On November 5, 2012, the New York Department of Financial Services issued an Insurance Circular Letter No. 8 (“Circular”), which provides that
it would be dangerous to public health and against public policy for insurers to enforce provisions of their policies that operate to bar insureds from disposing of damaged property before the insurer has inspected it. Accordingly, insurers must accept homeowners’ documentation of losses rather than requiring an inspection first where an immediate cleanup is reasonably necessary to protect health and safety, or protect further damage to property.
The letter emphasizes that the Circular applies only to homeowner policies, and that FEMA is expected to issue guidance on this issue with respect to flood policies. The Circular warns insureds who have both flood and homeowner policies to follow the FEMA rules in order to preserve their claims under the flood insurance program.
Notably, the Circular states that
Any authorized insurer that fails to act in accordance with this circular letter will be subject to liability for engaging in unfair claim settlement practice as prohibited by Article 2601 of the Insurance Law.
We will advise of further insurance department bulletins and circulars as they are posted.