1.4 The New York Standard Fire Policy (§ 3404), Suit Against the Insurer, Cancellation & Nonrenewal, DFS Cybersecurity & TRIA
Key Takeaways
- Insurance Law § 3404(e) sets the New York standard fire policy, and no New York fire policy may provide less coverage than that form.
- The standard fire policy requires a signed and sworn proof of loss within 60 days, makes loss payable 60 days after proof, and bars suit unless commenced within 24 months after the inception of the loss.
- Personal lines nonrenewal notice under § 3425 is 45 to 60 days in advance, while commercial lines nonrenewal notice under § 3426 is 60 to 120 days in advance.
- Licensed independent adjusters are Covered Entities under 23 NYCRR Part 500 and must notify the Superintendent of a reportable cybersecurity event within 72 hours and of an extortion payment within 24 hours.
- TRIA requires Treasury certification of an act of terrorism causing more than $5 million in losses, a $200 million program trigger, a 20% insurer deductible, an 80% federal share and a $100 billion annual cap, and runs through December 31, 2027.
The New York Standard Fire Policy (§ 3404), Suit Against the Insurer, Cancellation & Nonrenewal, DFS Cybersecurity & TRIA
Exam Focus: Four statutory items in the Insurance Regulation domain that candidates routinely skip. The § 3404 standard fire policy supplies the conditions embedded in every New York property form — 60 days for proof of loss, 60 days until loss is payable, 24 months to sue. Cancellation and nonrenewal run on different clocks for personal (§ 3425) and commercial (§ 3426) lines. And two compliance regimes sit on the adjuster directly: 23 NYCRR Part 500 cybersecurity and the federal Terrorism Risk Insurance Act.
The New York Standard Fire Policy (Insurance Law § 3404)
New York is a standard fire policy state. Insurance Law § 3404(e) sets out the text of the standard fire policy — the historic “165-line” form — and no fire policy may be issued in New York providing less coverage than that form. Every homeowners, dwelling and commercial property policy written in New York therefore carries those provisions, whether or not they are reprinted, which is why § 3404 governs disputes that on their face look like policy-language disputes.
The Conditions That Matter on a Claim File
| Provision | The rule |
|---|---|
| Concealment, fraud | The entire policy is void if the insured has wilfully concealed or misrepresented any material fact concerning the insurance, the subject of it, the insured's interest in it, or in case of any fraud or false swearing by the insured relating thereto |
| Uninsurable and excepted property | Does not cover accounts, bills, currency, deeds, evidences of debt, money or securities |
| Perils not included | Excludes loss by enemy attack, invasion, insurrection, rebellion, civil war, usurped power, order of civil authority (except destruction to prevent a conflagration), neglect of the insured to use all reasonable means to save the property, and theft — and loss by explosion or riot unless fire ensues |
| Conditions suspending or restricting insurance | Coverage is suspended while the hazard is increased by any means within the insured's control, and while a described building is vacant or unoccupied beyond 60 consecutive days |
| Cancellation | The company may cancel on five days' written notice to the insured; the insured may cancel at any time |
| Mortgagee interests | The mortgagee's interest is not invalidated by the mortgagor's acts or neglect; the company may cancel the mortgagee's interest on ten days' written notice |
| Pro rata liability | The company is not liable for a greater proportion of any loss than the amount it insures bears to the whole insurance covering the property |
| Requirements in case loss occurs | Give immediate written notice, protect the property from further damage, separate damaged and undamaged personal property, furnish a complete inventory, and within 60 days render a signed and sworn proof of loss |
| Appraisal | On written demand each party selects a competent and disinterested appraiser within 20 days; the appraisers select an umpire within 15 days or a judge of a court of record appoints one; an award by any two determines the amount of loss |
| Company's options | The company may repair, rebuild or replace with like kind and quality within a reasonable time on giving notice of its intention within 30 days after receipt of the proof of loss |
| Abandonment | There can be no abandonment to the company of any property |
| When loss payable | Loss is payable 60 days after the proof of loss is received and either the amount is agreed, an appraisal award is filed, or a judgment is entered |
| Suit | No suit is sustainable unless all requirements have been complied with and the action is commenced within 24 months after the inception of the loss |
| Subrogation | The company may require an assignment of all right of recovery against any party for the loss |
Suit Against the Insurer — the cross-reference you must make. Regulation 64 § 216.6(c) requires that, in any case where a claim is rejected, the insurer notify the claimant in writing of any applicable policy provision limiting the claimant's right to sue. In New York that provision is normally the § 3404 24-month suit limitation. A denial letter that omits it is a Regulation 64 violation and gives the claimant a strong waiver and estoppel argument.
Cancellation and Nonrenewal: Two Different Statutes
Personal Lines — Insurance Law § 3425
Applies to “covered policies” such as personal auto and homeowners.
- First 60 days (the underwriting or binder period): the insurer has broad freedom to cancel, but the notice must state the specific reason or reasons.
