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 October 16, 2003 representing the position of the New York State Insurance Department.

RE: Rental Vehicle Coverage Endorsement.

Question Presented:

Pursuant to N.Y. Ins. Law § 3440(b) (McKinney 2000), must an insurer that writes a motor vehicle liability insurance policy in New York State that insures less than five private passenger motor vehicles registered in New York State provide rental vehicle insurance coverage when a motorcycle rented by the insured in the United States, its territories or possessions and Canada under a rental agreement with a term of thirty continuous days or less is damaged during the during the term of the rental agreement?

Conclusion:

Yes. A motorcycle is a "private passenger motor vehicle", as defined by N.Y. Ins. Law § 3440(a)(1) (McKinney 2000), for which rental vehicle insurance coverage must be provided.

Facts:

Mr. A represents that his insurance company writes coverage only for motorcycles in New York State. His policy also provides rental vehicle insurance coverage. He inquires whether his insurance company must provide rental vehicle insurance coverage for damage to a motorcycle rented by his insured motorcyclist. His inquiry was generated by the definition of "Rental vehicle" in the Insurance Services Office, Inc. PP-2003-ORVC1 RENTAL VEHICLE COVERAGE ENDORSEMENT (hereinafter "ISO endorsement"). The ISO endorsement has been filed with and approved by the Department and will become effective on September 1, 2003.

The ISO endorsement's definition of "Rental vehicle" states:

"Rental vehicle" means a motor vehicle of the private passenger or station wagon type or a motor vehicle with a pick-up body, a delivery sedan, panel truck or van if the vehicle is:

1. Not used for transporting persons or property for hire; and

2. Owned by a person engaged in the business of renting or leasing vehicles without a driver to persons other than the owner, and is registered in the name of such owner. (Emphasis added)

Analysis:

N.Y. Ins. Law § 3440(b) (McKinney 2000) identifies those motor vehicle liability insurance policies that shall provide coverage for actual damage to or loss of rental vehicles and defines the term "rental vehicle":

(b) Subject to subsection (d) of this section, every motor vehicle liability insurance policy which insures less than five private passenger motor vehicles registered in this state shall by endorsement, provide coverage for the obligation of the insured for actual damage to, or loss of, vehicles (including loss of use) rented by an insured in the United States, its territories or possessions and Canada under a rental agreement with a term of thirty continuous days or less, regardless of where within those areas such rental vehicle is registered, rented, or operated, subject to such maximum coverage limitations as the superintendent may by regulation prescribe or any other applicable limits in the policy, whichever is higher. The term "rental vehicle" shall be used as defined in section one hundred thirty-seven-a of the vehicle and traffic law, if a private passenger motor vehicle and not used for the transportation of persons or property for hire. (Emphasis added)

N.Y. Veh. & Traf. Law § 137-a (McKinney 1996) defines "Rental vehicle" as "[a] vehicle owned by a person engaged in the business of renting or leasing vehicles which is rented or leased without a driver to a person other than the owner and is registered in the name of such owner."

Hence, if a vehicle is a "rental vehicle" as defined under N.Y. Veh. & Traf. Law § 137-a, damage to such vehicle will be covered under § 3440 where the vehicle is a "private passenger motor vehicle" and is not used for the transportation of persons or property for hire. N.Y. Ins. Law § 3440(a) (McKinney 2000) defines "private passenger motor vehicle" as follows:

(a) For the purposes of this section, a "private passenger motor vehicle" is a motor vehicle: (1) of the private passenger or station wagon type that is owned or hired by an individual or by husband and wife under a long-term contract and is neither used as a public or livery conveyance for passengers nor rented to others without a driver; or (2) with a pick-up body, a delivery sedan, panel truck or van, owned by an individual or by husband and wife who are residents of the same household or by a family farm co-partnership or a family farm corporation, and not customarily used in the occupation, profession or business of the insured other than farming or ranching, whether or not used in the course of driving to or from work. (Emphasis added)

(1) A motorcycle is a motor vehicle

The first question is whether a motorcycle is a motor vehicle for the purposes of § 3440. The term "motor vehicle" is not defined by N.Y. Ins. Law § 3440(a) (McKinney 2000) nor is there any definition of such term in other provisions of the Insurance Law applicable to N.Y. Ins. Law

§ 3440 (McKinney 2000).

