§ 54 — The insurance contract

New York § 54

• Jurisdiction: New York
• Law WKC: Workers' Compensation
• Art. 4: Security For Compensation

Text

§ 54. The insurance contract. 1. Right of recourse to the insurance\ncarrier. Every policy of insurance covering the liability of the\nemployer for compensation shall be issued by one or more stock\ncompanies, mutual corporations or reciprocal insurers authorized to\ntransact workers' compensation insurance in this state. In the case of a\npolicy with multiple insurers, such insurers shall share one hundred\npercent of the liabilities by subscription, and one of the insurers\nshall serve as the lead insurer for notice and cancellation purposes.\nSuch a policy shall contain a provision setting forth the right of the\nchair to enforce in the name of the people of the state of New York for\nthe benefit of the person entitled to the compensation insured by the\npolicy either by filing a separate application or by making the\ninsurance carrier a party to the original application, the liability of\nthe insurance carrier in whole or in part for the payment of such\ncompensation; provided, however, that payment in whole or in part of\nsuch compensation by either the employer or the insurance carrier shall\nto the extent thereof be a bar to the recovery against the other of the\namount so paid.\n 2. Knowledge and jurisdiction of the employer extended to cover the\ninsurance carrier. Every such policy shall contain a provision that, as\nbetween the employee and the insurance carrier, the notice to or\nknowledge of the occurrence of the injury on the part of the employer\nshall be deemed notice or knowledge, as the case may be, on the part of\nthe insurance carrier, or if more than one insurer, the lead carrier;\nthat jurisdiction of the employer shall, for the purpose of this\nchapter, be jurisdiction of the lead insurance carrier and that such\ninsurance carrier shall in all things be bound by and subject to the\norders, findings, decisions or awards rendered against the employer for\nthe payment of compensation under the provisions of this chapter.\n 3. Insolvency of employer does not release the insurance carrier.\nEvery such policy shall contain a provision to the effect that the\ninsolvency or bankruptcy of the employer shall not relieve the insurance\ncarrier from the payment of compensation for injuries or death sustained\nby an employee during the life of such policy.\n 4. Limitation of indemnity agreements. Every contract or agreement of\nan employer the purpose of which is to indemnify him from loss or damage\non account of the injury of an employee by accidental means, or on\naccount of the negligence of such employer or his officer, agent or\nservant, shall be absolutely void unless it shall also cover liability\nfor the payment of the compensation and for the payment into the special\nfunds provided for by this chapter. Every such contract or agreement of\ninsurance issued by an insurance carrier covering the liability of an\nemployer for the payment of the compensation and for the payment into\nthe special funds provided by this chapter shall be deemed to include\nall employees of the employer employed at or in connection with the\nbusiness of the employer carried on, maintained, or operated at the\nlocation or locations set forth in such contract or agreement and\nemployees for whose injuries a contractor may become liable under the\nprovisions of section fifty-six of this chapter. Any employee or\nemployees or class of employees not enumerated in section three,\nsubdivision one, group one to seventeen inclusive, of this chapter,\nemployed by a municipal corporation or political subdivision of the\nstate, may by the terms of the contract or agreement be expressly\nexcluded therefrom.\n 5. (a) Cancellation and termination of insurance contracts. No\ncontract of insurance issued by an insurance carrier against liability\narising under this chapter shall be cancelled within the time limited in\nsuch contract for its expiration unless notice is given as required by\nthis section. When cancellation is due to non-payment of premiums and\nassessments, such cancellation shall not be effective until at least ten\ndays after a notice of cancellation of such contract, on a date\nspecified in such notice, shall be filed in the office of the chair and\nalso served on the employer. When cancellation is due to any reason\nother than non-payment of premiums and assessments, such cancellation\nshall not be effective until at least thirty days after a notice of\ncancellation of such contract, on a date specified in such notice, shall\nbe filed in the office of the chair and also served on the employer;\nprovided, however, in either case, that if the employer has secured\ninsurance with another insurance carrier which becomes effective prior\nto the expiration of the time stated in such notice, the cancellation\nshall be effective as of the date of such other coverage. No insurer\nshall refuse to renew any policy insuring against liability arising\nunder this chapter unless at least thirty days prior to its expiration\nnotice of intention not to renew has been filed in the office of the\nchair and also served on the employer.