OGC Op. No. 04-09-02
The Office of General Counsel issued the following opinion on September 2, 2004, representing the position of the New York State Insurance Department.
Re: Cancellation or Surcharge for License Revocation Resulting from DWI Chemical Test Refusal
May an insurance company cancel an insureds automobile policy, or increase the rates thereof, because such insureds license is revoked after a Department of Motor Vehicles ("DMV") chemical test refusal hearing, even if the insured was not convicted of driving while intoxicated ("DWI") in a criminal matter?
N.Y. Ins. Law § 3425(c)(1)(B) (McKinney Supp. 2004) permits an insurance company to cancel an automobile policy if the drivers license of the named insured, or any other person who customarily operates an automobile insured under the policy, is suspended or revoked during the policy period subject to certain exceptions. In addition, an insurer may also non-renew a policy pursuant to the applicable provisions of N.Y. Ins. Law § 3425 (McKinney Supp. 2004). With respect to surcharges, in general, N.Y. Ins. Law § 2335 (McKinney Supp. 2004) permits an insurer to surcharge an insured for certain traffic infractions. Specifically, Section 2335(a)(4) permits surcharges for DWI convictions. In this case, the insurer may not surcharge the inquirers client pursuant to paragraph (4) because there was no DWI conviction. However, if the client/insured has two or more moving violations, the insurer may impose a surcharge pursuant to Section 2335(a)(14).
The inquirer states that recently a client was driving his personal vehicle when he was stopped by the police on the suspicion of driving while intoxicated. Subsequently, the client was arrested and refused to take a chemical test. The DMV suspended his license pending a chemical test refusal hearing ("refusal hearing"). The refusal hearing, which is separate from the criminal proceeding, was subsequently adjourned. The clients license was reinstated pending the rescheduled refusal hearing, which has not occurred yet.
While waiting for the refusal hearing to take place, the inquirer negotiated a plea whereby the client pled guilty to an offense that is not alcohol-related, thereby settling the criminal matter without a DWI conviction. The inquirer is convinced, however, that the client may have his license revoked after the refusal hearing. As a result, the inquirer questions whether the clients insurer may cancel his policy or increase the premium if the clients license is ultimately revoked.
The inquirer asks whether an insurer may cancel an insureds policy if the insureds license is revoked. N.Y. Ins. Law § 3425(c)(1)(B) (McKinney Supp. 2004) provides, in pertinent part, as follows:
(c) After a covered policy has been in effect for sixty days, or upon the effective date if the policy is a renewal, no notice of cancellation shall be issued to become effective unless required pursuant to a program approved by the superintendent as necessary because a continuation of the present premium volume would be hazardous to the interests of policyholders of the insurer, its creditors or the public, or unless it is based on one or more of the following:
(1) With respect to automobile insurance policies:
(B) suspension or revocation during the required policy period of the drivers license of the named insured or any other person who customarily operates an automobile insured under the policy, other than a suspension issued pursuant to subdivision one of section five hundred ten-b of the vehicle and traffic law1 or one or more administrative suspensions arising from the same incident which has or have been terminated prior to the effective date of cancellation[.]
The inquirer also asks whether an insurer may surcharge an insured if there is a revocation after a DMV refusal hearing. N.Y. Ins. Law 2335 (McKinney Supp. 2004), entitled Motor Vehicle Liability Insurance Rates; Prohibition of Surcharges for Certain Traffic Infractions, addresses this issue. That section provides in relevant part, as follows:
No insurer authorized to transact or transacting business in this state, or controlling or controlled by or under common control by or with an insurer authorized to transact or transacting business in this state, which sells a policy providing motor vehicle liability insurance coverage in this state shall increase the policy premium in connection with the insurance permitted or required by this chapter solely because the insured or any other person who customarily operates an automobile covered by the policy:
(a) has been found guilty of a traffic infraction under any of the provisions
of the vehicle and traffic law provided, however, that this provision shall not apply to a conviction for a violation which 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 if such conviction consisted of:
(4) operating a motor vehicle while intoxicated or impaired by the consumption of alcohol;
(14) two or more moving violations of any other provision of the vehicle and traffic law[.]
Generally, N.Y. Ins. Law § 2335 prohibits insurers from increasing policy premiums on a motor vehicle liability insurance policy solely because the insured or other person who operates the covered vehicle has been found guilty of a traffic infraction under the provisions of the Vehicle and Traffic Law. However, Section 2335(a) provides exceptions for certain traffic convictions. Specifically, Section 2335(a)(4) permits a surcharge for DWI convictions. In this instance, the inquirer states that there was no conviction in the DWI criminal case. As a result, the insurer may not surcharge the inquirers client pursuant to this paragraph.
Paragraph (14) also permits an insurer to surcharge for two or more moving violations of other provisions of the vehicle and traffic law. The inquirer did not specify what violation the client pled guilty to and/or whether he has had other moving violations. Therefore, the insurer could increase the clients policy premium depending on his driving record/moving violations history.
Please note that in addition to Section 2335, N.Y. Comp. Codes R. & Regs. tit. 11, Part 169 (1997) (Regulation 100), entitled Noncommercial Motor Vehicle Insurance Merit Rating Plans, also provides guidance with respect to the application of insurance rate surcharges and credits, based upon an individuals past accident or violation record.2 Additionally, an insurer with an approved multi-tier program may uptier a policy pursuant to N.Y. Comp. Codes R. & Regs. tit. 11, Part 154 (1995) (Regulation 150) if its program so provides, subject to the restrictions set forth in Section 2335.
As a final matter, please note that the insurer may also non-renew the policy pursuant to the applicable provisions of N.Y. Ins. Law § 3425 (McKinney Supp. 2004), at the end of the required policy period.
For further information you may contact Associate Attorney D. Monica Marsh at the New York City Office.
1 N.Y. Veh. & Traff. Law § 510-b (1) (McKinney Supp. 2004) addresses suspension and revocation for violations committed during probationary periods.
2Regulation 100 does not specifically address surcharges for traffic infractions.