- After 60 days: cancellation is permitted only on enumerated grounds — nonpayment of premium (with the amount due stated), conviction of a crime increasing the hazard, fraud or material misrepresentation in obtaining the policy or in presenting a claim, wilful or reckless acts or omissions increasing the hazard, physical changes making the property uninsurable under the insurer's standards, and a determination by the Superintendent that continuation would violate the Insurance Law. For personal auto, suspension or revocation of a driver's license is added.
- Nonrenewal or conditional renewal: written notice stating the specific reasons, 45 to 60 days before the end of the policy period.
Commercial Lines — Insurance Law § 3426
- First 60 days: cancellation only on stated grounds, effective 20 days after written notice.
- After 60 days or on renewal: cancellation only on enumerated grounds — nonpayment, conviction of a crime increasing the hazard, fraud or material misrepresentation, acts or omissions substantially increasing the hazard, material physical changes making the property uninsurable, a Superintendent determination on solvency or legal violation, and a good-faith suspicion of arson — effective 15 days after written notice to the first named insured and the insured's agent or broker.
- Nonrenewal or conditional renewal: notice at least 60 but not more than 120 days in advance of the expiration date; for excess liability policies and certain jumbo risks the window shortens to at least 30 but not more than 120 days.
| Personal lines (§ 3425) | Commercial lines (§ 3426) | |
|---|---|---|
| Underwriting period | 60 days | 60 days |
| Cancellation notice after 60 days | Per the statute's schedule, with specific reasons | 15 days |
| Nonrenewal / conditional renewal notice | 45 to 60 days | 60 to 120 days (30 to 120 for excess/jumbo) |
DFS Cybersecurity Requirements (23 NYCRR Part 500)
The blueprint lists cybersecurity under Maintenance and duration because it now attaches to the licensee, not just to the carrier. Any individual or entity operating under a DFS license, registration or charter under the Banking, Insurance or Financial Services Law is a Covered Entity — and that includes a licensed independent adjuster.
Core obligations:
- A written cybersecurity program and cybersecurity policy approved by a senior officer or the governing body.
- A designated Chief Information Security Officer (CISO) and an annual written report to the governing body.
- Periodic risk assessments, penetration testing and vulnerability assessments, access privilege management, multi-factor authentication, encryption of nonpublic information, secure disposal, and third-party service provider security policies.
- An incident response and business continuity plan, with training and monitoring.
- Notice to the Superintendent within 72 hours of determining that a cybersecurity event has occurred that meets the regulation's reporting criteria, and notice within 24 hours of making an extortion (ransom) payment, with a written explanation within 30 days.
- An annual certification of material compliance (or written acknowledgment of non-compliance with a remediation plan) filed with DFS.
- A limited exemption in § 500.19 relieves the smallest licensees of some — but not all — requirements; the notice obligations are not among the items exempted.
Adjuster Reality: claim files are stuffed with nonpublic personal information — names, dates of birth, Social Security numbers, medical records, bank details for settlement drafts. Part 500 and Regulation 169 (Section 12.3) together mean that losing a laptop of claim files is simultaneously a privacy failure, a cybersecurity event, and potential grounds for discipline under § 2110.
The Terrorism Risk Insurance Act (15 U.S.C. § 6701 note)
TRIA was enacted in 2002 after the September 11 attacks left the commercial property and liability market without terrorism capacity. It has been extended repeatedly — 2005, 2007, the Terrorism Risk Insurance Program Reauthorization Act of 2015, and again in 2019, which runs the program through December 31, 2027.
How the Program Works
- Certification. The Secretary of the Treasury, in consultation with the Secretary of Homeland Security and the Attorney General, certifies an act of terrorism. Certification requires aggregate property and casualty insurance losses exceeding $5 million from the act.
- Program trigger. Federal sharing begins only once industry-wide insured losses from certified acts exceed the $200 million program trigger.
- Insurer deductible. Each participating insurer retains a deductible equal to 20% of its prior year's direct earned premium in TRIA lines.
- Federal share. Above the deductible the federal government pays 80% of insured losses and the insurer retains 20%.
- Program cap. Aggregate federal and insurer liability is capped at $100 billion in a program year.
The Two Duties on the Carrier
- Make available. A participating insurer must make terrorism coverage available in its commercial property and casualty policies on terms not materially different from other coverage. The insured may decline it.
- Disclosure. The insurer must disclose the premium charged for terrorism coverage and the existence of the federal share, both at offer and at renewal.
The New York Wrinkle: Fire Following
Because New York's § 3404 standard fire policy makes fire a covered peril and permits no policy to give less than the standard form, a fire that follows a terrorist act is covered under a New York fire policy whether or not the insured bought TRIA terrorism coverage. That “fire following” rule is a genuine New York-specific answer, and it is exactly the kind of statutory carve-out the Series 17-70 likes to test.
A New York homeowner’s fire claim is denied. Twenty-six months after the date of the fire the insured sues. Which New York provision is dispositive, and what duty did Regulation 64 place on the insurer at the time of denial?
A commercial property insurer decides not to renew a policy that has been in force for three years. What advance notice does Insurance Law § 3426 require?