Current through Register Vol. 46, No. 12, March 20, 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.