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 18, 2004, representing the position of the New York State Insurance Department.

Re: Anti-Theft and Vehicle Recovery System

Questions Presented:

1. Does ABC Co.’s anti-theft and vehicle recovery system qualify for the N.Y. Ins. Law § 2336(e) (McKinney 2000) premium discount?

2. Is the discount percentage value established by the Superintendent or is at the discretion of the individual insurer?

3. Must ABC Co. obtain approval of the discount from each individual insurer?

Conclusions:

1. Yes, ABC Co.’s anti-theft and vehicle recovery system qualifies for the N.Y. Ins. Law § 2336(e) (McKinney 2000) premium discount.

2. Each individual insurer, in accordance with the guidelines included in Circular Letter No. 2 (1993), establishes the discount percentage value.

3. ABC Co. does not have to obtain approval of the discount from each individual insurer.

Facts:

ABC Co. sells an anti-theft and vehicle recovery system that is installed in motor vehicles. The system keeps track of the vehicle’s location, speed and direction, and records and reports additional vital information. This information is forwarded to an online computer system maintained by the company. Consumers may access this system on the Internet and view the activities of their vehicles on digitized maps. Certain functions, such as disabling or enabling the vehicle and unlocking the doors, may be controlled remotely.

One of these remote functions includes track action, which sends a command to the recovery system device requesting location-based tracking data. The information is reported back every five minutes for a total of 30 minutes. To continue tracking, the consumer simply repeats the track command action. The locate action sends a command to the recovery system device requesting location-based data, including nearest address, city, state, country, date, speed and heading.

The customer has two options to recover a stolen vehicle. The first option is described as follows:

Upon discovering a vehicle theft, the vehicle owner contacts local police authorities to complete a stolen vehicle report. At that time, the owner advises the local police authorities that the automobile is equipped with a recovery system web site interface. The vehicle owner provides the local police authorities with the last vehicle location, speed and heading as made available to them by accessing the secure recovery system web site interface. The vehicle owner maintains contact with the police authorities providing additional location, speed and heading information as required for the local police authorities to visually locate the stolen vehicle.

And the alternative option is described as follows:

If the customer has selected the Concierge Service, then upon discovering a vehicle theft, the vehicle owner contacts the recovery system toll free Concierge Service to report a stolen vehicle. The Concierge Service will advise the vehicle owner to immediately contact the local authorities to file a stolen vehicle report if they have not already done so. Upon filing the report, the customer calls the Concierge Service to advise that a stolen vehicle report has been filed and provides the Concierge Service with the local police authority contact phone number. The Concierge Service calls the local police authorities first verifying that a stolen vehicle report has been filed and secondly, advising the police authorities that the vehicle is equipped with a recovery system GPS vehicle tracing and recovery system. The Concierge Service provides the local police authorities with the last vehicle location, speed and heading. The Concierge Service remains in contact with police providing additional location, speed and heading information as required for the police authorities to visually locate the stolen vehicle.

Analysis:

N.Y. Ins. Law § 2336(e) (McKinney 2000 & Supp. 2004) states:

Any schedule or rating plan for non-commercial private passenger automobile insurance shall provide for an appropriate reduction in premium charges for comprehensive coverage with respect to any insured vehicle equipped with an operational anti-theft and recovery device consisting of an electronic homing device used in conjunction with a participating police agency and using a radio frequency network allocated by the Federal Communications Commission; provided, however, that in no event shall the non-use of this device or any other anti-theft device constitute grounds for an increase in policy premiums or cancellations or non-renewal of a non-commercial private passenger automobile insurance policy.

In a May 25, 2001 opinion, the Department stated that the wording "used in conjunction with a participating police agency" as it appears in § 2336(e) does not necessarily mean that a vehicle containing the auto anti-theft device must be tracked by a police agency. In a July 2, 2001 opinion, the Department concluded that an anti-theft program, which was similar to the recovery system described herein, qualified for the discount. Accordingly, it is the Department’s opinion that ABC Co.’s recovery system, under both above-mentioned options to recover a stolen vehicle, qualifies for the § 2336(e) discount.

The Department issued Circular Letter No. 2 (1993), dated February 12, 1993, providing guidelines for insurers in establishing the discount for anti-theft devices, as mandated by § 2336(e). The Department recommended that insurers initially establish a 15% discount for electronic homing devices and limit the cumulative effect to 25% for all discounts applied to comprehensive coverage. Where insurers can demonstrate that adoption of these recommended premium reductions would result in an inappropriate premium, it may file different percentages for approval, together with supporting information. Accordingly, each insurer writing "non-commercial private passenger" automobile insurance should have on file an appropriate discount that would be applicable to all § 2335(e) anti-theft devices, including this one.

Because the discount is mandatory, each insurer must apply the discount to any vehicle that is equipped with the system. The Department recommends that all customers be advised to check their policies to determine whether the discount is being applied.

For further information you may contact Principal Attorney Paul A. Zuckerman at the New York City Office.