§ 3442 — Credit card, debit card, or checking account group policies

New York § 3442

• Jurisdiction: New York
• Law ISC: Insurance
• Art. 34: Insurance Contracts-property/casualty

Text

§ 3442. Credit card, debit card, or checking account group policies.\n(a) For purposes of this section, unless the context requires otherwise:\n (1) "Account group member" means a person:\n (A) to whom a credit card account or debit card account is issued by a\nsponsor or who has agreed with the sponsor to pay obligations arising\nfrom the use of a credit card or debit card issued to another person; or\n (B) who may access by check an account maintained by the sponsor.\n (2) "Account group policy" means a group policy, including\ncertificates issued to the group members, where the group policyholders,\nand each additional group policyholder, if any, is:\n (A) a sponsor and the policy's group members are its account group\nmembers or other authorized users of the account group member's payment\nmedium; or\n (B) an interchange organization, or the trustee or trustees of a trust\nestablished, or participated in, by one or more interchange\norganizations or one or more sponsors who are members of the interchange\norganization, where the policy's group members are the authorized users\nof the payment medium administered by the interchange organization or by\nits member sponsors.\n (3) "Authorized user" means a group member or any other person\ndesignated by the group member as an authorized user of the account\ngroup member's payment medium.\n (4) "Beneficiary" means an authorized user of a payment medium or any\nother person who is a recipient of the benefits of the payment medium\nwho is designated as an additional insured under an account group\npolicy.\n (5) "Certificate" or "certificate of insurance" means any policy,\ncontract, or other evidence of insurance, or rider or endorsement\nthereto, issued to a group member under an account group policy.\n (6) "Check" means a check, draft, credit union share draft, negotiable\norder of withdrawal, or other written, electronic or telephonic order\nbut does not include a traveler's check.\n (7) "Commercial creditor" means a corporation, partnership,\nassociation or other organization that, as part of its vocation, extends\ncredit by making loans, issuing credit cards, or otherwise, including:\n (A) a bank, trust company, savings bank, savings and loan association,\nor credit union, as those terms are defined in section two of the\nbanking law;\n (B) a national bank, federal savings bank, federal savings and loan\nassociation, or federal credit union, as those terms are defined in\ntitle twelve of the United States Code;\n (C) a foreign banking corporation licensed to maintain a branch or\nagency in New York under article five of the banking law or title twelve\nof the United States Code;\n (D) a creditor, as defined in section one thousand six hundred two of\ntitle fifteen of the United States Code;\n (E) an issuer of a credit card, within the meaning of article\ntwenty-nine-A of the general business law;\n (F) a transmitter of money, within the meaning of article thirteen-A\nof the banking law; or\n (G) a retailer.\n (8) "Conditional renewal" means change of limits, change in type of\ncoverage, reduction or elimination of coverage, increased deductible or\naddition of exclusion, or increased premiums in excess of ten percent\n(exclusive of any premium increase generated as a result of increased\nexposure units or as a result of experience rating, loss rating,\nretrospective rating, or audit).\n (9) "Credit card" means a payment medium that takes the form of a\ncredit card, credit plate, charge plate, courtesy card, or other\nidentification card or device, issued by a sponsor to an account group\nmember (or a check drawn by an authorized user against the credit card\naccount), which an authorized user may use to obtain a loan, credit, or\ncash advance, or to purchase, hire, rent or lease property or services.\n (10) "Debit card" means a payment medium that takes the form of a\ncard, plate, or other identification card or device, issued by an issuer\nto an account group member who is an owner of a deposit account\nmaintained by the issuer, which an authorized user drawing upon the\ndeposit account may use to purchase, hire, rent or lease property or\nservices. "Debit card" does not include a credit card or a check.\n (11) "Group member" means an account group member who is insured under\nthe account group policy.\n (12) "Interchange organization" means a person that administers a\npayment medium for the benefit of one or more sponsors and the sponsor's\naccount group members.\n (13) "Motor vehicle" means a motor vehicle as defined in section three\nhundred eleven of the vehicle and traffic law, whether or not used on a\npublic highway, and includes a snowmobile as defined in section two\nthousand two hundred twenty-one of the vehicle and traffic law.