The Office of General Counsel issued the following informal opinion on January 24, 2000, representing the position of the New York State Insurance Department.
Filing requirements for unauthorized Insurer
Does the filing requirement contained in N. Y. Veh. & Traf. Law § 311(4)(c)(McKinney 1996) arise as a result of an insurer being subject to the filing requirement contained in N.Y. Ins. Law § 1214 (McKinney 1985)?
No. The filing requirement imposed by N. Y. Veh. & Traf. Law § 311(4)(c) is independent of that imposed by N.Y. Ins. Law § 1214.
An unauthorized insurer must, on occasion, adjust claims arising from motor vehicle incidents occurring in New York involving its insureds, or its insureds vehicles that are registered in another state. These claims arise under optional coverages contained in the other states policy, that obligates the insurer to provide minimum coverage in both type and amount of the New York State minimum financial security provisions, irrespective of its status as an insurer. An insured may choose to purchase this optional coverage. Additionally, under compulsory coverage selections, certain No-Fault and or PIP benefits may also be owed.
In an earlier opinion, this insurer had been advised that if certain employees of the insurer were to become licensed as independent adjusters pursuant to N.Y. Ins. Law § 2108 (McKinney 1985 & Supp. 1999), they could adjust these claims from the unauthorized insurers office located outside of New York. They were also advised that filings are required pursuant to N.Y. Ins. Law § 1214 and N. Y. Veh. & Traf. Law § 311(4)(c). They are now questioning whether the N. Y. Veh. & Traf. § 311(4)(c) filing is required in addition to the N.Y. Ins. Law § 1214 filing.
A New York licensed independent adjuster may adjust claims in New York on behalf of an unauthorized insurer from the unauthorized insurers offices out of state, provided that the insurer has executed and filed with the Department a written appointment of the superintendent as its true and lawful attorney in and for this state, upon whom all lawful processes in any proceeding against it can be served. (N.Y. Ins. Law § 1214). A person is prohibited from adjusting losses for any foreign insurance corporation that has not done so. This requirement is imposed on any unauthorized insurer that is transacting business in this state (this is distinguished from doing an insurance business in this state which requires licensing).
The unauthorized insurer is also required to make a filing with the Commissioner of Motor Vehicles pursuant to N. Y. Veh. & Traf. Law § 311(4)(c) which, in relevant part, defines an "owners policy of liability insurance" as:
In the case of a vehicle lawfully registered in another state, or in both this state and another state, either a policy issued by an authorized insurer, or a policy issued by an unauthorized insurer authorized to transact business in another state if such unauthorized insurer files with the commissioner in a form to be approved by him a statement consenting to service of process and declaring its policies shall be deemed to be varied to comply with the requirements of this article.
This section requires that an owners policy of insurance, in the case of a motor vehicle registered in another state in the name of a nonresident, shall either be a policy issued by an authorized insurer or a policy issued by an unauthorized insurer who files with the Commissioner of Motor Vehicles a consent to service of process and declares its policies varied to comply with the requirements of the Motor Vehicle Financial Security Act. The Court in Bookbinder v. Hults, 19 Misc. 2d. 1062, 1064, 192 N.Y.S. 2d. 331, 334 (Sup. Ct. 1959) describes the states interest in protecting the citizens of New York from financially irresponsible drivers as follows:
"The protection intended cannot be afforded unless the State has some control over the insurer. The State has accordingly imposed certain obligations on insurers so that the injured person shall have the means of obtaining payment for any recovery that he might obtain against the negligent operator of the automobile. Thus, if a resident operator cannot supply a policy of insurance as provided for under the provisions of Art. 6-A then he may not utilize the highways. Sec. 93-a, subd. 4(c) makes the safeguards, which are applicable to resident operators applicable to non-resident operators."
Clearly, both the legislature and the courts intended that the provisions of N. Y. Veh. & Traf. Law § 311(4)(c) apply to all unauthorized insurers independent of the requirement imposed by N.Y. Ins. Law § 1214.
For further information you may contact Associate Attorney Joan Siegel at the New York City office.