There is a newer version of the New York Consolidated Laws
2006 New York Code - Credit Card, Debit Card, Or Checking Account Group Policies.
* § 3442. Credit card, debit card, or checking account group policies.
(a) For purposes of this section, unless the context requires otherwise:
(1) "Account group member" means a person:
(A) to whom a credit card account or debit card account is issued by a
sponsor or who has agreed with the sponsor to pay obligations arising
from the use of a credit card or debit card issued to another person; or
(B) who may access by check an account maintained by the sponsor.
(2) "Account group policy" means a group policy, including
certificates issued to the group members, where the group policyholders,
and each additional group policyholder, if any, is:
(A) a sponsor and the policy's group members are its account group
members or other authorized users of the account group member's payment
medium; or
(B) an interchange organization, or the trustee or trustees of a trust
established, or participated in, by one or more interchange
organizations or one or more sponsors who are members of the interchange
organization, where the policy's group members are the authorized users
of the payment medium administered by the interchange organization or by
its member sponsors.
(3) "Authorized user" means a group member or any other person
designated by the group member as an authorized user of the account
group member's payment medium.
(4) "Beneficiary" means an authorized user of a payment medium or any
other person who is a recipient of the benefits of the payment medium
who is designated as an additional insured under an account group
policy.
(5) "Certificate" or "certificate of insurance" means any policy,
contract, or other evidence of insurance, or rider or endorsement
thereto, issued to a group member under an account group policy.
(6) "Check" means a check, draft, credit union share draft, negotiable
order of withdrawal, or other written, electronic or telephonic order
but does not include a traveler's check.
(7) "Commercial creditor" means a corporation, partnership,
association or other organization that, as part of its vocation, extends
credit by making loans, issuing credit cards, or otherwise, including:
(A) a bank, trust company, savings bank, savings and loan association,
or credit union, as those terms are defined in section two of the
banking law;
(B) a national bank, federal savings bank, federal savings and loan
association, or federal credit union, as those terms are defined in
title twelve of the United States Code;
(C) a foreign banking corporation licensed to maintain a branch or
agency in New York under article five of the banking law or title twelve
of the United States Code;
(D) a creditor, as defined in section one thousand six hundred two of
title fifteen of the United States Code;
(E) an issuer of a credit card, within the meaning of article
twenty-nine-A of the general business law;
(F) a transmitter of money, within the meaning of article thirteen-A
of the banking law; or
(G) a retailer.
(8) "Conditional renewal" means change of limits, change in type of
coverage, reduction or elimination of coverage, increased deductible or
addition of exclusion, or increased premiums in excess of ten percent
(exclusive of any premium increase generated as a result of increased
exposure units or as a result of experience rating, loss rating,
retrospective rating, or audit).
(9) "Credit card" means a payment medium that takes the form of a
credit card, credit plate, charge plate, courtesy card, or other
identification card or device, issued by a sponsor to an account group
member (or a check drawn by an authorized user against the credit card
account), which an authorized user may use to obtain a loan, credit, or
cash advance, or to purchase, hire, rent or lease property or services.
(10) "Debit card" means a payment medium that takes the form of a
card, plate, or other identification card or device, issued by an issuer
to an account group member who is an owner of a deposit account
maintained by the issuer, which an authorized user drawing upon the
deposit account may use to purchase, hire, rent or lease property or
services. "Debit card" does not include a credit card or a check.
(11) "Group member" means an account group member who is insured under
the account group policy.
(12) "Interchange organization" means a person that administers a
payment medium for the benefit of one or more sponsors and the sponsor's
account group members.
(13) "Motor vehicle" means a motor vehicle as defined in section three
hundred eleven of the vehicle and traffic law, whether or not used on a
public highway, and includes a snowmobile as defined in section two
thousand two hundred twenty-one of the vehicle and traffic law.
(14) "Payment medium" means a credit card, debit card or check.