\n (14) "Payment medium" means a credit card, debit card or check.\n (15) "Person" includes an individual, corporation, partnership,\nassociation, or other legal entity.\n (16) "Sponsor" means:\n (A) a commercial creditor that issues a credit card or debit card to\nits account group members;\n (B) a commercial creditor that maintains an account which may be\naccessed by check by the commercial creditor's account group members; or\n (C) the trustee or trustees of a trust established, or participated\nin, by one or more commercial creditors for the benefit of the\ncommercial creditor's account group members.\n (b) An account group policy or certificate may be issued or issued for\ndelivery in this state only in compliance with the provisions of this\nsection.\n (c) Coverage under an account group policy shall extend only to\nbeneficiaries and shall be associated with the direct use or employment\nof a payment medium by an authorized user to purchase, hire, lease or\nrent property or services.\n (d) An account group policy may provide only one or more of the\nfollowing property/casualty insurance coverages, subject to the\nfollowing limitations:\n (1) Loss of or damage to personal property, other than loss of use or\nloss resulting from a defect in materials or workmanship, where:\n (A) the article of personal property is owned by;\n (i) an authorized user; or\n (ii) a beneficiary other than an authorized user, if coverage is\nprovided under the account group policy to the beneficiary as an\nadditional insured;\n (B) the article of personal property is purchased using the account\ngroup member's payment medium;\n (C) the amount of coverage is limited to the amount charged, debited,\nor drawn, unless the insurer repairs or replaces the article of personal\nproperty, but in no event shall the coverage exceed ten thousand dollars\nper article and fifty thousand dollars in the aggregate per group member\nper policy year;\n (D) the period of coverage for each article of personal property does\nnot exceed ninety days from date of purchase; and\n (E) the coverage is excess over any other valid and collectible\ninsurance covering the same article of personal property, except that\nthe coverage need not be excess over insurance issued pursuant to this\nparagraph.\n (2) Obligation to a person engaged in the business of renting or\nleasing motor vehicles, for loss of or damage to a motor vehicle rented\nor leased from that person, where:\n (A) the obligation is incurred by:\n (i) an authorized user; or\n (ii) another person driving the motor vehicle with the authorized\nuser's permission, if coverage under the account group policy is\nprovided to such beneficiary as an additional insured;\n (B) the rental or lease of the motor vehicle is paid wholly by means\nof the account group member's payment medium;\n (C) the period of the rental or lease coverage does not exceed:\n (i) forty-five consecutive days where the payment medium used for the\nrental or lease was a credit card issued to an account group member that\nis an employee of a person that has contracted with a sponsor to provide\ncredit cards to the person's employees primarily for business use; or\n (ii) thirty-one consecutive days for all other authorized users;\n (D) the coverage is excess over any other valid and collectible\ninsurance covering the same motor vehicle, except that the coverage may\nbe primary for motor vehicle rentals or leases:\n (i) when the motor vehicle is used outside the United States, its\nterritories and possessions; or\n (ii) where the payment medium used for the rental or lease was a\ncredit card issued to an account group member that is an employee of a\nperson that has contracted with a sponsor to provide credit cards to the\nperson's employees primarily for business use; or\n (E) the motor vehicle is rented or leased without a driver.\n (3) Loss of, damage to, or loss of use of baggage and its contents,\nwhere:\n (A) (i) the authorized user owns or uses the baggage and its contents,\nand the loss, damage, or loss of use occurs in connection with the\nauthorized user being in transit; or\n (ii) a beneficiary other than an authorized user owns or uses the\nbaggage and its contents, and the loss, damage, or loss of use occurs\nwhile in connection with that beneficiary being in transit, if coverage\nunder the policy is provided in regard to the beneficiary as an\nadditional insured;\n (B) the account group member's payment medium is used to obtain\ntransportation or accommodations for the owner of the baggage and its\ncontents, in connection with that owner being in transit; and\n (C) the amount of coverage does not exceed two thousand dollars per\nbag, including contents, and ten thousand dollars in the aggregate for\nall insureds per trip.