\n Such notice shall be served on the employer by delivering it to him,\nher or it or by sending it by mail, by certified or registered letter,\nreturn receipt requested, addressed to the employer at his, her or its\nlast known place of business; provided that, if the employer be a\npartnership, then such notice may be so given to any of one of the\npartners, and if the employer be a corporation then the notice may be\ngiven to any agent or officer of the corporation upon whom legal process\nmay be served; and further provided that an employer may designate any\nperson or entity at any address to receive such notice including the\ndesignation of one person or entity to receive notice on behalf of\nmultiple entities insured under one insurance policy and that service of\nnotice at the address so designated upon the person or entity so\ndesignated by delivery or by mail, by certified or registered letter,\nreturn receipt requested, shall satisfy the notice requirement of this\nsection. Provided, however, the right to cancellation of a policy of\ninsurance in the state fund shall be exercised only for non-payment of\npremiums and assessments or as provided in section ninety-four of this\nchapter.\n The provisions of this subdivision shall not apply with respect to\npolicies containing coverage pursuant to subsection (j) of section three\nthousand four hundred twenty of the insurance law relating to every\npolicy providing comprehensive personal liability insurance on a one,\ntwo, three or four family owner-occupied dwelling.\n In the event such cancellation or termination notice is not filed with\nthe chair within the required time period, the chair shall impose a\npenalty in the amount of up to five hundred dollars for each ten-day\nperiod the insurance carrier or state insurance fund failed to file the\nnotification. All penalties collected pursuant to this subdivision shall\nbe deposited in the uninsured employers' fund.\n (b) Conditional renewal for carriers under common control. A contract\nof insurance shall remain in full force and effect subject to the same\nrates as the expiring contract of insurance rates, unless written notice\nis mailed or delivered by the insurance carrier to the employer, at the\naddress shown on the policy, and to such employer's authorized agent or\nbroker, indicating the insurance carrier's intention to condition\nrenewal upon issuance of a policy that supersedes a policy previously\nissued by another insurance carrier under common control that will\nresult in an increased premium in excess of ten percent (exclusive of\nany premium increase generated as a result of increased loss costs filed\nand approved in accordance with subsection (e) of section two thousand\nthree hundred five of the insurance law, increased exposure units, or as\na result of experience rating, contractor credit adjustment program,\nmerit rating, retrospective rating or audit or removal or reduction of a\ndrug free credit, managed care credit, or deductible. Such notice shall\nbe mailed or delivered at least thirty days in advance of the expiration\ndate of the policy, and shall set forth the amount of the premium\nincrease (or, where such amount cannot reasonably be determined as of\nthe time the notice is provided due to failure of the policyholder to\nprovide to the insurance carrier the information necessary to determine\nthe premium, a reasonable estimate of the premium increase based upon\nthe information available to the insurance carrier at that time).\nNothing in this subdivision shall require the insurance carrier to\nprovide such notice when the employer, an agent or broker authorized by\nthe employer, or another insurance carrier of the employer has mailed or\ndelivered written notice that the policy has been replaced or is no\nlonger desired.\n 5-a. Issuance, amendment, endorsement or reinstatement of insurance\ncontracts. a. Any insurance carrier or the state insurance fund who\nissues, reinstates, amends or endorses any contract of insurance or\nrider thereto covering the liability of an employer for compensation\nunder this chapter shall file notification in the office of the chair\nwithin thirty days after such issuance, reinstatement, amendment, or\nendorsement of the contract. Such notice shall be filed in the manner\nand form prescribed by the chair.