2023 New York Laws › ISC - Insurance › Article 34 - Insurance Contracts-Property/casualty › 3427 - Gap Insurance; Cancellation, Renewal and Other Provisions.

§ 3427. Gap insurance; cancellation, renewal and other provisions. (a)
Definitions. As used in this section:
(1)  "Covered policy" means, for purposes of this section, a policy or
contract of gap insurance, issued or issued for delivery in this  state,
on a risk located or resident in this state.
(2)  "Nonpayment of premium" means the failure of the named insured to
discharge any obligations in connection with the payment of premiums  on
a  policy  of  insurance or any installment of such premium, whether the
premium is payable directly to the insurer or its agent,  or  indirectly
under  any  premium  finance plan or extension of credit. Payment to the
insurer, or to an agent or broker authorized to  receive  such  payment,
shall  be  timely,  if made within fifteen days after the mailing to the
insured of a notice of cancellation for nonpayment of premium.
(b) Lessor gap insurance:
(1) A covered policy of lessor gap insurance shall be subject  to  all
the provisions of section three thousand four hundred twenty-six of this
article, except as otherwise provided in this section.
(2)  Subject  to  the notice requirements of subsection (c) of section
three thousand four hundred twenty-six of this article, a covered policy
of lessor gap insurance may be cancelled only for:
(A)  one  or  more  of  the  bases  for  cancellation  set  forth   in
subparagraphs  (A)  through (D), and (F) through (H) of paragraph one of
subsection (c) of section three thousand four hundred twenty-six of this
article;
(B) material change in the nature or extent  of  the  risk,  occurring
after  issuance  or  last annual renewal anniversary date of the policy,
which causes the  risk  of  loss  to  be  substantially  and  materially
increased  beyond that contemplated at the time the policy was issued or
last renewed; or
(C) if the policy automatically provides coverage for the  gap  amount
waived  under  new leases entered into by the lessor, or acquired by the
lessor's assignee, the lessor's or assignee's (whichever is the insured)
failure to provide, within sixty days or as otherwise specified  in  the
policy,  the  insurer with the name and address of each lessee and other
information reasonably required by the insurer.
(c) Lessee gap insurance: (1) Except as provided in this section,  the
provisions of sections three thousand four hundred twenty-five and three
thousand  four  hundred  twenty-six of this article shall not apply to a
covered policy of lessee gap insurance.
(2) During the first  sixty  days  a  covered  policy  of  lessee  gap
insurance is initially in effect, no cancellation shall become effective
until  twenty  days  after  written  notice is mailed to the first named
insured at the mailing address shown in the policy, except for the bases
for cancellation set forth in subparagraphs (A) through (H) of paragraph
one of subsection (c) of section three thousand four hundred  twenty-six
of this article for which fifteen days notice shall be given.
(3)  After a covered policy of lessee gap insurance has been in effect
for sixty days, or on or after the effective date if  the  policy  is  a
renewal,  no  cancellation  or  nonrenewal  shall become effective until
fifteen days after written notice is mailed or delivered  to  the  first
named   insured   at  the  mailing  address  shown  in  the  policy  and
cancellation or nonrenewal is conditioned upon the  termination  of  the
lease  for  reasons  other  than  a  total loss of the personal property
caused by its theft or physical damage, or is based on one  or  more  of
the  reasons set forth in subparagraphs (A) through (H) of paragraph one
of subsection (c) of section three thousand four hundred  twenty-six  of
this  article;  except  that where the lease is for ten years or longer,
the policy may be cancelled or nonrenewed forty-five days after  written

