Provides that an automobile insurer may waive the inspection of a private passenger automobile prior to providing physical damage coverage.

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S2496-2011 Actions

• Jan 4, 2012: REFERRED TO INSURANCE
• Jan 24, 2011: REFERRED TO INSURANCE

S2496-2011 Meetings

Insurance: Jun 6, 2011

S2496-2011 Memo

BILL NUMBER:S2496

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.

JUSTIFICATION:

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.

S2496-2011 Text

                      S T A T E   O F   N E W   Y O R K
  ________________________________________________________________________

                                    2496

                         2011-2012 Regular Sessions

                              I N  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.