\n (4) Loss of, damage to, or loss of use of personal property resulting\nfrom a defect in materials or workmanship in that property, where:\n (A) the article of personal property is owned by:\n (i) an authorized user; or\n (ii) a beneficiary other than an authorized user, if coverage is\nprovided under the account group policy to the beneficiary as an\nadditional insured;\n (B) the article of personal property is purchased by means of the\naccount group member's payment medium;\n (C) the amount of coverage is limited to the amount charged, debited,\nor drawn, but in no event shall exceed ten thousand dollars; and\n (D) the article of personal property has one or more warranties issued\nby a manufacturer, distributor or seller.\n (5) Loss of, damage to, or loss of use of personal property occurring\nin connection with the use of rented or leased motor vehicles where:\n (A) the article of personal property is owned by:\n (i) an authorized user; or\n (ii) a beneficiary other than an authorized user if coverage is\nprovided under the account group policy to the beneficiary as an\nadditional insured;\n (B) the rental or lease of the motor vehicle is paid for wholly by\nmeans of the account group member's payment medium;\n (C) the period of coverage does not exceed the lesser of:\n (i) the rental or lease period; or\n (ii) forty-five consecutive days where the payment medium used for the\nrental or lease was a credit card issued to an account group member that\nis an employee of an entity that has contracted with a sponsor to\nprovide credit cards to the entity's employees primarily for business\nuse; or thirty-one consecutive days for all other authorized users;\n (D) the motor vehicle is rented or leased without a driver; and\n (E) the amount of the coverage does not exceed five thousand dollars.\n (6) Losses incurred in connection with the unauthorized use of a\npayment medium, where:\n (A) one or more individuals are designated authorized users of a\npayment medium by virtue of their status as employees of a group member\nin accordance with procedures established by such group member for\nauthorized use of the payment medium;\n (B) the group member that employs such authorized users has agreed\nwith another group member to pay obligations arising from the use of\nsuch payment medium by such authorized users;\n (C) an authorized user uses such payment medium in a manner that is\nunauthorized by the group member that employs the authorized user;\n (D) the obligation of the group member that employs the authorized\nusers to such other group member, pursuant to the agreement described in\nsubparagraph (B) of this paragraph for a loss incurred in connection\nwith use in an unauthorized manner, is discharged by payment of the\ninsurance benefit to such other group member;\n (E) the amount of coverage shall be limited to the amount of the loss,\nbut in no event shall exceed fifteen thousand dollars; and\n (F) for purposes of this paragraph only, the term "group member" shall\ninclude (i) those entities specified in subparagraphs (A) through (F) of\nparagraph seven of subsection (a) of this section which are insureds\nunder the insurance described in subparagraph (D) of this paragraph, and\n(ii) employers of account group members who are designated authorized\nusers of a payment medium by virtue of their employee status.\n (7) Loss resulting from an inability to use a ticket to an event\nwhere:\n (A) the ticket was purchased with the account group member's payment\nmedium;\n (B) the event does not fully reimburse the person for the expenses\ndisbursed or to be disbursed for the ticket, including any fees, or\nprovide a ticket of equal value or a rain check;\n (C) the amount of coverage is limited to the amount charged, debited,\nor drawn, but shall not exceed seven hundred fifty dollars per ticket;\nand\n (D) the coverage is excess over any other reimbursement.\n (8) Loss due to cancellation of a catered affair where:\n (A) the expenses were paid by means of the account group member's\npayment medium;\n (B) the amount of coverage is limited to the amount charged, debited,\nor drawn, but shall not exceed thirty thousand dollars in any twelve\nmonth period; and\n (C) the coverage is excess over any other reimbursement.\n (9) Loss of tuition and other educational expenses due to a student's\ndismissal or withdrawal from an educational institution where:\n (A) expenses were paid by means of the account group member's payment\nmedium;\n (B) the amount of coverage is limited to the amount charged, debited,\nor drawn, but shall not exceed sixty thousand dollars in any twelve\nmonth period; and\n (C) the coverage is excess over any other reimbursement.\n (10) Loss resulting from the cancellation or interruption of a trip,\nwhere:\n (A) coverage is limited to a specific trip;\n (B) the trip was paid by means of the account group member's payment\nmedium;\n (C) the amount of coverage is limited to the amount charged, debited,\nor drawn, but shall not exceed fifteen thousand dollars per trip; and\n (D) the coverage is excess over any other reimbursement.