The Office of General Counsel issued the following opinion on September 8, 2005, representing the position of the New York State Insurance Department.
Re: Limited license for credit insurance
1. Does New York have a limited producer license with respect to the sale of credit property insurance?
2. With respect to financed or leased equipment, may a master policy be issued to an insured lender/lessor with notices of insurance issued to the retail purchasers/lessees?
1. New York does not have a limited producer license with respect to the sale of credit property insurance.
2. With respect to financed or leased equipment, a master policy may be issued to an insured lender/lessor with notices of insurance issued to the retail purchasers/lessees so long as the policy insures only the lender/lessor.
The inquirer states that the inquirer is an insurance agency representing a property and casualty insurance company, (hereinafter P&C). P&C is filing a physical damage program in New York for financed and leased agricultural and commercial equipment. A master policy is issued in the name of the insured lender/lessor. Notices of insurance, not policies, are issued to the retail purchasers/lessees. The insurance is offered by licensed tractor and implement dealerships and is sold with a retail finance contract or lease at the time the equipment is purchased or leased.
The inquirer inquired whether New York has a limited producer license as does the other states in which the inquirer markets this insurance.
Since the policy insures the seller/lessor's insurable interest in the property resulting from loss or damage to the property, and does not cover the financial loss of the seller/lessor resulting from a default by the purchaser/lessee, the policy would be considered to be credit property insurance. New York does not have a limited agent or broker license with respect to credit property insurance, or, for that matter, other types of credit insurance. Hence, if any dealer sells the insurance, the dealer would have to obtain an insurance agent or broker license in New York. Licensing information is available on the Department's website, www.ins.state.ny.us.
A master policy may be issued to the retailer/lessor covering property sold or leased by that retailer/lessor. However, such a master policy may cover only the security interests of the retailer/lessor. Should it also cover the interests of the purchasers/lessees, the policy would be an impermissible group insurance policy. Alternatively, separate policies may be issued covering the retailer/lessor and each purchaser/lessee. In such a case, the policies would not constitute impermissible group policies. Furthermore, credit property policy forms are subject to prior approval by the Superintendent.
For further information one may contact Principal Attorney Paul A. Zuckerman at the New York City Office.