New York: The "Loss Transfer" Opportunity to Recover Otherwise Non-Recoverable First-Party Benefits

May 13, 2014 — Robert M. Caplan – White and Williams LLP
New York’s “no-fault” legislation reflects a public policy designed to make the insurer of first-party benefits absorb the economic impact of loss without resort to reimbursement from its insured or, by subrogation, from the tortfeasor. Country Wide Ins. Co. v. Osathanugrah, 94 A.D.2d 513, 515 (N.Y. 1st Dept. 1983). The no-fault concept embodied in New York’s Insurance Law modifies the common law system of reparation for personal injuries under tort law. Safeco Ins. Co. of Am. v. Jamaica Water Supply Co., 83 A.D.2d 427, 431 (N.Y. 2nd Dept. 1981). “[F]irst party benefits are a form of compensation unknown at common law, resting on predicates independent of the fault or negligence of the injured party.” Id. at 431. The purpose of New York’s no-fault scheme is “to promote prompt resolution of injury claims, limit cost to consumers and alleviate unnecessary burdens on the courts.” Byrne v. Oester Trucking, Inc., 386 F. Supp. 2d 386, 391 (S.D.N.Y. 2005). New York’s no-fault scheme—contained in Article 51 of its Consolidated Laws (“Comprehensive Motor Vehicle Insurance Reparations”)—requires owners of vehicles to carry insurance with $50,000 minimum limits which covers basic economic loss, i.e., first-party benefits, on account of personal injury arising from the use or operation of a motor vehicle. Basic economic loss includes, among other things: (1) medical expenses; (2) lost earnings up to $2,000 per month for three years; and (3) out-of-pocket expenses up to $25 per day for one year. N.Y. INS. LAW § 5102(a). Read the full story...
Reprinted courtesy of Robert M. Caplan, White and Williams LLP
Mr. Caplan may be contacted at caplanr@whiteandwilliams.com