\n (11) Loss of or damage to personal property, where:\n (A) (i) the authorized user owns or uses the personal property, and\nthe loss or damage occurs in connection with a specific trip; or\n (ii) a beneficiary other than an authorized user owns or uses the\npersonal property, and the loss or damage occurs in connection with a\nspecific trip, if coverage is provided under the account group policy to\nthe beneficiary as an additional insured;\n (B) the trip was paid by means of the account group member's payment\nmedium;\n (C) the amount of coverage does not exceed one thousand dollars per\narticle of personal property, and five thousand dollars in the aggregate\nfor all insureds per trip; and\n (D) the coverage is excess over any other valid and collectible\ninsurance covering the same article of personal property.\n (12) Loss of or damage to wireless communications equipment or loss of\nuse resulting from a defect in materials or workmanship to wireless\ncommunication equipment, where:\n (A) the wireless communications equipment is owned or leased by;\n (i) an authorized user; or\n (ii) a beneficiary other than an authorized user, if coverage is\nprovided under the account group policy to the beneficiary as an\nadditional insured;\n (B) the account group member's payment medium is used to obtain the\nwireless services related to the wireless communication equipment;\n (C) the amount of coverage does not exceed ten thousand dollars per\nwireless communications equipment, but in no event shall the coverage\nexceed fifty thousand dollars in the aggregate per group member per\npolicy year;\n (D) the period of coverage for the wireless communication equipment\ndoes not exceed 60 days from each date wireless services are charged,\ndebited, or drawn; and\n (E) For purposes of this paragraph, the term "wireless communications\nequipment" shall mean wireless handsets, pagers, personal digital\nassistants, wireless telephones or wireless telephone batteries and\nother wireless devices and accessories related to such devices that are\nused to access wireless communications services and includes wireless\nservices.\n (13) Coverages which, in the opinion of the superintendent, are\ndetermined to be substantially similar to one of the foregoing coverages\nspecified in paragraphs one through twelve of this subsection, or such\nother coverages that the superintendent determines are limited in scope,\nand not duplicative or a substitute for other more comprehensive\ncoverages, and thereupon for purposes of this section shall be deemed to\nbe permissible pursuant to regulations promulgated by the\nsuperintendent.\n (e) (1) An account group policy shall not cover a motor vehicle,\nexcept in regard to coverage under paragraph two of subsection (c) of\nthis section.\n (2) An account group policy shall not be considered a motor vehicle\npolicy for purposes of this chapter.\n (f) The premium for the account group policy, including certificates,\nmay be paid by the group policyholder from funds contributed:\n (1) wholly by the group policyholder;\n (2) wholly by the group members; or\n (3) jointly by the group policyholder and group members.\n (g) (1) Any policy dividend, retrospective premium credit, or\nretrospective premium refund in respect of premiums paid by the group\npolicyholder may:\n (A) be applied to reduce the premium contribution of the group\npolicyholder, but not in excess of the proportion to its contribution;\nor\n (B) be retained by the group policyholder.\n (2) Any policy dividend, retrospective premium credit, or\nretrospective premium refund not distributed under paragraph one of this\nsubsection shall be:\n (A) applied to reduce future premiums and, accordingly, future\ncontributions, of existing or future group members, or both; or\n (B) paid or refunded to those group members insured on the date the\npayment or refund is made to the group policyholder, if distributed by\nthe group policyholder, or on the date of mailing, if distributed\ndirectly by the insurer, subject to the following requirements:\n (i) the insurer shall be responsible for determining the allocation of\nthe payment or refund to the group members;\n (ii) if the group policyholder distributes the payment or refund, the\ninsurer shall be responsible for audit to ascertain that the payment or\nrefund is actually made in accordance with the allocation procedure; and\n (iii) if the group policyholder fails to make the payment or refund,\nthe insurer shall make the payment or refund directly or use the method\nprovided in subparagraph (A) of this paragraph.