Alliance: Veto Spousal Liability Insurance Bill

A10456 passed both legislative houses and awaits Gov. Pataki's signature before it can take effect.

Under current New York law, insurers have the option of offering supplemental spousal coverage for automobile-related injuries suffered by a spouse as a result of the culpable conduct of the other spouse. Recovery is limited to mandatory no-fault coverage.

In contrast, the measure's legislative history states that A10456 is meant to update the 65-year-old law by requiring insurers to notify insureds of statutory limitations on excess liability coverage for injuries or death caused by an insured to his or her spouse.

The measure also makes available, at the request of the insured and upon payment of a premium, so-called "supplemental spousal liability insurance,"?which is in excess of no-fault coverage?for injuries caused by the insured to his or her spouse.

Mr. Cucci said it was "due to the danger of potential collusive and fraudulent conduct between spouses" that insurers in New York have independently elected to not offer this type of coverage.

The legislative history indicates that no insurer in New York offers supplemental spousal liability insurance.

It further notes that the state's highest court has rejected the danger-of-collusion argument in regard to a former common-law rule barring suits between other family members. In fact, the observation is made that only Louisiana and Georgia have rejected the collusion argument with regard to interspousal torts.

The legislative history also states that New York is the only state with a specific statute authorizing insurers to deny excess liability coverage against claims by spouses of negligent insureds without notice or a written exclusion in the policy.

But Mr. Cucci said that "while sponsors of this bill have cited the broad availability of this type of coverage in other states," many other states allow each insurer to determine whether or not it will offer the coverage.

Mr. Cucci cited the "dramatic increase in the number of fraudulent motor vehicle insurance claims" in New York as "creating a significant burden on the vast majority" of law-abiding New Yorkers "in the form of significantly more expensive auto insurance."

He observed that the Pataki Administration has worked "assiduously" to combat these abuses through regulatory reforms and proposed legislation.

"The Alliance applauds its efforts and urges rejection of this stand-alone bill," Mr. Cucci said. He suggested that if the coverage under A10456 is deemed necessary, it should be considered only "as part of an omnibus bill that reduces, rather than exacerbates, fraud in New York."