N.Y. Insurance Law Section 3427
Gap insurance

  • cancellation, renewal and other provisions

(a)

Definitions. As used in this section:

(1)

“Covered policy” means, for purposes of this section, a policy or contract of gap insurance, issued or issued for delivery in this state, on a risk located or resident in this state.

(2)

“Nonpayment of premium” means the failure of the named insured to discharge any obligations in connection with the payment of premiums on a policy of insurance or any installment of such premium, whether the premium is payable directly to the insurer or its agent, or indirectly under any premium finance plan or extension of credit. Payment to the insurer, or to an agent or broker authorized to receive such payment, shall be timely, if made within fifteen days after the mailing to the insured of a notice of cancellation for nonpayment of premium.

(b)

Lessor gap insurance:

(1)

A covered policy of lessor gap insurance shall be subject to all the provisions of § 3426 (Commercial lines insurance)section three thousand four hundred twenty-six of this article, except as otherwise provided in this section.

(2)

Subject to the notice requirements of subsection (c) of § 3426 (Commercial lines insurance)section three thousand four hundred twenty-six of this article, a covered policy of lessor gap insurance may be cancelled only for: (A) one or more of the bases for cancellation set forth in subparagraphs (A) through (D), and (F) through (H) of paragraph one of subsection (c) of § 3426 (Commercial lines insurance)section three thousand four hundred twenty-six of this article; (B) material change in the nature or extent of the risk, occurring after issuance or last annual renewal anniversary date of the policy, which causes the risk of loss to be substantially and materially increased beyond that contemplated at the time the policy was issued or last renewed; or (C) if the policy automatically provides coverage for the gap amount waived under new leases entered into by the lessor, or acquired by the lessor’s assignee, the lessor’s or assignee’s (whichever is the insured) failure to provide, within sixty days or as otherwise specified in the policy, the insurer with the name and address of each lessee and other information reasonably required by the insurer.

(c)

Lessee gap insurance:

(1)

Except as provided in this section, the provisions of sections three thousand four hundred twenty-five and three thousand four hundred twenty-six of this article shall not apply to a covered policy of lessee gap insurance.

(2)

During the first sixty days a covered policy of lessee gap insurance is initially in effect, no cancellation shall become effective until twenty days after written notice is mailed to the first named insured at the mailing address shown in the policy, except for the bases for cancellation set forth in subparagraphs (A) through (H) of paragraph one of subsection (c) of § 3426 (Commercial lines insurance)section three thousand four hundred twenty-six of this article for which fifteen days notice shall be given.

(3)

After a covered policy of lessee gap insurance has been in effect for sixty days, or on or after the effective date if the policy is a renewal, no cancellation or nonrenewal shall become effective until fifteen days after written notice is mailed or delivered to the first named insured at the mailing address shown in the policy and cancellation or nonrenewal is conditioned upon the termination of the lease for reasons other than a total loss of the personal property caused by its theft or physical damage, or is based on one or more of the reasons set forth in subparagraphs (A) through (H) of paragraph one of subsection (c) of § 3426 (Commercial lines insurance)section three thousand four hundred twenty-six of this article; except that where the lease is for ten years or longer, the policy may be cancelled or nonrenewed forty-five days after written notice is mailed or delivered to the first named insured at the mailing address shown in the policy if the cancellation or nonrenewal is to be effective upon the tenth anniversary date of the policy or any subsequent annual anniversary date.

(4)

If the policy is not issued for a term coextensive with the length of the lease, the insurer shall renew it for successive terms for the duration of the lease, unless cancelled or nonrenewed in accordance with the provisions of this subsection.

(d)

Creditor gap insurance:

(1)

A covered policy of creditor gap insurance shall be subject to all the provisions of § 3426 (Commercial lines insurance)section three thousand four hundred twenty-six of this article, except as otherwise provided in this section.