\n (3) Notwithstanding paragraphs one and two of this subsection, if a\ndividend accrues upon termination of coverage under an account group\npolicy, the premium for which was paid out of funds contributed by group\nmembers specifically for the coverage, the dividend shall be paid or\nrefunded by the group policyholder to the group members insured on the\ndate the payment or refund is made to the group policyholder, net of\nreasonable expenses incurred by the group policyholder in paying or\nrefunding the dividend to such group members.\n (4) For the purposes of this subsection, "dividend" means a return by\nan insurer to a group policyholder of excess premiums paid by that group\npolicyholder in light of favorable loss experience, including\nretrospective premium credits or retrospective premium refunds. The term\n"dividend" does not include reimbursements or fees received by a group\npolicyholder in connection with the operation or administration of an\naccount group policy, including administrative reimbursements, fees for\nservices provided by the group policyholder, or transactional service\nfees.\n (h) The insurer must treat in like manner all eligible account group\nmembers of the same class and account status.\n (i) The group shall consist of at least one thousand members.\n (j) An account group policy or certificate shall not be eligible for\nplacement by an excess line broker licensed pursuant to article\ntwenty-one of this chapter.\n (k) Coverage provided under an account group policy or certificate\nissued pursuant to paragraph four of subsection (d) of this section\nshall be deemed miscellaneous property insurance, as enumerated in\nparagraph five of subsection (a) of section one thousand one hundred\nthirteen of this chapter.\n (l) (1) The insurer shall be responsible for the mailing or delivery\nof a certificate of insurance to each group member insured under the\naccount group policy. The insurer shall also be responsible for the\nmailing or delivery to each group member of an amended certificate of\ninsurance, or endorsement to the certificate, whenever there is a change\nof limits; change in type of coverage; addition, reduction, or\nelimination of coverage; or addition of exclusion, under the account\ngroup policy or certificate.\n (2) The certificate shall contain in substance all material terms and\nconditions of coverage afforded to the group member, unless the account\ngroup policy is incorporated by reference and a copy of the group policy\naccompanies the certificate.\n (3) If coverage afforded to the group member is excess of other\napplicable insurance coverage, the certificate shall contain a notice\nadvising the group member that, if the member has other insurance\ncoverage, specified coverages under the account group policy will be\nexcess over the other insurance.\n (m) A group policyholder shall comply with the provisions of section\ntwo thousand one hundred twenty-two of this chapter, in the same manner\nas an agent or broker, in any advertisement, sign, pamphlet, circular,\ncard, or other public announcement referring to coverage under an\naccount group policy or certificate.\n (n) An account group policy or certificate shall not be subject to\nsection three thousand four hundred twenty-five or section three\nthousand four hundred twenty-six of this article. The following\nrequirements shall apply in regard to termination of coverage:\n (1) (A) An account group policy or certificate may be cancelled by an\ninsurer only if cancellation is based on one or more of the reasons set\nforth in subparagraphs (A) through (D) or (F) through (H) of paragraph\none of subsection (c) of section three thousand four hundred twenty-six\nof this article; provided, however, that an act or omission by a group\nmember which would constitute the basis for cancellation of an\nindividual certificate shall not constitute the basis for cancellation\nof the account group policy.\n (B) Where the premium is derived wholly from funds contributed by the\ngroup policyholder, an individual certificate may be cancelled by the\ninsurer only if cancellation is based on one or more of the reasons set\nforth in subparagraph (B), (C) or (H) of paragraph one of subsection (c)\nof section three thousand four hundred twenty-six of this article.\n (2) (A) An insurer's cancellation of an account group policy,\nincluding all certificates, shall not become effective until fifteen\ndays after the insurer mails or delivers written notice of cancellation\nto the group policyholder at the mailing address shown in the policy.\n (i) Where all or part of the premium is derived from funds contributed\nby a group member specifically for the coverage, written notice of\ncancellation of the account group policy shall also be mailed or\ndelivered by the insurer to the group member at the group member's\nmailing address.