For purposes of financial security, N.Y. Veh. & Traf. Law § 311(2) (McKinney Supp. 2003) of Vehicle and Traffic Law Article 6 ("MOTOR VEHICLE FINANCIAL SECURITY ACT") defines the term motor vehicle as used in Article 6 by referring to the definition of motor vehicle in N.Y. Veh. & Traf. Law § 125 (McKinney 1996), subject to further modification set forth in Section 311(2), which modifications are not relevant herein. With exceptions that do not apply to a motorcycle, N.Y. Veh. & Traf. Law § 125 (McKinney 1996) defines motor vehicle broadly as "[e]very vehicle operated or driven upon a public highway which is propelled by any power other than muscular power . . ." In Cycleway, Inc. v. Kawasaki Motors Corp., U.S.A., 77 Misc.2d 829, 354 N.Y.S.2d 812, 816 (Sup. Ct. Oneida Co. 1974) the court stated: "Motorcycles are motor vehicles within the meaning of Section 125 of the Vehicle and Traffic Law." Thus, the definition of motor vehicle for the purpose of meeting the financial security requirements of Vehicle and Traffic Law Article 6 includes a motorcycle.

In addition, N.Y. Veh. & Traf. Law § 123 (McKinney 1996) defines the term motorcycle: "Every motor vehicle having a seat or saddle for the use of the rider and designed to travel on not more than three wheels in contact with the ground, but excluding a tractor." (Emphasis added) RANDOM HOUSE WEBSTER'S COLLEGE DICTIONARY 864 (2d ed. 1999) defines the term motorcycle as "a motor vehicle resembling a bicycle but larger and heavier, chiefly for one rider but sometimes having two saddles or a sidecar for passengers." (Emphasis added)

Additionally, the term "motor vehicle", when used in the Insurance Law has generally been construed to include motorcycles. The principal exception is N.Y. Ins. Law § 5102(f) (McKinney 2000), which explicitly excludes motorcycles from the definition of motor vehicle. Absent such a specific exclusion in § 3440, the term "motor vehicle" should be given its commonly understood construction, in regard to motorcycles. Accordingly, for the purpose of interpreting N.Y. Ins. Law § 3440(b), including the definition of "rental vehicle", a motorcycle is a motor vehicle.

(2) A motorcycle is a private passenger type

Inasmuch as we have concluded that a motorcycle is a "motor vehicle" under § 3440, the next question is whether it is one of the types of motor vehicles set forth in either § 3440(a)(1) or (2). We can easily dispose of most of the types of vehicles specified in those paragraphs since a motorcycle is clearly not of a "station wagon type", does not have a "pick-up body, and is not a delivery sedan, panel truck or van. This leaves only the question of whether a motorcycle is a motor vehicle that is "of the private passenger….type" The phrase "private passenger type" is not defined either in § 3440 or any other section of the Insurance Law applicable to § 3440. However, the term "private passenger" appears repeatedly through Articles 23 and 34 of the Insurance Law. In virtually every such use, the term "private passenger" is defined as, or been construed as, meaning a vehicle principally used for non-business purposes.

Several of the statutes that use the term "private passenger" also preface the term with the term "non-commercial" (See for example N.Y. Ins. Law §§ 2332, 2333, 2334 and 2336). But even those sections that do not specifically limit the applicability to "non-commercial" use have been so construed. See for example N.Y. Ins. Law §§ 2305, 2315, 2337, and 3412.) Moreover, N.Y. Ins. Law § 3429 specifically applies the term "private passenger automobile insurance" to mean policies of automobile insurance under N.Y. Ins. Law § 3425.

The sole exception is in regard to the definition of "private passenger automobile" that is contained in N.Y. Comp. Codes R. & Regs. tit. 11, § 67 (Regulation 79), which implements the inspection requirements of N.Y. Ins. Law § 3411. That definition applies to four wheeled vehicles below a certain weight, regardless of use. However, the definition in the regulation explicitly states that it is applicable only for the purposes of such inspection requirements.

Accordingly, since the phrase "private passenger" in the Insurance Law generally refers to vehicles that are used for non-business purposes, it is reasonable to conclude that, for the purposes of § 3440, a "private passenger type" of vehicle are vehicles that are generally usually used for non-business purposes.

Thus, for the purpose of interpreting the definition of "rental vehicle" in N.Y. Ins. Law § 3440(b) (McKinney 2000), a motorcycle is a motor vehicle of the "private passenger type" pursuant to N.Y. Ins. Law § 3440(a)(1) (McKinney 2000), and the Department has so construed § 3440 since it was enacted.

The purpose of the ISO endorsement is to provide rental vehicle insurance coverage required by N.Y. Ins. Law § 3440(b) (McKinney 2000). The ISO endorsement also uses "motor vehicle of the private passenger . . . type" to define the term "rental vehicle". Therefore, it is our opinion that a motorcycle is included within the ISO endorsement's definition of "rental vehicle".

For further information you may contact Senior Attorney Robert Freedman at the New York City Office.