BILL NUMBER: S9368
SPONSOR: BAILEY
 
TITLE OF BILL:
An act to amend the insurance law, in relation to enacting the "New York
property rehabilitation protection act"
 
PURPOSE OR GENERAL IDEA OF BILL:
This bill would add a new section 3463 to the insurance law, to protect
individuals who have sustained damage to their property, by limiting and
expressly prohibiting, after January 1, 2027, the use of an assignment
of benefits contract, by an unscrupulous rehabilitation contractor.
 
SUMMARY OF PROVISIONS:
Section 1: This section would add a short title, declaring that this law
shall be known and may be cited as the New York Property Rehabilitation
Protection Act.
Section 2: This section would establish Legislative Findings and Deter-
minations.
Section 3: This section would add a new section 3463 to the insurance
law to:
(A) Establish Definitions for Assignee, Assignment Agreement, Assignor,
Commercial Property Insurance, Residential Property Insurance, Presuit
Settlement Deman, and Presuit Settlement Offer,
(B) Establish requirements and limitations for Assignment Agreements in
New York State;
(C) Provide requirements and limitations for Assignment Agreement
Claims;
(D) Establish Defenses under Assignment Agreements;
(E) Establish requirements and limitations for the Transfer of Authority
under an Assignment Agreement;
(F) Establish the Exclusivity of an Assignment Agreement;
(G) Establish the Additional Responsibilities of an Assignee under an
Assignment Agreement;
(H) Limit the applicability of Section 3463; and
(I) Provide that no policyholder may not assign, in whole or in part,
any post-loss insurance benefit under any residential property insurance
policy or under any commercial property insurance policy, that is issued
on or after January 1, 2027, and that any such attempt to assign such
post-loss property insurance benefits under such a policy, shall be
deemed unlawful, void, Invalid, and unenforceable.
Section 4: This section would provide that this act would take effect on
the 120th day after it shall have become a law.
 
JUSTIFICATION:
This bill would seek to provide protection to property owners after they
have suffered a loss as a result of a fire, flood, storm or other
catastrophic event that requires their property to undergo rehabili-
tation.
For decades it has become apparent that unscrupulous rehabilitation
contractors have been using the mechanism of Assignment of Benefit
Agreements to defraud and take advantage of residential property owners
and their insurance companies. These unscrupulous rehabilitation
contractors, who most often operate in the wake of natural disasters,
fires, or other catastrophic events, have been found to use these
Assignment of Benefit Agreements, to sign up impacted home owners, for
inadequate, inordinately expensive, insufficient or unreliable home
rehabilitation services, without appropriate consumer protections,
express contractual provisions outlining what actual construction work
will be performed and at what cost, based upon a fraudulent and/or
misleading promise that all costs of such services will be paid for by
such home owners' insurance company. These unscrupulous rehabilitation
contractors, and their unreliable and often misleading Assignment of
Benefit Agreements, can result in homeowners not receiving quality reha-
bilitation services, and/or ultimately becoming responsible for enormous
rehabilitation costs, without the benefit of the necessary rehabili-
tation work.
This problem, of the misuse of such Assignment of Benefit Agreements has
not only happened in New York, but in many other states as well, causing
such other states to limit or preclude the execution of such Assignment
of Benefit Agreements, and mandating consumer protection for such
destressed homeowners.
In order to provide consumer protection for such distressed homeowners
in New York State, it is necessary to limit and preclude the unscrupu-
lous use of such Assignment of Benefit Agreements, as has been done in
several other states. In order to accomplish such consumer protection,
this New York Property Rehabilitation Protection Act, is sought to be
enacted to address such limitations and preclusions with respect to
Assignment of Benefit Agreements, executed prior to January 1, 2027, and
to expressly prohibit the use of such agreements after January 1, 2027.
By so doing, this New York Property Rehabilitation Protection Act, seeks
to bring New York State and its homeowners and insurers, in conformance
with similar protections and preclusions that have been enacted in other
states, and that have provided such consumer protection to their home-
owners and insurance companies.
 
PRIOR LEGISLATIVE HISTORY:
2026: This is a new bill.
 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
No negative fiscal impact for state or local governments would be expe-
rienced by this bill, and it is hoped that it will have the effect of
diminishing rehabilitation contract fraud, thereby reducing consumer
protection costs for both state and local governments.
 
EFFECTIVE DATE:
On the 120th day after it shall become a law.