OGC Opinion No. 03-01-34: Motor Club Roadside Service Plans

OGC Op. No. 03-01-34

The Office of General Counsel issued the following opinion on January 13, 2003, representing the position of the New York State Insurance Department.

Re: Motor Club Roadside Service Plans

Question Presented:

What requirements under the Insurance Law apply to a motor club that provides emergency roadside assistance?

Conclusion:

While motor clubs are not subject to licensure or regulation by this Department, if any of the services provided by a motor club constitute doing an insurance business in this state, those services may be offered only by an authorized insurer in accordance with the Insurance Law and Regulations. However, the Department has issued Circular Letter No. 2 (1979), which provides guidelines describing how motor clubs may provide certain benefits in New York.

Facts:

Company A is a national road club. Among the benefits provided by road clubs are towing services in the event of breakdown of a motor vehicle; roadside assistance if the motorist runs out of gas or gets a flat tire; and locksmith services if the motorist is locked out of the vehicle. Motor clubs also provide trip routing and map service.

Analysis:

However, the Department has issued Circular Letter No. 2 (1979), which contains guidelines describing how motor clubs may provide certain benefits in New York. The Department has not objected to a motor club providing towing or roadside assistance services so long as it follows those guidelines, with one exception. A motor club may not obtain a master or group policy for towing, emergency, trip interruption or legal services, as described in item 2 of the Circular Letter, as such a policy would constitute group property/casualty insurance of a kind not authorized under New York Law. Trip routing and map service are not insurance as that term is defined under New York Law and, accordingly, the Department has no objection to a motor club providing those benefits or services.