(15) "Person" includes an individual, corporation, partnership,
association, or other legal entity.
(16) "Sponsor" means:
(A) a commercial creditor that issues a credit card or debit card to
its account group members;
(B) a commercial creditor that maintains an account which may be
accessed by check by the commercial creditor's account group members; or
(C) the trustee or trustees of a trust established, or participated
in, by one or more commercial creditors for the benefit of the
commercial creditor's account group members.
(b) An account group policy or certificate may be issued or issued for
delivery in this state only in compliance with the provisions of this
section.
(c) Coverage under an account group policy shall extend only to
beneficiaries and shall be associated with the direct use or employment
of a payment medium by an authorized user to purchase, hire, lease or
rent property or services.
(d) An account group policy may provide only one or more of the
following property/casualty insurance coverages, subject to the
following limitations:
(1) Loss of or damage to personal property, other than loss of use or
loss resulting from a defect in materials or workmanship, where:
(A) the article of personal property is owned by;
(i) an authorized user; or
(ii) a beneficiary other than an authorized user, if coverage is
provided under the account group policy to the beneficiary as an
additional insured;
(B) the article of personal property is purchased using the account
group member's payment medium;
(C) the amount of coverage is limited to the amount charged, debited,
or drawn, unless the insurer repairs or replaces the article of personal
property, but in no event shall the coverage exceed ten thousand dollars
per article and fifty thousand dollars in the aggregate per group member
per policy year;
(D) the period of coverage for each article of personal property does
not exceed ninety days from date of purchase; and
(E) the coverage is excess over any other valid and collectible
insurance covering the same article of personal property, except that
the coverage need not be excess over insurance issued pursuant to this
paragraph.
(2) Obligation to a person engaged in the business of renting or
leasing motor vehicles, for loss of or damage to a motor vehicle rented
or leased from that person, where:
(A) the obligation is incurred by:
(i) an authorized user; or
(ii) another person driving the motor vehicle with the authorized
user's permission, if coverage under the account group policy is
provided to such beneficiary as an additional insured;
(B) the rental or lease of the motor vehicle is paid wholly by means
of the account group member's payment medium;
(C) the period of the rental or lease coverage does not exceed:
(i) forty-five consecutive days where the payment medium used for the
rental or lease was a credit card issued to an account group member that
is an employee of a person that has contracted with a sponsor to provide
credit cards to the person's employees primarily for business use; or
(ii) thirty-one consecutive days for all other authorized users;
(D) the coverage is excess over any other valid and collectible
insurance covering the same motor vehicle, except that the coverage may
be primary for motor vehicle rentals or leases:
(i) when the motor vehicle is used outside the United States, its
territories and possessions; or
(ii) where the payment medium used for the rental or lease was a
credit card issued to an account group member that is an employee of a
person that has contracted with a sponsor to provide credit cards to the
person's employees primarily for business use; or
(E) the motor vehicle is rented or leased without a driver.
(3) Loss of, damage to, or loss of use of baggage and its contents,
where:
(A) (i) the authorized user owns or uses the baggage and its contents,
and the loss, damage, or loss of use occurs in connection with the
authorized user being in transit; or
(ii) a beneficiary other than an authorized user owns or uses the
baggage and its contents, and the loss, damage, or loss of use occurs
while in connection with that beneficiary being in transit, if coverage
under the policy is provided in regard to the beneficiary as an
additional insured;
(B) the account group member's payment medium is used to obtain
transportation or accommodations for the owner of the baggage and its
contents, in connection with that owner being in transit; and
(C) the amount of coverage does not exceed two thousand dollars per
bag, including contents, and ten thousand dollars in the aggregate for
all insureds per trip.
