The Office of General Counsel issued the following opinion on October 21, 2005, representing the position of the New York State Insurance Department.
RE: Agent Charging Fee for Insufficient Check Charges
May an insurance agent charge its client a fee to reimburse the agent for an insufficient check charge as a result of a check that is dishonored by the bank?
No, an insurance agent may not charge an additional fee for an insufficient check charge as a result of a dishonored check.
This is a general inquiry.
There is no statute that allows an insurance agent to charge a fee for its services. The only fee an insurance agent may charge an insured is a consulting fee pursuant to N.Y. Ins. Law § 2119(a) (McKinney 2000 & 2005 Supp.) for consulting services, which are not the kind of service inquired about. The Department has previously opined on this matter (see OGC opinion # 02-01-06).
The insurance agent does have the option of not accepting checks in the first place. There is no statute that requires an agent to accept checks as a method of payment.
For further information you may contact Principal Attorney Paul A. Zuckerman at the New York City Office.