notice  is mailed or delivered to the first named insured at the mailing
address shown in the policy if the cancellation or nonrenewal is  to  be
effective  upon  the  tenth  anniversary  date  of  the  policy  or  any
subsequent annual anniversary date.
(4) If the policy is not issued for a term coextensive with the length
of  the  lease,  the insurer shall renew it for successive terms for the
duration of the lease, unless cancelled or nonrenewed in accordance with
the provisions of this subsection.
(d) Creditor gap insurance:
(1) A covered policy of creditor gap insurance shall be subject to all
the provisions of section three thousand four hundred twenty-six of this
article, except as otherwise provided in this section.
(2) Subject to the notice requirements of subsection  (c)  of  section
three thousand four hundred twenty-six of this article, a covered policy
of creditor gap insurance may be cancelled only for:
(A)   One  or  more  of  the  bases  for  cancellation  set  forth  in
subparagraphs (A) through (D), and (F) through (H) of paragraph  one  of
subsection (c) of section three thousand four hundred twenty-six of this
article;
(B)  Material  change  in  the nature or extent of the risk, occurring
after issuance or last annual renewal anniversary date  of  the  policy,
which  causes  the  risk  of  loss  to  be  substantially and materially
increased beyond that contemplated at the time the policy was issued  or
last renewed; or
(C)  If  the policy automatically provides coverage for the gap amount
waived under new loans or other credit transactions entered into by  the
creditor  or  acquired  by  the  creditor's  assignee, the creditor's or
assignee's (whichever is the insured) failure to provide,  within  sixty
days  or as otherwise specified in the policy, the insurer with the name
and address of each debtor and other information reasonably required  by
the insurer.
(e) Debtor gap insurance:
(1)  Except  as  provided  in this section, the provisions of sections
three thousand four hundred twenty-five and three thousand four  hundred
twenty-six of this article shall not apply to a covered policy of debtor
gap insurance.
(2)  During  the  first  sixty  days  a  covered  policy of debtor gap
insurance is initially in effect, no cancellation shall become effective
until twenty days after written notice is  mailed  to  the  first  named
insured at the mailing address shown in the policy, except for the bases
for cancellation set forth in subparagraphs (A) through (H) of paragraph
one  of subsection (c) of section three thousand four hundred twenty-six
of this article for which fifteen days notice shall be given.
(3) After a covered policy of debtor gap insurance has been in  effect
for  sixty  days,  or  on or after the effective date if the policy is a
renewal, no cancellation or  nonrenewal  shall  become  effective  until
fifteen  days  after  written notice is mailed or delivered to the first
named  insured  at  the  mailing  address  shown  in  the   policy   and
cancellation  or  nonrenewal  is conditioned upon the termination of the
loan for reasons other than a total loss of the personal property caused
by its theft or physical damage, or is based  on  one  or  more  of  the
reasons  set  forth in subparagraphs (A) through (H) of paragraph one of
subsection (c) of section three thousand four hundred twenty-six of this
article; except that where the loan or other credit transaction  is  for
ten  years  or  longer,  the  policy  may  be  cancelled  or  nonrenewed
forty-five days after written notice is mailed or delivered to the first
named insured at  the  mailing  address  shown  in  the  policy  if  the

cancellation or nonrenewal is to be effective upon the tenth anniversary
date of the policy or any subsequent annual anniversary date.
(4) If the policy is not issued for a term coextensive with the length
of  the loan or other credit transaction, the insurer shall renew it for
successive  terms  for  the  duration  of  the  loan  or  other   credit
transaction,  unless  cancelled  or  nonrenewed  in  accordance with the
provisions of this subsection.
(f) For purposes of this  section,  "property  insured",  as  used  in
subparagraphs  (E) and (H) of paragraph one of subsection (c) of section
three thousand four  hundred  twenty-six  of  this  article,  means  the
property  which  is  the  subject  of  the lease or loan or other credit
transaction.
(h) Every notice of cancellation issued pursuant to this section shall
specify the grounds for cancellation.
(i) If a lessor, creditor or assignee charges the lessee or debtor for
the waiver of the gap amount, the lessor or creditor, or, in the absence
of a waiver by the creditor or lessor, the  assignee,  as  part  of  the
waiver  offer,  shall  provide  the  lessee  or  debtor  with  a  notice
specifying the name of  the  insurer  that  has  issued  the  lessor  or
creditor  gap  insurance  policy, the cost of the lessor or creditor gap
insurance coverage, and the charge for the  waiver.  Any  person  having
been  found,  after  notice  and hearing, to have wilfully violated this
subsection shall be liable to the people  of  this  state  for  a  civil
penalty in a sum not exceeding five hundred dollars for each violation.
(j)   Notwithstanding   any  other  provision  of  this  chapter,  the
cancellation and nonrenewal provisions of this section shall apply  only
to  the  gap  insurance  provisions  of  a  policy or contract that also
provides other  coverages  and  the  gap  insurance  coverage  shall  be
severable  from the other coverages for the purposes of cancellation and
nonrenewal; except that lessor or debtor gap insurance coverage included
within a  policy  insuring  a  mobile  home  shall  be  subject  to  the
cancellation  and  nonrenewal requirements applicable to the mobile home
policy.
(k) Notwithstanding section three thousand four hundred thirty-five of
this article, a covered policy of lessor or creditor gap insurance  that
insures  a  lessor  or creditor and the lessor's or creditor's assignees
shall not be considered a group insurance policy.
(l) The superintendent may  prescribe  by  regulation  minimum  policy
provisions  for  gap  insurance  which  the  superintendent  deems to be
necessary  or  appropriate  for  lessor  gap  insurance,  creditor   gap
insurance,  lessee  gap  insurance and debtor gap insurance contracts or
policies.