\n (ii) Where none of the premium is derived from funds contributed by a\ngroup member specifically for the coverage, the group policyholder shall\nmail or deliver written notice to the group member advising the group\nmember of the cancellation of the account group policy and the effective\ndate of cancellation. The written notice shall be mailed or delivered by\nthe group policyholder within ninety days after receiving notice of\ncancellation from the insurer.\n (B) An insurer's cancellation of an individual certificate shall not\nbecome effective until fifteen days after the insurer mails or delivers\nwritten notice of cancellation to the group member at the group member's\nmailing address and to the group policyholder at the mailing address\nshown in the account group policy.\n (C) (i) A group policyholder may cancel an account group policy,\nincluding all certificates, or any individual certificate, for any\nreason upon thirty days written notice to the insurer and each group\nmember; and\n (ii) The group policyholder shall mail or deliver written notice to\neach affected group member of the group policyholder's cancellation of\nthe account group policy or certificate and the effective date of\ncancellation. Such written notice shall be mailed or delivered to the\ngroup member's mailing address at least thirty days prior to the\neffective date of the cancellation.\n (3) (A) Unless an account group policy provides for a longer policy\nperiod, the policy and all certificates shall be issued or renewed for a\none-year policy period.\n (B) The group policyholder shall be entitled to renew the account\ngroup policy and all certificates upon timely payment of the premium\nbilled to the group policyholder for the renewal, unless:\n (i) the insurer mails or delivers to the group policyholder and all\ngroup members written notice of nonrenewal, or conditional renewal; and\n (ii) the written notice is mailed or delivered at least thirty, but\nnot more than one hundred twenty days prior to the expiration date\nspecified in the policy or, if no date is specified, the next\nanniversary date of the policy.\n (C) Notwithstanding subparagraph (A) of this paragraph, an account\ngroup policy insuring an experimental program that is test marketed for\na period of one hundred twenty days or less may be issued for that\npolicy period. The provisions of subparagraph (B) of this paragraph\nshall not apply if the group members were previously notified of the\nexpiration date of the account group policy.\n (4) (A) Where the account group policy is nonrenewed by the group\npolicyholder, the group policyholder shall mail or deliver written\nnotice to each group member advising the group member of nonrenewal of\nthe account group policy and the effective date of nonrenewal. The\nwritten notice shall be mailed or delivered by the group policyholder at\nleast thirty days prior to the nonrenewal.\n (B) The provisions of subparagraph (A) of this paragraph shall not\napply in the case of a sponsor's nonrenewal in connection with an\naccount group policy insuring an experimental program test marketed for\na period of one hundred twenty days or less, if the group members were\npreviously notified of the expiration date of the account group policy.\n (5) Every notice of cancellation, nonrenewal, or conditional renewal\nshall contain the specific reason or reasons for cancellation,\nnonrenewal, or conditional renewal.\n (6) (A) An insurer shall not be required under this subsection to give\nnotice to a group member if the insurer has been advised by either the\ngroup policyholder or another insurer that substantially similar\ncoverage has been obtained from the other insurer without lapse of\ncoverage.\n (B) A group policyholder shall not be required under this subsection\nto give notice to a group member if substantially similar coverage has\nbeen obtained from another insurer without lapse of coverage.\n (7) (A) If, prior to the effective date of cancellation, nonrenewal,\nor conditional renewal of the account group policy, or a certificate,\nwhether initiated by the insurer, group policyholder or by the group\nmember in regard to the group member's certificate, coverage attaches\npursuant to the terms of an account group policy providing insurance of\none or more of the types enumerated in this section, then the coverage\nshall be effective until expiration of the applicable period of coverage\nprovided in the account group policy notwithstanding the cancellation,\nnonrenewal or conditional nonrenewal of the account group policy.\n (B) Notwithstanding subparagraph (A) of this paragraph, an insurer may\nterminate coverage under an individual certificate on the effective date\nof cancellation, if the certificate is cancelled in accordance with the\nprovisions of subparagraph (B) of paragraph one of this subsection.\n (o) The superintendent may, pursuant to regulation, adjust the\nmonetary limitations set forth in subsection (d) of this section for\ninflation.\n