(2)

Subject to the notice requirements of subsection (c) of § 3426 (Commercial lines insurance)section three thousand four hundred twenty-six of this article, a covered policy of creditor gap insurance may be cancelled only for: (A) One or more of the bases for cancellation set forth in subparagraphs (A) through (D), and (F) through (H) of paragraph one of subsection (c) of § 3426 (Commercial lines insurance)section three thousand four hundred twenty-six of this article; (B) Material change in the nature or extent of the risk, occurring after issuance or last annual renewal anniversary date of the policy, which causes the risk of loss to be substantially and materially increased beyond that contemplated at the time the policy was issued or last renewed; or (C) If the policy automatically provides coverage for the gap amount waived under new loans or other credit transactions entered into by the creditor or acquired by the creditor’s assignee, the creditor’s or assignee’s (whichever is the insured) failure to provide, within sixty days or as otherwise specified in the policy, the insurer with the name and address of each debtor and other information reasonably required by the insurer.

(e)

Debtor gap insurance:

(1)

Except as provided in this section, the provisions of sections three thousand four hundred twenty-five and three thousand four hundred twenty-six of this article shall not apply to a covered policy of debtor gap insurance.

(2)

During the first sixty days a covered policy of debtor gap insurance is initially in effect, no cancellation shall become effective until twenty days after written notice is mailed to the first named insured at the mailing address shown in the policy, except for the bases for cancellation set forth in subparagraphs (A) through (H) of paragraph one of subsection (c) of § 3426 (Commercial lines insurance)section three thousand four hundred twenty-six of this article for which fifteen days notice shall be given.

(3)

After a covered policy of debtor gap insurance has been in effect for sixty days, or on or after the effective date if the policy is a renewal, no cancellation or nonrenewal shall become effective until fifteen days after written notice is mailed or delivered to the first named insured at the mailing address shown in the policy and cancellation or nonrenewal is conditioned upon the termination of the loan for reasons other than a total loss of the personal property caused by its theft or physical damage, or is based on one or more of the reasons set forth in subparagraphs (A) through (H) of paragraph one of subsection (c) of § 3426 (Commercial lines insurance)section three thousand four hundred twenty-six of this article; except that where the loan or other credit transaction is for ten years or longer, the policy may be cancelled or nonrenewed forty-five days after written notice is mailed or delivered to the first named insured at the mailing address shown in the policy if the cancellation or nonrenewal is to be effective upon the tenth anniversary date of the policy or any subsequent annual anniversary date.

(4)

If the policy is not issued for a term coextensive with the length of the loan or other credit transaction, the insurer shall renew it for successive terms for the duration of the loan or other credit transaction, unless cancelled or nonrenewed in accordance with the provisions of this subsection.

(f)

For purposes of this section, “property insured”, as used in subparagraphs (E) and (H) of paragraph one of subsection (c) of § 3426 (Commercial lines insurance)section three thousand four hundred twenty-six of this article, means the property which is the subject of the lease or loan or other credit transaction.

(h)

Every notice of cancellation issued pursuant to this section shall specify the grounds for cancellation.

(i)

If a lessor, creditor or assignee charges the lessee or debtor for the waiver of the gap amount, the lessor or creditor, or, in the absence of a waiver by the creditor or lessor, the assignee, as part of the waiver offer, shall provide the lessee or debtor with a notice specifying the name of the insurer that has issued the lessor or creditor gap insurance policy, the cost of the lessor or creditor gap insurance coverage, and the charge for the waiver. Any person having been found, after notice and hearing, to have wilfully violated this subsection shall be liable to the people of this state for a civil penalty in a sum not exceeding five hundred dollars for each violation.

(j)

Notwithstanding any other provision of this chapter, the cancellation and nonrenewal provisions of this section shall apply only to the gap insurance provisions of a policy or contract that also provides other coverages and the gap insurance coverage shall be severable from the other coverages for the purposes of cancellation and nonrenewal; except that lessor or debtor gap insurance coverage included within a policy insuring a mobile home shall be subject to the cancellation and nonrenewal requirements applicable to the mobile home policy.

