New legislation (S.7052) that would require complete disclosure of a defendant’s insurance documents in a personal-injury court case passed the state Senate and state Assembly on the last day of New York’s 2021 legislative session.
What the bill would require
If it is signed into law, this bill would establish the Comprehensive Insurance Disclosure Act, which would require a defendant involved in a personal-injury case to disclose all policies implicated in the case—including information on any and all primary, excess or umbrella policies. After the defendant answers the plaintiff’s complaint, the defendant would have 60 days to disclose these policies.
For example …
A woman (the plaintiff) allegedly slips and falls at a local grocery store (the defendant). The woman files a suit against the grocery store. The grocery store has 30 days to respond to the suit, indicating whether it takes responsibility for the alleged negligence, which—allegedly—caused the woman to fall.
After the defendant answers the complaint filed by the plaintiff—if the Comprehensive Insurance Disclosure Act is signed into law—the defendant would be granted just 60 days to produce all of its insurance documents and applications that are implicated in the case.
Why PIANY opposes
PIANY and other industry associations oppose this bill because it would require the disclosure of insurance applications.
Most commercial-lines applications show an insured’s gross revenue—among other important financial data—and personal-lines applications usually show an insured’s annual gross earnings. Even though the insurance application does not provide further information about coverage limits or policy exclusions—information that would be important in an insurance-related court case—this bill would require sensitive, private and personal data to be disclosed.
And, many insurance applications include information for multiple insureds, some of which might not be involved in the case. If the insurance application is required to be disclosed, then personal information of those not involved in the case could be considered “free” discovery for a plaintiff to determine that a defendant in an insurance-related court case has assets outside of an insurance agreement to satisfy a potential judgment.
Additionally, the 60-day timeframe given to a personal-injury defendant to disclose this insurance information would not allow enough time to determine which policies may be impacted. The time limit also could require the defendant to turn over extensive information relative to all of their policies, even if those policies aren’t implicated in the case.
The bill also would require the defendant to continue updating their insurance information throughout the litigation. This could be impossible. Most personal-injury defendants do not have the ability to analyze all of their coverages, and determine the existence or order of coverage within 60 days of responding to a lawsuit, and within 30 days of any changes in coverage going into effect.
Essentially, this bill would allow a plaintiff’s attorneys to engage in an unreasonable fishing expedition for any potential insurance coverage, and could result in inflated demands based on the dollar amount of policy limits, regardless of whether those policies even provide coverage in a particular case.
CPLR Section 3101
Currently, Civil Practice Law and Rules Section 3101 already requires a personal-injury defendant to disclose insurance agreements—both primary and excess policies—as part of the discovery process of litigation. Furthermore, as part of New York’s board discovery rules, it is routine for the erosion of limits—whether by judgment, settlement, or defense expenses within limits—to be disclosed.
PIANY is unaware of any such problems with the current system, so the association doesn’t see the need for this bill’s extreme changes to the process.
PIANY is dedicated to preventing this bill from becoming law as it is written currently. In the off-session, the association is working with other agent and carrier associations to educate Gov. Andrew M. Cuomo and his staff about the dangers of this bill.
These efforts most likely will include an advocacy campaign in which PIANY calls up its members to contact the governor’s office to share why this bill could harm their clients.
Katherine “Kat” Slye-Hernandez, Ph.D.
Katherine “Kat” Slye-Hernandez received her Ph.D. in political science from the State University of Albany, Albany, N.Y., in May 2020. She also has her Master of Arts from SUNY Albany and a Bachelor of Arts degree in Political Science and History from Elmira College, Elmira, N.Y.