Current through Register Vol. 46, No. 39, September 25, 2024
(a)
Preamble.
The purpose of this section is to implement the provisions of
section
3412 of the
Insurance Law, which provides for measures to be applied by insurers and a
central organization engaged in loss prevention in order to prevent payment of
fraudulent claims arising under automobile physical damage policies. Such
measures shall include: reporting of data on private passenger automobiles
involved in total losses to a central organization engaged in loss prevention,
as designated by the superintendent; verification procedures to be applied by
insurers prior to the payment of total theft losses; restrictions on the
insured's retention of salvage; restrictions and procedures for insurer's
disposition of salvage; the insurer's right to retrieve located stolen or
abandoned vehicles; and notification by insurers to law enforcement agencies,
when the insurer or the central organization suspects improper or fraudulent
action on the part of the insured, or others involved in the loss settlement
process.
(b)
Applicability.
This section shall apply to all losses involving private
passenger automobiles of the current model year and the preceding six model
years and older private passenger automobiles with an actual cash value of
$5,000 or more, prior to the loss. A private passenger
automobile shall mean a four-wheel private passenger vehicle, station
wagon, van, jeep-type vehicle, sport utility vehicle or pickup
truck.
(c)
Central
organization.
The central organization shall be designated by the
superintendent. For purposes of this Part, central
organization shall also include any entity that is acceptable to the
superintendent with which the central organization contracts to assist in
executing its responsibilities pursuant to this Part. All insurers licensed to
write automobile physical damage insurance in this State are hereby required to
become members of the central organization, for the purpose of compliance with
this section.
(d)
Reporting and follow-up requirements.
Insurers shall report all private passenger automobiles
involved in losses to the central organization, as follows:
(1) All total theft losses shall be reported
immediately, but no more than two business days following notice of claim, as
defined in section
216.1(d) of this
Part. If the insurer has not received any acknowledgment or communication from
the central organization within 10 calendar days following its submission of
the total theft report to the central organization, the insurer shall
immediately communicate with the central organization to determine the status
of its report.
(2) All other first
and third-party losses, however sustained, where damage to the claimant's
vehicle exceeds $2,500 shall be reported to the central organization no later
than five calendar days after the sale of salvage or, if the insured or
claimant is permitted to retain the vehicle, no later than five calendar days
after the date of loss payment.
(3)
The central organization shall be responsible for recording any special vehicle
identification number (VIN) issued by the Commissioner of Motor Vehicles, which
data will be forwarded to the central organization pursuant to section
431
(2) of the Vehicle and Traffic
Law.
(e)
Verification procedures required prior to paying a total theft
loss.
Notwithstanding the provisions of section
216.7(b) and (c)
of this Part, an insurer shall comply with central organization verification
procedures prior to its payment of a total theft loss, subject to the rules
provided for in this section.
(1) The
insurer shall defer the payment of a claim for five calendar days following
receipt of the acknowledgment from the central organization of the insurer's
total theft report. If no further communication is received from the central
organization during this five-day period indicating unresolved questionable
circumstances, the insurer shall continue with the processing of the claim in
accordance with the provisions of this Part.
(2) If the central organization verification
procedure indicates insurance coverage by more than one insurer or a previously
unrecovered theft loss, the insurers shall promptly investigate and resolve
such discrepancy.
(3) If the
central organization verification procedure reveals an erroneous vehicle
identification number (VIN) and the central organization is unable to clear up
such discrepancy internally, a questionnaire will be sent to the insurer by the
central organization. This questionnaire shall be returned to the central
organization within five business days of receipt by the insurer. Should
central organization and insurer efforts, after due diligence, be unsuccessful
in resolving the VIN error after a 30-day period from date of report of loss to
the insurer on a vehicle that has been inspected pursuant to Part 67 of this
Title, the insurer shall proceed with the processing of the loss in accordance
with the provisions of this Part.
(4) Subject to the provisions of subdivision
(h) of this section, if the central organization certification procedure
indicates that the theft loss may be fraudulent, the insurer shall suspend
processing of the loss. The central organization shall then cooperate with any
investigation.
(f)
Salvage.
Insurers shall, except where the insured is permitted to
retain the automobile as part of the claim settlement, take possession of the
certificate of title, properly endorsed to them, and take possession of the
salvage, if any, whenever a loss is determined by the insurer to be a total
loss or a constructive total loss. Insurers, in disposing of the salvage, shall
fully comply with the requirements of section
429 of
the Vehicle and Traffic Law.
