The Office of General Counsel issued the following informal opinion on December 24, 2002, representing the position of the New York State Insurance Department.
Re: Permissibility of Surcharges by Insurance Companies.
Question Presented:
Since N.Y. Ins. Law § 2335(a) (McKinney 2000) is no longer in force and effect, may an insurer impose a surcharge on an automobile insurance policy for a single traffic infraction?
Conclusion:
An insurer may impose a surcharge on an automobile insurance policy for a single traffic infraction, provided that the insurers approved merit rating plan contains a provision for such surcharge and the insurer complies with N.Y. Comp. Codes. R. & Regs. tit. 11, §§ 169.0-169.2 (1997) (Regulation 100).
Facts:
No specific fact pattern was provided.
Analysis:
N.Y. Ins. Law § 2335(a) (McKinney 2000) generally prohibited insurers from increasing the premium on a commercial or private passenger motor vehicle liability insurance policy solely because the insured or any other person who customarily operated the automobile covered by the policy was found guilty of a traffic infraction under the provisions of the Vehicle and Traffic Law. However, section 2335(a) provided exceptions for certain listed convictions for traffic infractions1 that occurred during the thirty-six month period ending on the last day of the fourth month preceding the month of the effective date of the policy.
Pursuant to N.Y. Ins. Law § 2342 (McKinney 2000 and Supp. 2003), section 2335(a) ceased to be of any force or effect after August 2, 2001. However, in accordance with section 2334(a), N.Y. Comp. Codes R. & Regs. tit. 11, §§ 169.0-169.2 (1997) (Regulation 100), entitled "Noncommercial Motor Vehicle Insurance Merit Rating Plans", remains in effect. The regulation sets forth guidelines for the application of insurance rate surcharges and credits, based upon an individuals past accident or violation record, but does not specifically address surcharges for traffic infractions.
Pursuant to N.Y. Ins. Law § 2307 (McKinney 2000 and Supp. 2003) an insurers merit rating plans are subject to the Superintendents prior approval. This approval is, in part, dependent upon such rates meeting the criteria of Article 23 and related regulations that govern, and articulate the standards, requirements and procedures for the rates of motor vehicle insurance offered in New York by authorized insurers.
Thus, an insurer may impose a surcharge on an automobile insurance policy for a single traffic infraction, provided that the insurers approved merit rating plan contains a provision for such surcharge and the insurer complies with N.Y. Comp. Codes. R. & Regs. tit. 11, §§ 169.0-169.2 (1997) (Regulation 100). However, to date, no merit rating plan has been approved with such a provision, except as was permitted under section 2335(a).
For further information you may contact Senior Attorney Pascale Joasil at the New York City Office.
1 For example, operating a motor vehicle at a speed of more than fifteen miles per hour in excess of the legal limit. See section 2335(a)(1)(McKinney 2000).