The Office of General Counsel issued the following opinion on August 3, 2005, representing the position of the New York State Insurance Department.
Re: Driving Discounts
1) May an insurer refuse to give the accident prevention course discount and instead give only the driver education discount to an insured who qualifies for both discounts?
2) Can age be a factor in determining the amount of discount that the vehicle operator receives?
1) No. An insurer is required to give the accident prevention course discount to the insured if the insured completes the accident prevention course pursuant to N.Y. Ins. Law § 2336. On the other hand, a driver education discount is voluntary and may be given to the insured in accordance with the insurer's filed and approved rating rules.
2) The age of the vehicle operator may be a factor in determining the amount of the driver education discount that is to be given. However, the insurer must stipulate the appropriate rate differential in the rating rules that it files with the Department of Insurance for approval. The driver's age should not be a factor in regards to the mandated accident prevention course discount.
An inquirer wrote to the Department stating that some insurers currently refuse to give the accident prevention course discount if the vehicle operator is already getting the driver education discount. The inquirer would like a clarification on the application of the accident prevention discount for vehicle operators who have also completed an approved driver education course and whether the age of the vehicle operator is relevant in determining these discounts.
New York Insurance Law § 2336 (McKinney 2005), in pertinent part, states:
(a) Any schedule of rates or rating plan for motor vehicle liability and collision insurance submitted to the superintendent shall provide for an appropriate reduction in premium charges for any insured for a three year period after successfully completing a motor vehicle accident prevention course, known as the national safety councils defensive driving course, or any driver improvement course approved by the department of motor vehicles as being equivalent to the national safety council's defensive driving course, provided that in either event there shall be no reduction in premiums for a self instruction defensive driving course or a course which does not provide for actual classroom instruction for a minimum number of hours as determined by the department of motor vehicles. Such reduction in premium charges shall be subsequently modified to the extent appropriate, based upon analysis of loss experience statistics and other relevant factors . . . .
Section 2336 of the N.Y. Ins. Law requires an insurer to give a discount to any insured that successfully completes an accident prevention course approved by the Department of Motor Vehicles. If the principal operator of a motor vehicle has successfully completed an approved accident prevention course, the insurer of such motor vehicle must reduce the liability and collision premiums of the insureds policy for a period of three years following the completion of the course. Since the accident prevention course discount is mandatory, insurers may not refuse to offer it. The accident prevention course discount is generally 10%, as discussed in Circular Letter 1 (1980) issued by this Department, the first Amendment thereto (March 17, 1980), and the second Amendment thereto (November 12, 1981).
In addition, the insurer may also give a driver education discount to any insured that has completed a driver education course. Age may be a factor in determining the amount of the driver education course discount. However, the insurer must stipulate the appropriate rate differential or any limitation in the rating rules that it files with the Department for approval.
Both the accident prevention course discount and the driver education discount must be applied in a non-discriminatory manner in accordance with the insurer's approved rating rules filed with the Department.
For further information, Principal Attorney Paul Zuckerman may be contacted at the New York City Office.