Provides that an automobile insurer may waive the inspection of a private passenger automobile prior to providing physical damage coverage.
TITLE OF BILL: An act to amend the insurance law, in relation to inspections of private passenger automobiles prior to the provision of coverage for physical damage thereto
PURPOSE: This bill allows an auto insurer to waive the right to inspect a motor vehicle prior to issuing an insurance policy if such insurer has tiled a plan of operation to ensure that vehicles covered under such policy have not sustained physical damage.
SUMMARY OF PROVISIONS: Section 1: Amends Insurance Law section 3411 to permit an auto insurer to waive the physical inspection of an automobile prior to insuring such a vehicle. In addition, an insured can receive coverage after sustaining an accident without first having the vehicle inspected if such insurance carrier has filed a plan of operation with the Superintendent of Insurance.
EXISTING LAW: Under current law, all motor vehicles must be inspected prior to being covered under an auto insurance policy.
The prior inspection law was first enacted almost a quarter century ago to address problems of fraudulent damages to motor vehicles that were covered after the accident had been sustained. Since 1984, mandatory equipment can be verified by standardized Vehicle Identification Numbers (VIN) adopted by the auto industry in the 1980's. Fraudulent policies purchased after an accident has taken place can easily be identified through today's new computer technology that pinpoints where and when a call was made and when a vehicle had been in an accident or repaired. While some may still attempt to purchase policies for phantom vehicles, today's modern Special Investigation Units (SIU's) are far better equipped to identify such issues that their counterparts of the 1970's
The magnitude of this aspect of auto insurance fraud is not large enough to warrant the cost and unintended consequences of the existing law. The current regulation, as prescribed by section 3411, is complex and expensive for insurers to comply with, which drives up the overall cost for all auto insurance in New York.
In addition, under current law, people who have no intention of committing auto insurance fraud can find at the time of an accident, that they have lost coverage for such an accident because no auto inspection was performed. In this situation, the insured has purchased coverage and paid the premium, but will not be covered if his or her auto sustains physical property damage simply because the auto was inadvertently not inspected.
The intent of this bill is simply to remove the burden from the Department of crafting a one size fits all solution to reform this requirement that all vehicles must be physically inspected. It allows each insurer to either comply with the existing physical inspection laws or, if it wants to, to develop its own plan of operation to ensure that it does not cover autos after a physical damage claim has been sustained. For example, an insurer may require physical inspections for auto that are valued over a certain monetary threshold or rely more on new technologies that can identify those vehicles that have already sustained physical damages.
LEGISLATIVE HISTORY: S.2023 of 2007/2008 S.1039 of 2009/2010
FISCAL IMPLICATIONS: None.
LOCAL FISCAL IMPLICATIONS: None.
EFFECTIVE DATE: January first, next succeeding the date upon which it shall have become law, and apply to polices issued or renewed after such date.
STATE OF NEW YORK ________________________________________________________________________ 2496 2011-2012 Regular Sessions IN SENATE January 24, 2011 ___________Introduced by Sen. MARTINS -- read twice and ordered printed, and when printed to be committed to the Committee on Insurance AN ACT to amend the insurance law, in relation to inspections of private passenger automobiles prior to the provision of coverage for physical damage thereto THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. The section heading and subsections (d), (g) and (m) of section 3411 of the insurance law are amended to read as follows: Automobile physical damage insurance covering private passenger auto- mobiles; standard provisions;
[required]inspections; duties of insurers and insureds. (d) A newly issued policy shall not provide coverage for automobile physical damage perils prior to an inspection of the automobile by the insurer, UNLESS THE INSURER HAS WAIVED THE RIGHT TO SUCH INSPECTION PURSUANT TO A STATEMENT OF OPERATION FILED WITH THE SUPERINTENDENT. IN ITS STATEMENT OF OPERATION, AN INSURER MAY WAIVE THE RIGHT TO INSPECT SOME OR ALL AUTOMOBILES. EVERY STATEMENT OF OPERATION SHALL TAKE EFFECT UPON ITS FILING WITH THE SUPERINTENDENT AND MAY COVER SOME OR ALL AUTO- MOBILES. (g) If an automobile subject to the provisions of this section is acquired by the insured as a replacement for or an addition to an auto- mobile insured for physical damage coverage, and the insured requests physical damage coverage for the replacement or additional automobile, such coverage for physical damage shall not be effective before such inspection is made, UNLESS THE INSURER HAS WAIVED THE RIGHT TO SUCH AN INSPECTION PURSUANT TO A STATEMENT OF OPERATION FILED WITH THE SUPER- INTENDENT. If, at the time of the request for such coverage, the auto- mobile is unavailable for inspection because of conditions of purchase or other circumstances and is thereafter made available for inspection,EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD00571-01-1 S. 2496 2
the insurer shall promptly inspect the automobile, and physical damage coverage shall not become effective before the inspection has been made. (m) (1) The superintendent, in regulations implementing the provisions of this section, shall also require that insurers take appropriate action to ensure that there is wide public dissemination of the provisions of this section relating to the rights and obligations of insureds and insurers. (2) The inspections provided for in this section may be dispensed with or deferred BY AN INSURER under circumstances specified IN THEIR STATE- MENT OF OPERATION FILED WITH THE SUPERINTENDENT OR in regulations of the superintendent. Such circumstances may include but are not limited to, the insuring of a new automobile, the insuring of an automobile whose inspection would constitute a serious hardship to the insurer, the insured or an applicant for insurance, and the insuring of an automobile for a limited specified period of time. (3) Inspections made pursuant to this section shall be made at locations and times reasonably convenient to the insured. The results of any inspection may be considered in determining the value of the automo- bile. S 2. This act shall take effect on the first of January next succeed- ing the date on which it shall have become a law and shall apply to all insurance policies issued, renewed, altered or modified on or after such effective date.