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 May 2, 2001, representing the position of the New York State Insurance Department.

RE:  No-Fault Inter-Company Loss Transfer

Question Presented:

Would a motor vehicle, which weighs 6,500 pounds or less and which is used by its owner for commercial deliveries of the owner’s own product, be subject to the loss transfer provisions set forth in N.Y. Ins. Law § 5105(a) (McKinney 2000) when the owner charges its customers a fee for the delivery?

Conclusion:

No. Such a motor vehicle is not a motor vehicle "used principally for the transportation of persons or property for hire" within the meaning of N.Y. Ins. Law § 5105(a) (McKinney 2000), notwithstanding the fact that the owner charges its customers a fee for the delivery.

Facts:

Company A has presented a situation where the owner of a retail florist business owns a commercial vehicle that is used to deliver flowers to customers. It is Company A’s contention that a "for hire" situation is created where the owner charges a delivery fee because the delivery vehicle has become a "revenue generating vehicle."

Analysis:

N.Y. Ins. Law § 5105(a) (McKinney 2000) provides in pertinent part as follows:

Any insurer liable for the payment of first party benefits to or on behalf of a covered person and any compensation provider paying benefits in lieu of first party benefits which another insurer would otherwise be obligated to pay pursuant to subsection (a) of section five thousand one hundred three of this article or section five thousand two hundred twenty-one of this chapter has the right to recover the amount paid from the insurer of any other covered person to the extent that such other covered person would have been liable, but for the provisions of this article, to pay damages in an action at law. In any case, the right to recover exists only if at least one of the motor vehicles involved is a motor vehicle weighing more than six thousand five hundred pounds unloaded or is a motor vehicle used principally for the transportation of persons or property for hire.

In State Farm Mutual Automobile Insurance Company v. Aetna Casualty and Surety Company, 132 A.D.2d 930, 518 N.Y.S.2d 263 (4th Dept. 1987), aff’d, 71 N.Y.2d 1013, 530 N.Y.S.2d 106 (1988), the Appellate Division, in reversing the order of the Special Term which denied the petitioner’s application for a permanent stay of the arbitration sought by the respondent under the loss transfer provisions of N.Y. Ins. Law § 5105(a), said in pertinent part as follows:

The purpose of the 1977 amendment to Insurance Law § 5105 [(a), which added the language limiting loss transfer to cases involving motor vehicles weighing more than 6,500 pounds or motor vehicles used principally for the transportation of persons or property for hire,] was to limit the right of insurance carriers to recover first party payments [citing case]. To accept Special Term’s interpretation that the words "for hire" modify the words "persons or property," would frustrate this purpose by permitting a loss transfer claim in almost all cases involving commercial deliveries by an owner of a vehicle. Although the statute is unartfully drafted, we believe that the words "for hire" modify the word "vehicle" and that the statute covers only those vehicles hired to transport people, such as taxis and buses, and livery vehicles hired to transport property.

Given these limited exceptions, it is clear that a motor vehicle, which weighs 6,500 pounds or less and which is used by its owner for commercial deliveries of the owner’s own product does not constitute a motor vehicle "used principally for the transportation of persons or property for hire" within the meaning of N.Y. Ins. Law § 5105(a) (McKinney 2000), notwithstanding the fact that the owner charges its customers a fee for the delivery. Accordingly, such a motor vehicle would not be subject to the loss transfer provisions set forth in N.Y. Ins. Law § 5105(a) (McKinney 2000).

For further information you may contact Senior Attorney Ethan G. Wolfe at the New York City Office.