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 September 1, 2004, representing the position of the New York State Insurance Department.

Re: Lines of Authority

Questions Presented:

1. Has the New York State Insurance Department further defined the types of insurance that may be sold by a personal lines licensee under N.Y. Ins. Law § 2101?

2. May a personal lines licensee sell "scheduled personal property" insurance?

3. May a personal lines licensee sell a commercial automobile insurance policy when no additional commercial coverage is required?

Conclusions:

1. No, the New York State Insurance Department has not further defined the types of insurance that may be sold by a personal lines licensee under N.Y. Ins. Law § 2101 (West, WESTLAW through L. 2003 c. 692 legislation).

2. Yes, provided, that the scheduled personal property coverage sold by the personal lines licensee is property/casualty insurance coverage to an individual or family for primarily noncommercial purposes, the personal lines licensee may sell scheduled personal property coverage.

3. No, a personal lines licensee may not sell a commercial automobile policy, since it is property/casualty insurance coverage that is sold primarily for commercial purposes.

Facts:

No specific facts were provided.

Analysis:

N.Y. Ins. Law § 2103(b) (West, WESTLAW through L. 2003 c. 692 legislation).

states:

The superintendent may issue a license to any person, firm, association or corporation who or which has complied with the requirements of this chapter, authorizing the licensee to act as agent of any authorized insurer, other than an insurer specified in subsection (b) of section two thousand one hundred fifteen of this article, with respect to the lines of authority for accident and health or sickness, property, casualty, personal lines or any other line of authority granted other than life, and variable life and variable annuity products, which such insurer is authorized to do in this state.

N.Y. Ins. Law § 2101(r)(6)(West, WESTLAW through L. 2003 c. 692 legislation) defines personal lines insurance to mean "property/casualty insurance coverage sold to individuals and families for primarily noncommercial purposes…"

N.Y. Ins. Law § 2103(b) authorizes the superintendent to issue personal lines licenses and N.Y. Ins. Law § 2101(r)(6) defines personal lines insurance for such purposes as property/casualty insurance coverage sold to individuals and families primarily for noncommercial purposes. No regulation has been promulgated by the Superintendent that further defines what types of insurance may be sold by a personal lines licensee.

Scheduled personal property coverage is usually effected with an endorsement that is an addition to a homeowner’s policy or other personal property policy allowing a policyholder to purchase additional coverage for specific items of personal property, with each item or group of items and the amount of coverage listed. Provided that the scheduled personal property coverage sold by the personal lines licensee to an individual or family is for primarily noncommercial purposes, a personal lines licensee may sell scheduled personal property coverage.

Assuming that a commercial automobile policy refers to a policy of commercial risk insurance as defined in N.Y. Ins. Law § 107(a)(47)(McKinney 2000 & Supp. 2004), a personal lines licensee may not sell a commercial automobile policy, since it is property/casualty insurance coverage sold primarily for commercial purposes and not property/casualty insurance coverage sold to individuals and families for primarily noncommercial purposes. In order to sell a commercial automobile policy (which provides both physical damage and liability insurance), one must have a property and casualty license or a combined property/casualty license.

For further information you may contact Special Counsel Athan M. Shinas at the Albany office.