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

George E. Pataki
Governor

Gregory V. Serio
Superintendent

The Office of General Counsel issued the following opinion on August 5, 2003, representing the position of the New York State Insurance Department.

Re: Waiver of Mandatory Inspection Pursuant to N.Y. Comp. Codes R. & Regs. tit. 11, § 67.3(b)(7)

Question Presented:

Insurer A waived the mandatory inspection of a new, unused private passenger automobile pursuant to N.Y. Comp. Codes R. & Regs. tit. 11, § 67.3(b)(2) (2003), and subsequently issued a private passenger automobile insurance policy through an independent insurance agent ("Agent") for the automobile. The Agent is now seeking to transfer the coverage to Insurer B. In consideration of Insurer A’s § 67.3(b)(2) waiver of the automobile’s prior mandatory inspection, may Insurer B now waive the mandatory inspection of the automobile in accordance with N.Y. Comp. Codes R. & Regs. tit. 11, § 67.3(b)(7) (2003)?

Conclusion:

No. Insurer A’s waiver of the mandatory inspection under § 67.3(b)(2) does not mitigate Insurer B’s current obligations under § 67.3(b)(7). Insurer B may not rely upon Insurer A’s waiver under § 67.3(b)(2) to satisfy the circumstances of § 67.3(b)(7) because § 67.3(b)(2)’s bill of sale requirement for the automobile, when it was new and unused, does not satisfy the explicit conditions of § 67.3(b)(7). Therefore, under the facts presented, Insurer B may not waive the mandatory inspection of the automobile pursuant to § 67.3(b)(7) because Insurer A did not physically inspect the automobile.

Facts:

No further facts are provided.

Analysis:

N.Y. Comp. Codes R. & Regs. tit. 11, pt. 67 (2003) (Regulation 79) provides insurer requirements for mandatory underwriting inspections of "private passenger automobiles," as defined by § 67.1(a). N.Y. Comp. Codes R. & Regs. tit. 11, § 67.3(b)(1)-(10) lists the circumstances under which an insurer may waive or dispense with such mandatory inspections. § 67.3(b)(2) and § 67.3(b)(7) provide the following, in relevant part:

(2) Where a new, unused automobile is purchased or leased from a franchised automobile dealership and the insurer is provided with either a copy of the bill of sale which contains a full description of such automobile, including all options and accessories, or a copy of the lease or MV-50 form, provided by the Department of Motor Vehicles, which establishes transfer of ownership from the dealer to the customer and a copy of the window sticker or advanced dealer shipping notice (invoice) showing the itemized options and equipment in addition to the total retail price of the vehicle on which will be added any dealer installed options installed on the vehicle at the time of sale or lease. . . .

. . . .

(7) When an individual insured's coverage is being transferred by an independent insurance agent (as defined in section 2101(b) of the Insurance Law) to a new insurer and said agent provides the new insurer with a copy of the inspection report completed on behalf of the previous insurer, provided the independent agent represents both insurers, and the insured vehicle was physically inspected by the previous insurer.

Pursuant to the express language of Regulation 79, § 67.3(b)(7), Insurer B can only waive the mandatory inspection of the automobile if Insurer A physically inspected the automobile. Insurer B may not rely upon Insurer A’s waiver of the mandatory inspection under § 67.3(b)(2) to satisfy the requirements of § 67.3(b)(7) because § 67.3(b)(2)’s bill of sale requirement does not satisfy the explicit requirements of § 67.3(b)(7). Therefore, under the facts presented, Insurer B may not waive the mandatory inspection of the automobile pursuant to § 67.3(b)(7) because Insurer A did not physically inspect the automobile.

For further information you may contact Senior Attorney Kristian Earl Lynch at the New York City Office.