Insurance Circular Letter No. 15 (2019)
December 20, 2019
All Insurers Authorized to Write Motor Vehicle Insurance in New York, Licensed Property/Casualty Insurance Producers, and Rate Service Organizations
Recent Changes to the Law Regarding Insurance for Certain For-Hire Motor Vehicles, Including Altered Motor Vehicles Commonly Referred to as “Stretch Limousines”
STATUTORY AND REGULATORY REFERENCES: Insurance Law §§ 2328 and 3420(f); Vehicle and Traffic Law § 370(1); 15 NYCRR § 79.20(f)(2); Part III of Chapter 59 of the Laws of 2019; and Chapter 408 of the Laws of 2019
The purpose of this circular letter is to provide guidance to insurers authorized to write motor vehicle insurance in New York (“insurers”), licensed property/casualty insurance producers, and rate service organizations regarding recent changes to the Insurance Law and Vehicle & Traffic Law (“VTL”) that pertain to certain for-hire motor vehicles, including altered motor vehicles commonly referred to as “stretch limousines.”
Part III of Chapter 59 of the Laws of 2019 and Chapter 408 of the Laws of 2019 amended, in relevant part, VTL § 370(1)(a) and (b) and Insurance Law § 3420(f). Part III of Chapter 59 and Chapter 408 amended VTL § 370(1)(a) and (b) to require a motor vehicle with a seating capacity of eight or more passengers that is engaged in the business of carrying or transporting persons for hire to have a financial responsibility insurance policy or bond with a combined single limit (“CSL”) of at least $1,500,000 for bodily injury and death to one or more persons and because of injury to or destruction of property in any one accident. The Legislature did not amend the financial responsibility limits for a motor vehicle with a seating capacity of not more than seven passengers that is engaged in the business of carrying or transporting persons for hire.
Part III of Chapter 59 also amended Insurance Law § 3420(f) to require that any policy insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any natural person arising out of the ownership, maintenance and use of an altered motor vehicle, commonly referred to as a “stretch limousine”, having a seating capacity of eight or more passengers and used in the business of carrying or transporting passengers for hire, provide supplementary uninsured/underinsured motorists (“SUM”) insurance for bodily injury in an amount of a CSL of $1,500,000 because of bodily injury or death of one or more persons in any one accident.
The amendments to VTL § 370(1)(a) and (b) and Insurance Law § 3420(f) take effect on January 1, 2020 and apply to all policies issued, renewed, altered, or modified on or after January 1, 2020. Insurers have raised questions as to how they should implement the foregoing amendments.
A question has arisen regarding whether the Part III of Chapter 59 amendment to § 3420(f)(1) was intended to indicate that a “stretch limousine” is something other than a motor vehicle because it references “a motor vehicle or an altered motor vehicle commonly referred to as a ‘a stretch limousine’.” However, the Department of Financial Services (“Department”) does not believe it was the Legislature’s intent for “stretch limousine” to mean something other than a motor vehicle. Accordingly, the Department interprets “stretch limousine” to be a kind of motor vehicle for the purposes of Insurance Law § 3420 and any other provision of the Insurance Law and regulations promulgated thereunder.
While Part III of Chapter 59 does not define an “altered motor vehicle” or “stretch limousine”, the Department interprets these terms consistently with Department of Motor Vehicles regulation 15 NYCRR § 79.20(f)(2), which describes these kinds of vehicles as vehicles altered so as to have an extended chassis, lengthened wheel base, or elongated seating area and, in the case of trucks, as vehicles that have been modified to transport passengers in addition to having been altered.
Moreover, the amendments to VTL § 370(1)(a) and (b) and Insurance Law § 3420(f) apply to all policies “issued, renewed, altered, or modified” on or after January 1, 2020. A question has arisen as to what is meant by “altered or modified.” For the purpose of Part III of Chapter 59 and Chapter 408, the Department defines “altered or modified” to mean a change in the policy coverage or underlying risk characteristics that results in a revised policy premium. Examples of an alteration or modification to a policy include the addition or removal of a vehicle, driver, or any coverage under the policy, or a change in the principal garaging of the insured’s vehicle. Purely ministerial changes, such as changes to the manner or timing of payment or corrections of typographical errors, would not constitute alterations or modifications to the policy within the meaning of Part III of Chapter 59 and Chapter 408.
To ensure compliance with the amendments made by Part III of Chapter 59 and Chapter 408, insurers that write for-hire motor vehicles should review their policy forms and amend them, as necessary, to comply with the new minimum limits. If an insurer writes for-hire motor vehicles and does not have filed manual rates for the new required minimum limits, then the insurer should submit a rate filing for these new minimum limits as soon as possible pursuant to Insurance Law § 2328.
Insurers should send notices to affected policyholders that explain the statutory amendments to the minimum liability and SUM limits to minimize confusion and limit consumer inquiries and complaints. Insurers also should notify those property/casualty insurance producers with which they do business of the amendments.
Part III of Chapter 59 and Chapter 408 amended VTL § 370(1)(a) and (b) and Insurance Law § 3420(f) to increase minimum liability and SUM limits for certain for-hire vehicles, including stretch limousines. The amendments take effect on January 1, 2020 and apply to all policies issued, renewed, altered, or modified on or after January 1, 2020. Insurers that write for-hire motor vehicles should review their policy forms and manual rates and make a form or rate filing with the Department as necessary.
Please direct any questions regarding this circular letter to Limo Law Inquiries, c/o Property Bureau, New York State Department of Financial Services, One State Street, New York, New York 10004 or by email at [email protected].
Acting Executive Deputy Superintendent for Insurance