New York Laws
Article 34 - Insurance Contracts-Property/casualty
3427 - Gap Insurance; Cancellation, Renewal and Other Provisions.

(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 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 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 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 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 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 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 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 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 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 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 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 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.

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