(1) An
insured shall not be permitted to retain the insured vehicle if the salvage
value of the vehicle after the loss aggregates 10 percent or less of the actual
cash value of the vehicle prior to the loss, unless the insurer is satisfied
that the insured intends to retain the automobile for the insured's own
use.
(2) Unless the conditions set
forth in section
430.2 of the Vehicle and Traffic
Law are met, insurers shall not, directly or indirectly, transfer within or
without this State any vehicle for salvage, except to an automobile dealer, a
vehicle dismantler, or a scrap processor licensed, registered or certified in
accordance with the provisions of the Vehicle and Traffic Law, or such person
meeting licensing, registration or certification requirements of the state in
which such person does business. An insurer or its agents shall not purchase
salvage vehicles or used major component parts of motor vehicles except from a
registered vehicle dismantler or a licensed automobile
dealer.
(g)
Central
organization recording and reporting recovery of stolen or abandoned
vehicles.
The central organization shall be responsible for receiving
and recording reports received from police and other law enforcement agencies
of located stolen or abandoned vehicles pursuant to section
3412
(f) of the Insurance Law. The central
organization shall promptly transmit such information to the insurer providing
automobile physical damage coverage, if any, on the located vehicle. The
insurer shall immediately notify the insured of the location where the vehicle
has been stored for safekeeping.
(h)
Reporting requirement and
cooperation with law enforcement agencies.
(1) The central organization and each insurer
authorized to issue automobile comprehensive insurance policies covering losses
incurred to private passenger vehicles shall, upon the request of any
appropriate law enforcement agency or insurance organization engaged in
automobile loss prevention, release information in its possession resulting
from an investigation conducted by it pertaining to such comprehensive loss,
including information as such agency or organization deems related to its
investigation. Should the central organization or the insurer be of the opinion
that the loss was caused by any criminal or fraudulent act of any person or
organization, or that an improper action occurred in the disposition of an
automobile subject to the provisions of this section, the central organization
or the insurer shall notify the Department of Financial Services' Criminal
Investigations Unit and any other appropriate law enforcement agency or
insurance organization engaged in automobile loss prevention of that opinion,
and shall notify the Department of Financial Services or Department of Motor
Vehicles of any improper action of their respective licensees or
registrants.
(2) In the absence of
fraud or bad faith, there shall be no liability on the part of, and no cause of
action of any nature shall arise against, the central organization or the
insurer, or any person acting on their behalf:
(i) for any such information it
furnished;
(ii) for its assistance
in any such investigation; or
(iii)
for any report or notification made pursuant to the provisions of this
section.
(3) Any
information or evidence furnished pursuant to this subdivision shall be held in
confidence by the appropriate agency or insurance organization engaged in
automobile loss prevention, until such information is required to be released
pursuant to a criminal proceeding, or if such agency or organization shall be
served a summons or subpoena to testify as to any information or evidence in
its possession regarding such automobile comprehensive loss in any civil action
where an insured or other person is seeking recovery under a policy against an
insurer for such automobile comprehensive loss.
(i)
Required amendatory
endorsement.
For all policies providing automobile physical damage
coverage issued or renewed to be effective on and after October 1, 1979,
insurers shall adopt one of the following procedures:
(1) amend the policy by adding thereto the
endorsement as set out in this subdivision, which is hereby deemed approved
upon filing with the Department of Financial Services;
(2) submit for Department of Financial
Services' approval the insurer's own substantially similar endorsement;
or
(3) submit for Department of
Financial Services' approval the insurer's basic policy form incorporating the
substance of the endorsement set out in this subdivision.
An insurer which adopts one of the procedures set forth in
this subdivision may subsequently submit filings under either of the other
procedures.
MANDATORY PHYSICAL DAMAGE COVERAGE ENDORSEMENT
(NEW YORK)
Notwithstanding any conflicting provisions applicable to the
physical damage coverages of this policy, it is agreed that the following
condition is added:
Recovery of Stolen or Abandoned
Automobiles
In the event an automobile to which the physical damage
coverages of this policy apply is stolen or abandoned, the company or its
authorized representative(s) shall, when notified of the location of the
automobile, have the right to take custody of the automobile for
safekeeping.
Instruction
This endorsement must be attached to, incorporated in or
overprinted upon all policies covering private passenger automobiles issued or
delivered in New York.
(j)
Existing policies.
All policies in force on and after the effective date of this
Part providing automobile physical damage coverage shall be deemed to include
the provisions of the endorsement set forth in subdivision (i) of this
section.
