State RegulationsNY specificDifficulty 2/5
A bank in Buffalo wants a group accident and health policy to insure its personal-loan customers. Under N.Y. Ins. Law §4235, what limit applies to the amount of coverage on each debtor?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under N.Y. Ins. Law §4235(c)(1)(E), a group accident and health policy may be issued to a creditor insuring a group of debtors, but the amount of indemnity payable with respect to any person insured may not at any time exceed the amount of the unpaid indebtedness. The coverage exists to protect the loan balance, so it shrinks as the debtor pays the balance down.
Why the other options are wrong
- A) The statute expressly caps the indemnity by the unpaid indebtedness; creditor group coverage is not unlimited.
- C) The debtor's written consent cannot override the statutory cap tied to the unpaid balance.
- D) Each debtor's coverage is measured by that debtor's own outstanding balance, not by a single group-wide figure.
Memory hook
Creditor group coverage melts with the loan: never more than the balance owed.