\n b. In the event notice required under this subdivision is not filed\nwith the chair within the thirty-day time period, or notice is not\nprovided by a group self-insured trust pursuant to regulation\npromulgated by the board regarding notification of the trust's\ncommencement or termination of coverage for any employer, the chair may\nimpose a penalty of up to five hundred dollars for each ten-day period\nthe insurance carrier or state insurance fund or group self-insurance\ntrust failed to file the notification. All penalties collected pursuant\nto this subdivision shall be deposited in the uninsured employers' fund.\n c. The provisions of this subdivision shall not apply with respect to\ninsurance policies containing coverage pursuant to subsection (j) of\nsection three thousand four hundred twenty of the insurance law relating\nto every policy providing comprehensive personal liability insurance on\na one, two, three or four family owner-occupied dwelling.\n 6. a. Insurance of officers of corporations. Every executive officer\nof a corporation shall be deemed to be included in the compensation\ninsurance contract or covered under a certificate of self-insurance\nunless that person is an unsalaried executive officer of a\nnot-for-profit corporation or unincorporated association and such\ncorporation or association elects to exclude that person from the\ncoverage of this chapter. Such election to exclude such person shall be\nmade in writing on a form prescribed by the chair and filed with the\ninsurance carrier. Such election shall be effective with respect to all\nof the policies issued to the corporation or association by such\ninsurance carrier as long as it shall continuously insure the\ncorporation or association, provided that written notice of the\ncontinuation of the election to exclude any or all executive officers is\ngiven to the corporation or association with each renewal notice of the\npolicy. If such election is revoked, it shall be in writing on a form\nprescribed by the chair, and shall be filed with the chair and the\ninsurance carrier. Such revocation shall not be effective until thirty\ndays after such filing. Any executive officer whose corporation or\nassociation files an election not to be included under this chapter\nshall be deemed not to be an employee within the intent of this chapter;\nhowever, if not excluded, such officers and their dependents shall be\nentitled to compensation as provided by this chapter.\n b. An executive officer of any corporation who at all times during the\nperiod involved owns all of the issued and outstanding stock of the\ncorporation and holds all of the offices pursuant to paragraph (e) of\nsection seven hundred fifteen of the business corporation law and who is\nthe executive officer of a corporation having other persons who are\nemployees required to be covered under this chapter shall be deemed to\nbe included in the compensation insurance contract or covered under a\ncertificate of self-insurance unless the officer elects to be excluded\nfrom the coverage of this chapter. Such election shall be made by the\ncorporation filing a notice that the corporation elects to exclude the\nexecutive officer of such corporation named in the notice from coverage\nof this chapter. Such election shall be filed with the insurance carrier\nor the chair in the case of self-insurance upon a form prescribed by the\nchair of the workers' compensation board. Such election shall be\neffective with respect to all policies issued to such corporation by\nsuch insurance carrier as long as it shall continuously insure the\ncorporation and shall be final and binding upon the executive officer\nnamed in the notice until revoked by the corporation in accordance with\nparagraph a of this subdivision.\n (c) An executive officer of any corporation who at all times during\nthe period involved owns all of the issued and outstanding stock of the\ncorporation and holds all of the offices pursuant to paragraph (e) of\nsection seven hundred fifteen of the business corporation law and who is\nthe executive officer of a corporation that has no other persons who are\nemployees required to be covered under this chapter shall be deemed to\nbe excluded from coverage under this chapter unless such officer elects\nto be covered. Such coverage may be effected by obtaining an insurance\npolicy or in the case of self-insurance by the corporation submitting a\nform prescribed by the chair of the workers' compensation board, giving\nnotice that the corporation elects to bring the executive officer of\nsuch corporation named in the notice within the coverage of this\nchapter.