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 May 10, 2004, representing the position of the New York State Insurance Department.

Re: Section 9110: Leased Vehicles/Payment of Motor Vehicle Enforcement Fee by Insurers

QUESTION PRESENTED:

Where a lessor of a motor vehicle obtains contingent liability coverage on such leased vehicle to cover its liability exposures in New York, and the lessee obtains the primary motor vehicle liability insurance coverage on the same vehicle, which insurer and policyholder is responsible for paying the $5.00 motor vehicle law enforcement fee required by N.Y. Ins. Law § 9110 (McKinney Supp. 2004)?

CONCLUSION:

Given that the lessee is responsible for registering the vehicle and is the holder of the primary liability policy, the insurer for the lessee should be responsible for collecting the fee from the lessee and submitting it to the Superintendent pursuant to N.Y. Ins. Law § 9110 (McKinney Supp. 2004).

FACTS:

The inquirer states that a large automotive financing company ("lessor") leases vehicles in the state of New York. The lessor holds legal title to each vehicle under the lease transaction and purchases contingent liability policy to cover its vicarious liability exposures in New York. The individual or company leasing the vehicle ("lessee") is responsible for registering the vehicle and purchasing physical damage and liability coverage, which is the primary policy on the vehicle. While the lessee is the registered owner of the vehicle, the lessor retains legal title.

ANALYSIS:

The inquirer asks which insurer and policyholder is responsible under N.Y. Ins. Law § 9110 (McKinney Supp. 2004) for paying, to the Superintendent, the $5.00 motor vehicle law enforcement fee in a vehicle-leasing situation where there are two liability policies on the leased vehicle. One policy is a contingent liability insurance policy obtained by the lessor to cover its vicarious liability exposures. The other is a primary motor vehicle liability insurance policy obtained by the lessee, as required by the lease contract.

The inquirer argues that the insurer for the primary motor vehicle liability policy, procured by the lessee, should be responsible for collecting the fee from the lessee because, pursuant to N.Y. Ins. Law § 9110 (b) (McKinney Supp. 2004), the fee is payable per registered vehicle. The inquirer supports his conclusion by pointing out that the lessee, as the registrant for the leased vehicle, obtains the policy covering primary liability for such vehicle. Thus, the lessee, not the lessor whose policy covers only contingent liability, should be responsible for paying the fee.

N.Y. Ins. Law § 9110 (a) & (b) (McKinney Supp. 2004) provides, as follows:

(a) Every insurance company authorized to do business in this state shall annually collect, in addition to the applicable premium charge, a motor vehicle law enforcement fee charged to each holder of a policy issued in the state or for delivery in the state for motor vehicle liability insurance coverage.

(b) The annual fee is hereby imposed at the rate of five dollars per insured motor vehicle registered pursuant to the provisions of paragraph (b) of subdivision one of section four hundred one of the vehicle and traffic law. Such fee will be paid monthly by insurance companies to the superintendent on or before the fifteenth of the month next succeeding the month in which such collections are received.

The inquirer’s reading and interpretation of Section 9110 is a reasonable one. Section 9110(b) provides: "[t]he annual fee is hereby imposed at the rate of five dollars per insured motor vehicle registered." Thus, one $5.00 fee should be imposed per registered vehicle. Although Section 9110 does not specifically address the issue you raised, we do not believe that it was the statutory intent of Section 9110 to require that, in a situation such as this, both insurers collect and pay the fee to the Superintendent. Accordingly, because the lessee is responsible for registering the vehicle and is the holder of the primary liability policy, the Department agrees with the inquirer’s conclusion that the insurer for the primary liability policy should be responsible for collecting the fee from the lessee and submitting it to the Superintendent.

For further information you may contact Associate Attorney D. Monica Marsh at the New York City Office.