(4) Loss of, damage to, or loss of use of personal property resulting
from a defect in materials or workmanship in that property, where:
(A) the article of personal property is owned by:
(i) an authorized user; or
(ii) a beneficiary other than an authorized user, if coverage is
provided under the account group policy to the beneficiary as an
additional insured;
(B) the article of personal property is purchased by means of the
account group member's payment medium;
(C) the amount of coverage is limited to the amount charged, debited,
or drawn, but in no event shall exceed ten thousand dollars; and
(D) the article of personal property has one or more warranties issued
by a manufacturer, distributor or seller.
(5) Loss of, damage to, or loss of use of personal property occurring
in connection with the use of rented or leased motor vehicles where:
(A) the article of personal property is owned by:
(i) an authorized user; or
(ii) a beneficiary other than an authorized user if coverage is
provided under the account group policy to the beneficiary as an
additional insured;
(B) the rental or lease of the motor vehicle is paid for wholly by
means of the account group member's payment medium;
(C) the period of coverage does not exceed the lesser of:
(i) the rental or lease period; or
(ii) forty-five consecutive days where the payment medium used for the
rental or lease was a credit card issued to an account group member that
is an employee of an entity that has contracted with a sponsor to
provide credit cards to the entity's employees primarily for business
use; or thirty-one consecutive days for all other authorized users;
(D) the motor vehicle is rented or leased without a driver; and
(E) the amount of the coverage does not exceed five thousand dollars.
(6) Losses incurred in connection with the unauthorized use of a
payment medium, where:
(A) one or more individuals are designated authorized users of a
payment medium by virtue of their status as employees of a group member
in accordance with procedures established by such group member for
authorized use of the payment medium;
(B) the group member that employs such authorized users has agreed
with another group member to pay obligations arising from the use of
such payment medium by such authorized users;
(C) an authorized user uses such payment medium in a manner that is
unauthorized by the group member that employs the authorized user;
(D) the obligation of the group member that employs the authorized
users to such other group member, pursuant to the agreement described in
subparagraph (B) of this paragraph for a loss incurred in connection
with use in an unauthorized manner, is discharged by payment of the
insurance benefit to such other group member;
(E) the amount of coverage shall be limited to the amount of the loss,
but in no event shall exceed fifteen thousand dollars; and
(F) for purposes of this paragraph only, the term "group member" shall
include (i) those entities specified in subparagraphs (A) through (F) of
paragraph seven of subsection (a) of this section which are insureds
under the insurance described in subparagraph (D) of this paragraph, and
(ii) employers of account group members who are designated authorized
users of a payment medium by virtue of their employee status.
(7) Coverages which in the opinion of the superintendent are
determined to be substantially similar to one of the foregoing coverages
specified in paragraphs one through six of this subsection and thereupon
for purposes of this section shall be deemed to be permissible.
(e) (1) An account group policy shall not cover a motor vehicle,
except in regard to coverage under paragraph two of subsection (c) of
this section.
(2) An account group policy shall not be considered a motor vehicle
policy for purposes of this chapter.
(f) The premium for the account group policy, including certificates,
may be paid by the group policyholder from funds contributed:
(1) wholly by the group policyholder;
(2) wholly by the group members; or
(3) jointly by the group policyholder and group members.
(g) (1) Any policy dividend, retrospective premium credit, or
retrospective premium refund in respect of premiums paid by the group
policyholder may:
(A) be applied to reduce the premium contribution of the group
policyholder, but not in excess of the proportion to its contribution;
or
(B) be retained by the group policyholder.
(2) Any policy dividend, retrospective premium credit, or
retrospective premium refund not distributed under paragraph one of this
subsection shall be:
(A) applied to reduce future premiums and, accordingly, future
contributions, of existing or future group members, or both; or
(B) paid or refunded to those group members insured on the date the
payment or refund is made to the group policyholder, if distributed by
the group policyholder, or on the date of mailing, if distributed
directly by the insurer, subject to the following requirements:
(i) the insurer shall be responsible for determining the allocation of
the payment or refund to the group members;
(ii) if the group policyholder distributes the payment or refund, the
insurer shall be responsible for audit to ascertain that the payment or
refund is actually made in accordance with the allocation procedure; and
(iii) if the group policyholder fails to make the payment or refund,
the insurer shall make the payment or refund directly or use the method
provided in subparagraph (A) of this paragraph.
