State RegulationsNY specificDifficulty 2/5
A New York individual accident and health policy contains a clause that is more restrictive than New York law allows. Under the policy's conformity with state statutes provision, how is the clause treated?
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under N.Y. Ins. Law §3216(d)(2)(I), the conformity provision automatically amends any conflicting clause to conform to the governing statutes. The policy is not voided and no regulatory approval is needed; the offending language simply gives way to the statutory requirement while the rest of the contract stands. This protects insureds from inadvertently illegal policy language.
Why the other options are wrong
- A) Private agreement cannot override statute; the illegal term yields to the law.
- C) The remedy is reformation, not rescission; one bad clause does not unwind the whole contract.
- D) No approval process is required; the conformity amendment operates by force of the provision itself.
Memory hook
Illegal clause? Amended, not fatal.