\n d. Any two executive officers of a corporation who at all times during\nthe period involved between them own all of the issued and outstanding\nstock of the corporation and hold all such offices, provided, however\nthat each officer must own at least one share of stock, who are the\nexecutive officers of such corporation having other persons who are\nemployees required to be covered under this chapter shall be deemed to\nbe included in the compensation insurance contract or covered under a\ncertificate of self-insurance unless one or both the officers elect to\nbe excluded from the coverage of this chapter. Such election shall be\nmade by any such corporation filing a form prescribed by the chair of\nthe workers' compensation board with the insurance carrier or the chair\nin the case of self-insurance giving notice that the corporation elects\nto exclude one or both of the executive officers of such corporation\nnamed in the notice from the coverage of this chapter. Such election\nshall be effective with respect to all policies issued to such\ncorporation by such insurance carrier as long as it shall continuously\ninsure the corporation and shall be final and binding upon the executive\nofficers as named in the notice until revoked by the corporation. If\nsuch election is revoked, it shall be in writing on a form prescribed by\nthe chair and shall be filed with the chair and the insurance carrier.\nSuch revocation shall not be effective until thirty days after such\nfiling.\n e. Any two executive officers of a corporation who at all times during\nthe period involved between them own all of the issued and outstanding\nstock of such corporation and hold all such offices, provided, however\nthat each officer must own at least one share of stock, who are the\nexecutive officers of such corporation that has no other persons who are\nemployees required to be covered under this chapter shall be deemed to\nbe excluded from coverage under this chapter unless one or both officers\nelect to be covered. Such coverage may be effected by obtaining an\ninsurance policy or, in the case of self-insurance, by the corporation\nsubmitting a form prescribed by the chair of the workers' compensation\nboard, giving notice that the corporation elects to bring one or both\nexecutive officers of such corporation named in the notice within\ncoverage of this chapter.\n f. Notwithstanding the provisions of paragraph a of this subdivision\nor any other provision of this chapter, any executive officer of a\nreligious, charitable or educational corporation and the officers of a\nmunicipal corporation, and officers of any post or chapter of\norganizations of veterans of any war of the United States may be brought\nwithin the coverage of the insurance contract as if they were employees\nby any such corporation filing with the insurance carrier, upon a form\nprescribed by the chair of the workers' compensation board, a notice\nthat the corporation elects to bring one or more executive officers of\nsuch corporation named in the notice within the coverage of this\nchapter. Such election shall be effective with respect to all policies\nissued to such corporation by such insurance carrier as long as it shall\ncontinuously insure the corporation. If such election is revoked, it\nshall be in writing on a form prescribed by the chair and filed with the\nchair and with the insurance carrier and a copy thereof furnished to\neach officer as to whom such revocation is applicable, upon a form\nprescribed by the chair. Such revocation shall not be effective until\nthirty days after such filing. The estimation of the wage values of\nexecutive officers within the coverage of the insurance contract shall\nbe reasonable and separately stated and added to the valuation of the\npayrolls upon which the premium is computed.\n g. The executive officers brought within the coverage of the insurance\ncontract, and the dependents of any such executive officers, including\nexecutive officers of religious, charitable or educational corporations\nand officers of municipal corporations, and officers of any post or\nchapter of organizations of veterans of any war of the United States\nthat have elected to bring their officers within the coverage of the\npolicy, shall have the same rights and remedies as any employee and\nshall be entitled to compensation and medical care as provided by this\nchapter, and the insurance carrier shall be liable therefor and for\npayments into the special funds provided in this chapter as in the case\nof an employee. The executive officers who may be brought within the\ncoverage of an insurance contract shall include an officer of a\ncorporation who at all times during the period involved between them\nowns all of the issued and outstanding stock of the corporation and\nholds all of the offices pursuant to paragraph (e) of section seven\nhundred fifteen of the business corporation law or two executive\nofficers of a corporation who at all times during the period involved\nbetween them own all of the issued and outstanding stock of such\ncorporation and hold all such offices and who is the executive officer\nor who are the executive officers of a corporation that has no other\npersons who are employees required to be covered under this chapter.