(3) Notwithstanding paragraphs one and two of this subsection, if a
dividend accrues upon termination of coverage under an account group
policy, the premium for which was paid out of funds contributed by group
members specifically for the coverage, the dividend shall be paid or
refunded by the group policyholder to the group members insured on the
date the payment or refund is made to the group policyholder, net of
reasonable expenses incurred by the group policyholder in paying or
refunding the dividend to such group members.
(4) For the purposes of this subsection, "dividend" means a return by
an insurer to a group policyholder of excess premiums paid by that group
policyholder in light of favorable loss experience, including
retrospective premium credits or retrospective premium refunds. The term
"dividend" does not include reimbursements or fees received by a group
policyholder in connection with the operation or administration of an
account group policy, including administrative reimbursements, fees for
services provided by the group policyholder, or transactional service
fees.
(h) The insurer must treat in like manner all eligible account group
members of the same class and account status.
(i) The group shall consist of at least one thousand members.
(j) An account group policy or certificate shall not be eligible for
placement by an excess line broker licensed pursuant to article
twenty-one of this chapter.
(k) Coverage provided under an account group policy or certificate
issued pursuant to paragraph four of subsection (d) of this section
shall be deemed miscellaneous property insurance, as enumerated in
paragraph five of subsection (a) of section one thousand one hundred
thirteen of this chapter.
(l) (1) The insurer shall be responsible for the mailing or delivery
of a certificate of insurance to each group member insured under the
account group policy. The insurer shall also be responsible for the
mailing or delivery to each group member of an amended certificate of
insurance, or endorsement to the certificate, whenever there is a change
of limits; change in type of coverage; addition, reduction, or
elimination of coverage; or addition of exclusion, under the account
group policy or certificate.
(2) The certificate shall contain in substance all material terms and
conditions of coverage afforded to the group member, unless the account
group policy is incorporated by reference and a copy of the group policy
accompanies the certificate.
(3) If coverage afforded to the group member is excess of other
applicable insurance coverage, the certificate shall contain a notice
advising the group member that, if the member has other insurance
coverage, specified coverages under the account group policy will be
excess over the other insurance.
(m) A group policyholder shall comply with the provisions of section
two thousand one hundred twenty-two of this chapter, in the same manner
as an agent or broker, in any advertisement, sign, pamphlet, circular,
card, or other public announcement referring to coverage under an
account group policy or certificate.
(n) An account group policy or certificate shall not be subject to
section three thousand four hundred twenty-five or section three
thousand four hundred twenty-six of this article. The following
requirements shall apply in regard to termination of coverage:
(1) (A) An account group policy or certificate may be cancelled by an
insurer only if cancellation is based on one or more of the reasons set
forth in subparagraphs (A) through (D) or (F) through (H) of paragraph
one of subsection (c) of section three thousand four hundred twenty-six
of this article; provided, however, that an act or omission by a group
member which would constitute the basis for cancellation of an
individual certificate shall not constitute the basis for cancellation
of the account group policy.
(B) Where the premium is derived wholly from funds contributed by the
group policyholder, an individual certificate may be cancelled by the
insurer only if cancellation is based on one or more of the reasons set
forth in subparagraph (B), (C) or (H) of paragraph one of subsection (c)
of section three thousand four hundred twenty-six of this article.
(2) (A) An insurer's cancellation of an account group policy,
including all certificates, shall not become effective until fifteen
days after the insurer mails or delivers written notice of cancellation
to the group policyholder at the mailing address shown in the policy.