(k)

Notwithstanding § 3435 (Group property/casualty insurance)section three thousand four hundred thirty-five of this article, a covered policy of lessor or creditor gap insurance that insures a lessor or creditor and the lessor’s or creditor’s assignees shall not be considered a group insurance policy.

(l)

The superintendent may prescribe by regulation minimum policy provisions for gap insurance which the superintendent deems to be necessary or appropriate for lessor gap insurance, creditor gap insurance, lessee gap insurance and debtor gap insurance contracts or policies.

Source: Section 3427 — Gap insurance; cancellation, renewal and other provisions, https://www.­nysenate.­gov/legislation/laws/ISC/3427 (updated Sep. 22, 2014; accessed Jun. 22, 2024).

3401
Insurable interest in property
3402
Executory contract not a change in interest, title or possession
3403
Anti-arson application
3404
Fire insurance contracts
3405
Fire insurance contract
3406
Copy of examination of insured to be delivered to insured
3407
Property insurance
3407‑A
Property/casualty insurance contract and policy standard provisions
3408
Fire insurance
3409
Distribution of hazardous material report forms
3410
Fire insurance contract
3411
Automobile physical damage insurance covering private passenger automobiles
3412
Automobile physical damage insurance covering private passenger automobiles
3413
Standard claim forms for fire losses
3414
Reports by insurers of certain casualty loss on property owned or operated by religious organizations
3415
Supplemental claim form to be submitted for certain fire loss claims in excess of ten thousand dollars in a city with a population of one...
3420
Liability insurance
3421
Homeowners’ liability insurance
3422
Hate crimes
3425
Certain property/casualty insurance policies
3426
Commercial lines insurance
3427
Gap insurance
3428
Cancellation of insurance contracts
3429
Geographical location of risks
3429‑A
Geographical location of risks in area serviced by a volunteer fire department
3430
Right of insured, agent or broker aggrieved on basis of geographical location of property or risks
3431
Immunity
3432
Immunity
3433
Termination of contracts or accounts of licensed agents or brokers
3434
Motor vehicle insurance policies
3435
Group property/casualty insurance
3435‑A
Motor vehicle insurance policies
3436
Medical malpractice insurance
3436*2
Group credit unemployment insurance and individual credit unemployment insurance
3436‑A
Adverse action against legal reproductive health care or gender-affirming care
3439
Reinsurance contracts excepted
3440
Insurance covering private passenger motor vehicles
3442
Credit card, debit card, or checking account group policies
3443
Workers’ compensation and employers’ liability insurance
3444
Flood insurance notice
3445
Windstorm insurance notice
3446
Product or system group insurance policies
3447
Qualification of environmental remediation insurance for tax credit
3448
Involuntary unemployment insurance policies
3449
Wireless communications equipment insurance policies
3450
Insurance for expenses incurred as a result of an act or threatened act of violence
3451
Identity theft group insurance policies
3451*2
Regulations
3452
Group property travel insurance policies
3453
Group policy for service providers listed in a commercial directory
3453*2
Self-service storage company group insurance policies
3453*3
Employer sponsored group personal excess insurance
3454
Sponsored group personal insurance
3455
Transportation network company group insurance policies
3456
Prohibition against cancellation of policy when motor vehicle is used or operated through a transportation network company program
3457
Group insurance policies for certain for hire motor vehicles
3458
Electronic notices and documents
3458*2
Group insurance for peer-to-peer car sharing programs
3459
Car share exclusions for motor vehicle insurance policies
3460
Prohibition against cancellation of policy when motor vehicle is used or operated through a peer-to-peer car sharing program
3461
Notice of claim
3462
Affordable housing underwriting and rating

Accessed:
Jun. 22, 2024

Last modified:
Sep. 22, 2014

§ 3427’s source at nysenate​.gov

Link Style