district.  Such
election  not  to provide such coverage shall not become effective until
thirty days after a copy of such resolution  has  been  filed  with  the
chairman  of  the  workers'  compensation  board  and with the insurance
carrier and a copy thereof is furnished to each officer and employee  as
to  whom  such  revocation  is  applicable. The chairman of the workers'
compensation board shall prescribe the  form  of  such  resolution.  The
provisions  of  this  subdivision shall not be applicable in cases where
the injury arises out of and in  the  course  of  duty  as  a  volunteer
firefighter  or  a  volunteer  ambulance  worker  or  as a civil defense
volunteer and where the computation of benefits would be made under  the
provisions  of  the volunteer firefighters' benefit law or the volunteer
ambulance workers' benefit law or under article ten of this chapter.
7. Limitation of the issuance  of  policies  by  a  foreign  insurance
company.  No  policy  or contract of insurance issued by a foreign stock
corporation or mutual association authorized to transact the business of
workers' compensation insurance in  this  state,  except  a  corporation
organized  under  the  laws  of a state or country outside of the United
States and domiciled in this state, covering or intended  to  cover  the
liability  of  an employer to his employees under this chapter, shall be
accepted as a compliance with subdivision two of section fifty  of  this
chapter,  unless  such  foreign  stock corporation or mutual association
shall have filed with the superintendent of financial services a bond or
undertaking with good and sufficient sureties to the people of the state
of New York, and conditioned upon the payment in full  of  any  and  all
compensation  and  benefits  as  provided in this chapter to any and all
persons entitled thereto under any such policy or contract of insurance.
Such bond shall be approved as to form by the attorney-general and as to
sufficiency by the superintendent of financial services. The  amount  of
such  bond shall be such sum as may reasonably represent twenty-five per
centum of the outstanding reserves for compensation losses  on  policies
issued  by  such  foreign  stock  corporation or mutual association upon
risks located in the state of New York as determined by law  or  by  the
requirements  of  the  superintendent  of  financial services, provided,
however, that the amount of such bond shall in  no  case  be  less  than
twenty-five  thousand  dollars  nor  more than one million dollars. Such
bond shall  be  renewed  annually.  Every  such  bond  shall  contain  a
provision  authorizing  the attorney-general upon the certificate of the
superintendent of financial services that there has been default in  the

payment  of  compensation for thirty days or that the bonded company has
become insolvent to enforce such bond in the name of the people  of  the
state of New York for the benefit of any and all persons entitled to the
compensation  assured  by  any  policy  issued  by  such  foreign  stock
corporation or mutual association or otherwise entitled to any  benefits
under  such  policy.  In lieu of the bond required to be given hereunder
any such foreign stock corporation or  mutual  association  may  deposit
with  the  superintendent  of  financial services securities of the kind
prescribed in  section  one  thousand  three  hundred  eighteen  of  the
insurance  law  in  an  amount  equal  to  twenty-five per centum of the
outstanding reserves for compensation losses on policies issued by  such
foreign  stock  corporation  or mutual association upon risks located in
the state of New York, but not less than  twenty-five  thousand  dollars
nor  more  than  one  million  dollars.  In computing the amount of such
securities they shall be valued as determined by the  superintendent  of
financial  services  in  valuing the assets of insurance companies. Such
securities shall be held by the superintendent of financial services  as
a  special  deposit  and  as  express  security  for the payment of such
compensation or benefits and may be  sold  by  the  said  superintendent
without  notice  in the event that there has been default in the payment
of compensation for thirty days  or  that  the  depositing  company  has
become   insolvent.  The  income  thereon  shall  be  collected  by  the
superintendent of financial services and, prior to any  default  in  the
payment  of  such compensation or benefits, shall be paid over by him to
the stock corporation or mutual association depositing the same.
However, no such bond or undertaking shall be  required  to  be  filed
after  July  first, nineteen hundred thirty-eight, by any carrier making
payment to  the  stock  or  mutual  funds  respectively  established  by
sections one hundred seven and one hundred nine-d of this chapter.
8.  A  self-employed  person, a partner of a partnership as defined in
section ten of the partnership law but not including a limited  partner,
a  partner  of  a registered limited liability partnership as defined in
section two of the partnership law, a  member  of  a  limited  liability
company  as defined in subdivision (m) of section one hundred two of the
limited liability company law or a  member  of  a  professional  service
limited  liability  company as defined in subdivision (f) of section one
thousand two hundred one of the limited liability  company  law,  having
other  persons  who  are  employees  required  to  be covered under this
chapter may be  included  in  the  compensation  insurance  contract  or
covered  under  a  certificate of self-insurance. Such election shall be
made by any such partnership, sole  proprietorship,  registered  limited
liability partnership, limited liability company or professional service
limited liability company filing with the insurance carrier or the chair
in  the  case  of  self-insurance upon a form prescribed by the chair, a
notice that the partnership,  sole  proprietorship,  registered  limited
liability partnership, limited liability company or professional service
limited  liability  company elects to include the partner, partners, the
self-employed person or member named in the notice in  the  coverage  of
this  chapter.  Such  election  shall  be  effective with respect to all
policies issued to such  partnership,  sole  proprietorship,  registered
limited liability partnership, limited liability company or professional
service  limited  liability company by such insurance carrier as long as
it shall continuously insure the  employees  of  the  partnership,  sole
proprietorship,   registered   limited  liability  partnership,  limited
liability company or professional  service  limited  liability  company.
Such election shall be final and binding upon the partner, self-employed
person  or  member named in the notice until revoked by the partnership,
sole proprietorship, registered limited liability  partnership,  limited

liability  company  or professional service limited liability company. A
self-employed person, a  partner  of  a  partnership,  a  partner  of  a
registered   limited  liability  partnership,  a  member  of  a  limited
liability  company  or  a  member  of  a  professional  service  limited
liability company having no other persons who are employees required  to
be  covered  under  this  chapter  shall  be  deemed to be excluded from
coverage under this chapter unless he or she elects to be covered.  Such
coverage may be effected by obtaining an insurance policy.
The  self-employed  persons,  partners of a partnership, partners of a
registered limited liability partnership, members of a limited liability
company or members of a professional service limited  liability  company
brought   within  the  coverage  of  the  insurance  contract,  and  the
dependents of any such self-employed persons, partners of a partnership,
partners of a registered limited liability  partnership,  members  of  a
limited  liability  company or members of a professional service limited
liability company shall  have  the  same  rights  and  remedies  as  any
employee  or his or her dependents and shall be entitled to compensation
and medical care as provided by this chapter, and the insurance  carrier
shall  be  liable  therefor  and  for  payments  into  the special funds
provided in this chapter as in the case of an employee.