(i) Where all or part of the premium is derived from funds contributed
by a group member specifically for the coverage, written notice of
cancellation of the account group policy shall also be mailed or
delivered by the insurer to the group member at the group member's
mailing address.
(ii) Where none of the premium is derived from funds contributed by a
group member specifically for the coverage, the group policyholder shall
mail or deliver written notice to the group member advising the group
member of the cancellation of the account group policy and the effective
date of cancellation. The written notice shall be mailed or delivered by
the group policyholder within ninety days after receiving notice of
cancellation from the insurer.
(B) An insurer's cancellation of an individual certificate shall not
become effective until fifteen days after the insurer mails or delivers
written notice of cancellation to the group member at the group member's
mailing address and to the group policyholder at the mailing address
shown in the account group policy.
(C) (i) A group policyholder may cancel an account group policy,
including all certificates, or any individual certificate, for any
reason upon thirty days written notice to the insurer and each group
member; and
(ii) The group policyholder shall mail or deliver written notice to
each affected group member of the group policyholder's cancellation of
the account group policy or certificate and the effective date of
cancellation. Such written notice shall be mailed or delivered to the
group member's mailing address at least thirty days prior to the
effective date of the cancellation.
(3) (A) Unless an account group policy provides for a longer policy
period, the policy and all certificates shall be issued or renewed for a
one-year policy period.
(B) The group policyholder shall be entitled to renew the account
group policy and all certificates upon timely payment of the premium
billed to the group policyholder for the renewal, unless:
(i) the insurer mails or delivers to the group policyholder and all
group members written notice of nonrenewal, or conditional renewal; and
(ii) the written notice is mailed or delivered at least thirty, but
not more than one hundred twenty days prior to the expiration date
specified in the policy or, if no date is specified, the next
anniversary date of the policy.
(C) Notwithstanding subparagraph (A) of this paragraph, an account
group policy insuring an experimental program that is test marketed for
a period of one hundred twenty days or less may be issued for that
policy period. The provisions of subparagraph (B) of this paragraph
shall not apply if the group members were previously notified of the
expiration date of the account group policy.
(4) (A) Where the account group policy is nonrenewed by the group
policyholder, the group policyholder shall mail or deliver written
notice to each group member advising the group member of nonrenewal of
the account group policy and the effective date of nonrenewal. The
written notice shall be mailed or delivered by the group policyholder at
least thirty days prior to the nonrenewal.
(B) The provisions of subparagraph (A) of this paragraph shall not
apply in the case of a sponsor's nonrenewal in connection with an
account group policy insuring an experimental program test marketed for
a period of one hundred twenty days or less, if the group members were
previously notified of the expiration date of the account group policy.
(5) Every notice of cancellation, nonrenewal, or conditional renewal
shall contain the specific reason or reasons for cancellation,
nonrenewal, or conditional renewal.
(6) (A) An insurer shall not be required under this subsection to give
notice to a group member if the insurer has been advised by either the
group policyholder or another insurer that substantially similar
coverage has been obtained from the other insurer without lapse of
coverage.
(B) A group policyholder shall not be required under this subsection
to give notice to a group member if substantially similar coverage has
been obtained from another insurer without lapse of coverage.
(7) (A) If, prior to the effective date of cancellation, nonrenewal,
or conditional renewal of the account group policy, or a certificate,
whether initiated by the insurer, group policyholder or by the group
member in regard to the group member's certificate, coverage attaches
pursuant to the terms of an account group policy providing insurance of
one or more of the types enumerated in this section, then the coverage
shall be effective until expiration of the applicable period of coverage
provided in the account group policy notwithstanding the cancellation,
nonrenewal or conditional nonrenewal of the account group policy.
(B) Notwithstanding subparagraph (A) of this paragraph, an insurer may
terminate coverage under an individual certificate on the effective date
of cancellation, if the certificate is cancelled in accordance with the
provisions of subparagraph (B) of paragraph one of this subsection.
* NB Repealed December 31, 2006
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