A significant change has occurred in New York State’s auto insurance landscape – including supplemental spousal liability coverage in all auto insurance policies. This move, mandated by the New York State Department of Financial Services, aims to address potential gaps in coverage when a spouse is responsible for an accident. In this blog post, we’ll explore what supplemental spousal liability insurance entails, how it impacts policyholders, and the option to opt-out.
What is Supplemental Spousal Liability Insurance?
Supplemental spousal liability insurance provides bodily injury liability coverage in cases where one spouse is at fault in an accident, leading to injuries or death of the other spouse. This coverage ensures that the injured spouse can seek compensation from their own insurance company, even when the at-fault spouse’s negligence is the cause of the accident.
The legislation aims to prevent situations where claims brought by one spouse against the other were not covered unless the insured opted into supplemental spousal liability insurance. Governor Kathy Hochul signed this legislation, effective August 1, 2023, making this coverage a default inclusion in auto insurance policies.
Associated Costs and Opting Out
The cost of supplemental spousal liability insurance is estimated to range between $20 and $84 annually, a relatively small premium for the added protection. While the coverage is automatically added to policies, policyholders have the option to opt-out. However, this must be done in writing, emphasizing the importance of understanding the implications of opting out.
Implications for Policyholders
The new requirement applies to primary auto liability coverage, excluding umbrella liability coverage. While the necessity of this coverage may not be immediately apparent, it becomes crucial when an insurer for another driver pays for damages and subrogates against the insured driver. Additionally, it may come into play in cases involving supplementary uninsured/underinsured motorist claims.
Policyholders should be vigilant for notices from their insurers regarding the addition of this coverage to their policies. It’s crucial to review the details and make an informed decision on whether to opt out, keeping in mind the potential benefits in the event of an unfortunate accident.
It’s essential to understand that supplemental spousal liability insurance applies to all drivers, regardless of marital status. Even unmarried individuals must actively request the removal of this coverage. Businesses with auto insurance policies must be aware that the coverage could apply if employees using company vehicles have spouses.
Conclusion
The introduction of supplemental spousal liability insurance as a default inclusion in New York auto insurance policies reflects the state’s commitment to protecting individuals in the event of accidents caused by a spouse. Policyholders should carefully consider the implications of opting out and stay informed about this new requirement to ensure they have coverage that aligns with their needs and preferences.
Still have questions about supplemental spousal liability insurance? Call an Emery & Webb insurance agent at (845) 896-6727.