The Office of General Counsel issued the following opinion on August 19, 2002, representing the position of the New York State Insurance Department.
RE: Operation of a Motor Vehicle with an Expired Registration.
Pursuant to the Insurance Law, may an insurer include an exclusion in an automobile liability insurance policy that permits the denial of coverage on the ground that the claim arose while the insured was operating a motor vehicle with an expired registration?
No. N.Y. Comp. Codes R. & Regs. tit. 11, § 60-1.2 (1996) (Reg. 35-A) does not contain an exclusion that permits the denial of coverage on the ground that the claim arose while the insured was operating a motor vehicle with an expired registration. Therefore, an insurer may not include such an exclusion in an automobile liability insurance policy that is used to satisfy New Yorks motor vehicle financial security requirements.
No specific fact pattern was provided.
N.Y. Veh. & Traf. Law § 310 (McKinney 1996) provides that the Motor Vehicle Financial Security Act (Art. 6 of the Vehicle and Traffic Law) was enacted to help ensure that motorists would be financially able to respond in damages for their negligent acts, so that innocent victims of motor vehicle accidents could be recompensed for injury and financial loss inflicted on them.
Section 312(1) requires every driver to maintain proof of financial security continuously throughout the registration period and to produce such proof when requested. One method of maintaining financial security is through an owners policy of liability insurance. When the insurance policy is terminated, the owner must surrender his registration certificate and number plates of the vehicle to the commissioner, unless proof of financial security is otherwise maintained in compliance with Article 6 of the Vehicle and Traffic Law.
Section 311(4)(a) requires the Superintendent to prescribe by regulation the minimum provisions for an owners policy or liability insurance in New York State. In accordance with this provision, the Superintendent promulgated N.Y. Comp. Codes R. & Regs. tit. 11, §§ 60-1.1- 60-1.6 (Reg. 35-A), which governs both commercial and non-commercial automobile liability insurance policies.
Specifically, section 60-1.1 of the regulation mandates the minimum provisions that must be included in an owners policy of liability insurance. Section 60-1.2 provides permissible exclusions. These exclusions are narrow in furtherance of the policy mandate that innocent victims have a source for financial recompense when injuries or financial losses are sustained as a result of motor vehicle accidents. No owners policy of liability insurance used to satisfy the financial security requirements of the Vehicle & Traffic Law may contain an exclusion other than one expressly permitted under Regulation 35-A. See Rosado v. Eveready Ins. Co., 34 N.Y.2d 43, 312 N.E.2d 153, 356 N.Y.S.2d 8 (1974); Progressive Casualty Ins. Co. v. Yodice, 180 Misc. 2d 863, 694 N.Y.S.2d 281 (Sup. Ct. Richmond Co. 1999).
Section 60-1.2 of Regulation 35-A does not contain an exclusion that permits the denial of coverage on the ground that the claim arose while the insured was operating a motor vehicle with an expired registration. Accordingly, an insurer may not include such an exclusion in an automobile liability insurance policy that is used to satisfy the financial security requirements.
Please note that Regulation 35-A only applies to automobile liability insurance policies. An insurance company may include an exclusion not specified in Regulation 35-A in a physical damage insurance policy, provided that it is approved by the New York State Insurance Department.
For further information, you may contact Attorney Pascale Joasil at the New York City office.
1Since the inquiry specifically focuses on the denial of coverage, this opinion will be limited to this issue and will not address the cancellation and nonrenewal of automobile liability insurance policies pursuant to N.Y. Ins. Law §§ 3425 and 3426 (McKinney 2000 and Supp. 2002) or the rules of the New York Automobile Insurance Plan.