The Office of General Counsel issued the following opinion on June 3, 2010, representing the position of the New York State Insurance Department.

Re: Deductibles for automobile physical damage insurance policies

Questions Presented:

1) May an authorized insurer offer a zero deductible for a policy of comprehensive or collision automobile insurance coverage?

2) Is there an exception to the deductible requirements for antique, special, or historical vehicle programs, since these are not standard automobile programs?

Conclusions:

1) No. N.Y. Ins. Law § 3411(k) (McKinney 2007) prohibits an authorized insurer from offering a deductible of less than $50 for fire, theft or comprehensive insurance and $100 for collision insurance coverage on private passenger automobiles registered in New York, except that window glass coverage may be sold without a deductible.

2) No, there is no exception to the deductible requirements for antique, special, or historical vehicle programs.

Facts:

The inquiry is of a general nature, without reference to particular facts.

Analysis:

1) Deductibles under private passenger motor vehicle insurance policies

The inquirer asks, on behalf of an insurer who is a customer of the inquirer, about whether an insurer may offer automobile physical damage insurance with a zero deductible for automobiles registered in New York.

Insurance Law § 3411 is relevant to this inquiry. It applies to private passenger automobile policies. For purposes of § 3411(k), the Department interprets a private passenger automobile policy to have the same meaning as a covered policy under Ins. Law § 3425(a)(1): “a contract of insurance... issued or issued for delivery in this state, on a risk located or resident in this state, insuring against losses or liabilities arising out of the ownership, operation, or use of a motor vehicle, predominantly used for non-business purposes, when a natural person is the named insured under the policy of automobile insurance.” See OGC Opinion No. 08-04-36 (April 29, 2008).

Section 3411(k) reads, in pertinent part, as follows:

Each insurer which offers physical damage insurance subject to the provisions of this section shall offer such insurance with a standard deductible of two hundred dollars for each occurrence. The insured shall, however, at the inception of the policy or at the annual anniversary date, or at the time of the replacement or addition of an automobile, have the option of purchasing a policy with a lesser deductible, but in no event may the insurer sell a policy with a deductible of less than fifty dollars for fire, theft or comprehensive insurance coverages (one hundred dollars for assigned risk policies. . .) and one hundred dollars for collision insurance coverage except that window glass coverage may be sold without a deductible. . . .

A zero deductible on either comprehensive or collision insurance coverage is not permissible under automobile physical damage insurance policies covering New York State registered private passenger automobiles under Ins. Law § 3411(k). The minimum deductible for fire, theft or comprehensive insurance coverage is $50 and, if the policy is issued through the New York Automobile Insurance Plan (“NYAIP”) as an assigned risk policy, the minimum deductible for comprehensive coverage is $100. The minimum deductible for collision insurance coverage is $100. Only window glass coverage may be sold without a deductible.

2) Deductibles under antique, special, or historical private passenger motor vehicle insurance policies

The inquirer also asks whether there is an exception for antique, special, or historical vehicles to the limitations on deductibles set forth in Ins. Law § 3411(k). The statute makes no exception for such vehicles. The same prohibition against deductibles below the statutory limitations apply to antique, special, or historical vehicles that are private passenger automobiles.

For further information you may contact Associate Attorney Jeffrey A. Stonehill at the New York City Office.