\n h. Any officer or officers, elective or appointive, of a municipal\ncorporation or other political subdivision of the state complying with\nthe provisions of group nineteen of subdivision one of section three of\nthis chapter shall be deemed executive officers subject to the\nprovisions of this subdivision.\n 6-a. Insurance contracts with fire or ambulance districts.\nNotwithstanding any other provision of this section or of this chapter,\nany insurance contract to secure workers' compensation for a fire or\nambulance district pursuant to subdivision one or subdivision two of\nsection fifty of this chapter issued to take effect on or after July\nfirst, nineteen hundred sixty, in relation to a fire district and\nJanuary first, in the year next succeeding the year in which this\nsubdivision as hereby amended becomes effective, in relation to an\nambulance district or any such contract renewed to continue in effect on\nor after such dates, shall provide workers' compensation coverage for\nall fire or ambulance district officers, whether elective or appointive,\nand all fire or ambulance district employees, whether or not they are\ncompensated for their services, unless the board of fire or ambulance\ncommissioners of the fire district or ambulance district by resolution\nelects not to provide such coverage for any one or more of such officers\nor employees, or class thereof. Such election not to provide such\ncoverage shall be effective with respect to all such insurance contracts\nthereafter issued to such fire or ambulance district by any insurance\ncarrier until revoked in whole or in part by resolution of the board of\nfire or ambulance commissioners of the fire or ambulance district. Such\nelection not to provide such coverage shall not become effective until\nthirty days after a copy of such resolution has been filed with the\nchairman of the workers' compensation board and with the insurance\ncarrier and a copy thereof is furnished to each officer and employee as\nto whom such revocation is applicable. The chairman of the workers'\ncompensation board shall prescribe the form of such resolution. The\nprovisions of this subdivision shall not be applicable in cases where\nthe injury arises out of and in the course of duty as a volunteer\nfirefighter or a volunteer ambulance worker or as a civil defense\nvolunteer and where the computation of benefits would be made under the\nprovisions of the volunteer firefighters' benefit law or the volunteer\nambulance workers' benefit law or under article ten of this chapter.\n 7. Limitation of the issuance of policies by a foreign insurance\ncompany. No policy or contract of insurance issued by a foreign stock\ncorporation or mutual association authorized to transact the business of\nworkers' compensation insurance in this state, except a corporation\norganized under the laws of a state or country outside of the United\nStates and domiciled in this state, covering or intended to cover the\nliability of an employer to his employees under this chapter, shall be\naccepted as a compliance with subdivision two of section fifty of this\nchapter, unless such foreign stock corporation or mutual association\nshall have filed with the superintendent of financial services a bond or\nundertaking with good and sufficient sureties to the people of the state\nof New York, and conditioned upon the payment in full of any and all\ncompensation and benefits as provided in this chapter to any and all\npersons entitled thereto under any such policy or contract of insurance.\nSuch bond shall be approved as to form by the attorney-general and as to\nsufficiency by the superintendent of financial services. The amount of\nsuch bond shall be such sum as may reasonably represent twenty-five per\ncentum of the outstanding reserves for compensation losses on policies\nissued by such foreign stock corporation or mutual association upon\nrisks located in the state of New York as determined by law or by the\nrequirements of the superintendent of financial services, provided,\nhowever, that the amount of such bond shall in no case be less than\ntwenty-five thousand dollars nor more than one million dollars. Such\nbond shall be renewed annually. Every such bond shall contain a\nprovision authorizing the attorney-general upon the certificate of the\nsuperintendent of financial services that there has been default in the\npayment of compensation for thirty days or that the bonded company has\nbecome insolvent to enforce such bond in the name of the people of the\nstate of New York for the benefit of any and all persons entitled to the\ncompensation assured by any policy issued by such foreign stock\ncorporation or mutual association or otherwise entitled to any benefits\nunder such policy. In lieu of the bond required to be given hereunder\nany such foreign stock corporation or mutual association may deposit\nwith the superintendent of financial services