The Office of General Counsel issued the following informal opinion on July 21, 2000, representing the position of the New York State Insurance Department.
RE: Motor Vehicle Law Enforcement Fee
Must an insurer sending a notice of cancellation for non-payment of premium of motor vehicle liability insurance coverage include the one dollar motor vehicle law enforcement fee charged to the policy holder in its statement of the amount due?
The only viable option to the question presented is for the insurer to add the one-dollar fee to the premium installment due to total the amount that must be paid to avoid cancellation. It is not practical to send a separate written notice to the policyholder to pay the one-dollar fee, nor to send another declarations page of the policy to accomplish same.
The writer requests clarification as to whether an insurer, which has billed its insured for the Motor Vehicle Law Enforcement Fee of one dollar in addition to a regular premium installment that has gone unpaid, must then include the fee in the minimum amount due set forth in the cancellation notice that has been sent for non-payment of premium. The writers position is that the fee should not be included in the cancellation notice since it is not part of the insurance premium. Other carriers have taken the position that failing to include the fee could confuse the insured and render the cancellation invalid and they therefore include the fee in the minimum amount due in the cancellation notice.
N.Y. Ins. Law § 9110 (a) (McKinney Supp. 2000) provides that "Every insurance company authorized to do business in this state shall annually collect, in addition to the applicable premium charge, a motor vehicle law enforcement fee charged to each holder of a policy issued in the state or for delivery in the state for motor vehicle liability insurance coverage."
N.Y. Ins. Dept Circular Letter No. 5 (1992), dated May 5, 1992, on this subject provides in pertinent part that "The fee shall be charged to the policyholder" and, "The fee should be shown and separately identified either on a premium billing, or the declarations page of the policy, or in a separate written communication to the policyholder."
N.Y. Ins. Law § 3425 (c) (1) (A) (McKinney 1985) provides that an insurer may issue a notice of cancellation with respect to automobile insurance policies for "nonpayment of premium." N.Y. Ins. Law § 3425 (a) (10) (McKinney Supp. 2000) provides that "Nonpayment of premium means the failure of the named insured to discharge any obligation in connection with the payment of premiums on a policy of insurance or any installment of such premium."
Thus, as to the amount to be included in the cancellation notice, the insurer must include the enforcement fee in the minimum amount due set forth in the cancellation notice. This amount is properly designated as an addition to the premium because it is specifically authorized by Section 3425 (a) (10), which includes the failure of the insured to discharge any obligation in connection with the payment of premiums, such as the payment of the fee, in the definition of the nonpayment of premium.
For further information you may contact Associate Counsel Sidney B. Glaser at the New York City Office.