Circular Letter No. 2 (2017)
March 3, 2017
Property/Casualty Insurers Authorized To Write Surety Insurance In New York State
|RE:||Vehicle And Traffic Law Amendment Regarding Motor Vehicle Dealer Surety Bonds|
STATUTORY REFERENCES: Vehicle and Traffic Law §§ 415(1), 415(6-b); Insurance Law Article 23; L. 2016, ch. 342.
The purpose of this circular letter is to bring to your attention an amendment to the Vehicle & Traffic Law (“VTL”) relating to surety bonds issued in satisfaction of VTL bond requirements to motor vehicle dealers conducting business in New York.
VTL § 415(6-b)(a) requires a New York retail or wholesale motor vehicle dealer to maintain a surety bond as a condition of its registration and certification to sell motor vehicles in New York. With respect to a dealer selling motor vehicles other than new motor vehicles, Chapter 342 of the Laws of 2016 (“Chapter 342”), which takes effect on March 28, 2017, amended VTL § 415(6-b)(a) to increase the amounts of the surety bond and to reduce the threshold of the number of vehicles sold in the prior year that triggers the higher bond amount. As a condition to obtaining a registration certificate, every such dealer: (1) applying for a registration certificate in the first instance, or who sold 50 or fewer motor vehicles in the previous calendar year, shall obtain and maintain a surety bond from a New York-authorized insurer in the amount of $20,000; or (2) who sold more than 50 motor vehicles in the previous calendar year, shall obtain and maintain a surety bond from a New York-authorized insurer in the amount of $100,000. Any such dealer who is bonded pursuant to VTL § 415(6-b) prior to March 28, 2017 must comply with the amendments made by Chapter 342 upon the renewal, replacement, alteration, or extension of the dealer’s current surety bond. The $50,000 surety bond requirement set forth in VTL § 415(6-b)(a) that is applicable to the registration of a new motor vehicle dealer and a qualified dealer, as those terms are defined in VTL § 415(1), remains unchanged.
Insurers issuing these bonds that do not already have filed rates applicable to these revised bond amounts should make appropriate rate filings in accordance with Insurance Law Article 23, including providing supporting information, prior to issuing such bonds.
In addition, Chapter 342 amended VTL § 415(6-b)(c) to require any surety issuing a surety bond to provide the Commissioner of Motor Vehicles (“Commissioner”) with 60 days’ notice prior to the effective date of lapse of the surety bond, and to provide additional notice to the Commissioner upon the date of cancellation or lapse of the bond.
Please refer to the New York State Department of Motor Vehicles (“DMV”) website at https://dmv.ny.gov/dealers/dealer-surety-bond for additional information regarding motor vehicle dealer surety bonds. Please direct any questions regarding this circular letter or Chapter 342 to DMV Vehicle Safety at (518) 474-6253.
Very truly yours,
Deputy Bureau Chief