Supplemental spousal liability coverage: A choice for New Yorkers to make

By Michael Taub

In 2023, the New York State Legislature passed a law which requires all automobile policies written in New York to include supplemental spousal liability coverage. Traditionally, although a vehicle passenger could sue their spouse for negligence in causing a motor vehicle accident, the applicable insurance policy would not include coverage for that act, thereby eliminating a source of recovery.

supplemental spousal liability coverage — Michael Taub

Several years ago, New York State required insurance carriers to provide coverage for SSLC as an option. Such coverage is now mandatory. So while a policy holder was formerly required to choose this option – to opt in – the new law includes this coverage by default. They are now required to opt out in writing to remove the coverage.

The legislation which required all policies to automatically include Supplemental Spousal Liability was a policy choice made by the legislature and approved by the governor. The law ultimately benefits New Yorkers and provides an easy opt-out.

Take the case of a husband or wife seriously injured in a one-vehicle accident. Prior to the passage of SSLC, that passenger would be limited to recovering their medical expenses and a portion of their lost earnings under the vehicle’s no fault-insurance policy – and that coverage is usually limited to $50,000. The injured spouse would not be able to recover other items of damage. Although these instances are rare, when a wrong is committed, the law generally favors a right of recovery. Any accident victim should have the option to recover damages from the negligent party, regardless of the party’s identity.

Those who opposed the legislation highlighted the fact that SSLC is also required on policies for those who are unmarried – so a 20-year-old unmarried college student, for example, will wind up paying a premium for coverage which is inapplicable. One Times article cited a report from the New York Department of Financial Services that the premium increase would total $20 to $84 annually.

The law also requires that supplemental spousal liability coverage be included in policies where the vehicle is owned by a business, instead of by an individual. That coverage would also be inapplicable, but the policy holder can opt out. In a business policy scenario, at least the driver would be eligible for worker’s compensation in lieu of no-fault benefits.

What those opposed to the legislation tend to omit from their argument is that any policyholder, married or not, can easily opt out of the coverage. My own insurance carrier provided a form with the policy renewal to do exactly that. All that was necessary was to check a box to opt out, and the signed and dated form could be mailed back. Most carriers will no doubt also provide an online option.

The legislation provides a choice. For a relatively small increase in premium, New Yorkers will be covered for car accident injuries, even in a case where their own spouse is the negligent party. If, on the other hand, a policyholder decides that they do not want the coverage, they can choose to waive the coverage. New Yorkers can make that choice.

The bill has a sunset provision in 2027, which means that the law will expire at the end of that year. If the doomsday scenarios forecast by the insurance industry play out, the law doesn’t have to be renewed. For now, the law provides a person seriously injured through the fault of their spouse with a means of recovery. The prior version would have left many people unprotected.

One of the arguments against mandatory SSLC was that a tiny minority of policyholders purchased the coverage. That was because very few people read their policies. But if a policyholder sees a significant increase in their premium, they are more likely to determine the reason why. Although insurance policies can be complicated to interpret, they come with a declaration sheet that sets forth all the coverages and dollar limits included in that policy.

Consumer choice is a good thing. Although the law may not be perfect, let’s not allow the perfect to be the enemy of the very good. SSLC makes sense. The law probably shouldn’t encourage spouses to sue each other for negligence, and some people may not even want to consider litigating against a spouse. Those individuals can opt out. Yes, the insurance companies will wind up paying out more money in claims, but not nearly as much as will be collected in premium dollars.

Supplemental spousal liability coverage is essentially on a four-year test run. So if you’re a New York resident, check out your policy, see what the coverage costs, and make your own choice. The ball is in your court!

Michael L. Taub, Esq., is a partner at The Platta Law Firm in New York City. Contact him at [email protected].