New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

The Office of General Counsel issued the following informal opinion on January 18, 2001, representing the position of the New York State Insurance Department.

RE: Homeowners’ Insurance and Videotaping of Home Contents

Question Presented:

Whether an insurance agent, in conjunction with the sale of homeowners’ insurance, may offer to videotape the contents of an insured’s home?

Conclusion:

The above arrangement would not be permissible under the New York Insurance Law. The offer to videotape the contents of the insured’s home would be an "unlawful inducement" to the making of insurance, which is prohibited by N.Y. Ins. Law § 2324(a) (McKinney 2000).

Facts:

Videotaping the contents of one’s home is often recommended to applicants for homeowners’ insurance because in the event of a loss, it may facilitate resolution of a disputed claim. The insurer here has not required that a videotape of the contents of the home be made, however, the insurance agency wishes to offer the videotaping service, at no cost or low cost, to prospective insureds. The insurance agency would retain the tape in a fireproof safe.

Analysis:

N.Y. Ins. Law §2324(a)(McKinney 2000) provides, in relevant part, as follows:

[N]o licensed insurance agent, no licensed insurance broker, and no employee or other representative of any. . . such broker shall make, procure or negotiate any contract of insurance other than as plainly expressed in the policy or written contract issued or to be issued as evidence thereof, or shall directly, or indirectly, by giving or sharing a commission or in any manner whatsoever, pay or allow or offer to pay or allow to the insured. . . as an inducement to the making of insurance or after insurance has been effected, any rebate from the premium which is specified in the policy, or any special favor or advantage in the dividends or other benefit to accrue thereon, or shall give or offer to give, any valuable consideration or inducement of any kind which is not specified in such policy or contract, other than any article of merchandise not exceeding five [15] dollars1 in value which shall have conspicuously stamped or printed thereon the advertisement of the insurer, agent or broker.

The videotaping is not required by the insurer. The agency would be providing to prospective insureds, at little or no cost, the videotaping of household contents and storage of the videotape. The videotape is of no direct benefit to the agency, since in the event of loss, it would be the insurer and not the insurance agency that would be responsible for adjusting and settling the claim.

The taping and storage service clearly would be an inducement to place insurance with the agency and would constitute "valuable consideration" as within the meaning of the statute, falling squarely within the anti "rebating" provision.

This Department has had many opportunities to interpret the anti-rebating statute and has consistently concluded that agents and brokers are prohibited from offering rebates or inducements other than an article of merchandise not exceeding $15 in value which may be given to the insured as a "keepsake".

The offer of videotaping services and storage of the tape clearly does not fall within the parameters of the keepsake exception. Unless the videotaping and storage are underwriting requirements of the insurer or are specified in the homeowners’ policy, they can not be provided to prospective insureds under the circumstances presented in your letter.

For further information, you may contact Associate Attorney Sam Wachtel at the New York City Office.