securities of the kind\nprescribed in section one thousand three hundred eighteen of the\ninsurance law in an amount equal to twenty-five per centum of the\noutstanding reserves for compensation losses on policies issued by such\nforeign stock corporation or mutual association upon risks located in\nthe state of New York, but not less than twenty-five thousand dollars\nnor more than one million dollars. In computing the amount of such\nsecurities they shall be valued as determined by the superintendent of\nfinancial services in valuing the assets of insurance companies. Such\nsecurities shall be held by the superintendent of financial services as\na special deposit and as express security for the payment of such\ncompensation or benefits and may be sold by the said superintendent\nwithout notice in the event that there has been default in the payment\nof compensation for thirty days or that the depositing company has\nbecome insolvent. The income thereon shall be collected by the\nsuperintendent of financial services and, prior to any default in the\npayment of such compensation or benefits, shall be paid over by him to\nthe stock corporation or mutual association depositing the same.\n However, no such bond or undertaking shall be required to be filed\nafter July first, nineteen hundred thirty-eight, by any carrier making\npayment to the stock or mutual funds respectively established by\nsections one hundred seven and one hundred nine-d of this chapter.\n 8. A self-employed person, a partner of a partnership as defined in\nsection ten of the partnership law but not including a limited partner,\na partner of a registered limited liability partnership as defined in\nsection two of the partnership law, a member of a limited liability\ncompany as defined in subdivision (m) of section one hundred two of the\nlimited liability company law or a member of a professional service\nlimited liability company as defined in subdivision (f) of section one\nthousand two hundred one of the limited liability company law, having\nother persons who are employees required to be covered under this\nchapter may be included in the compensation insurance contract or\ncovered under a certificate of self-insurance. Such election shall be\nmade by any such partnership, sole proprietorship, registered limited\nliability partnership, limited liability company or professional service\nlimited liability company filing with the insurance carrier or the chair\nin the case of self-insurance upon a form prescribed by the chair, a\nnotice that the partnership, sole proprietorship, registered limited\nliability partnership, limited liability company or professional service\nlimited liability company elects to include the partner, partners, the\nself-employed person or member named in the notice in the coverage of\nthis chapter. Such election shall be effective with respect to all\npolicies issued to such partnership, sole proprietorship, registered\nlimited liability partnership, limited liability company or professional\nservice limited liability company by such insurance carrier as long as\nit shall continuously insure the employees of the partnership, sole\nproprietorship, registered limited liability partnership, limited\nliability company or professional service limited liability company.\nSuch election shall be final and binding upon the partner, self-employed\nperson or member named in the notice until revoked by the partnership,\nsole proprietorship, registered limited liability partnership, limited\nliability company or professional service limited liability company. A\nself-employed person, a partner of a partnership, a partner of a\nregistered limited liability partnership, a member of a limited\nliability company or a member of a professional service limited\nliability company having no other persons who are employees required to\nbe covered under this chapter shall be deemed to be excluded from\ncoverage under this chapter unless he or she elects to be covered. Such\ncoverage may be effected by obtaining an insurance policy.\n The self-employed persons, partners of a partnership, partners of a\nregistered limited liability partnership, members of a limited liability\ncompany or members of a professional service limited liability company\nbrought within the coverage of the insurance contract, and the\ndependents of any such self-employed persons, partners of a partnership,\npartners of a registered limited liability partnership, members of a\nlimited liability company or members of a professional service limited\nliability company shall have the same rights and remedies as any\nemployee or his or her dependents and shall be entitled to compensation\nand medical care as provided by this chapter, and the insurance carrier\nshall be liable therefor and for payments into the special funds\nprovided in this chapter as in the case of an employee.\n