OGC Opinion No. 06-07-12

The Office of General Counsel issued the following opinion on July 24, 2006, representing the position of the New York State Insurance Department.

Re: No-Fault Loss Transfer Claims

Question:

In order to be eligible for a No-Fault inter-company loss transfer for No-Fault benefits paid, may an insurer combine the unloaded weight of its insured's motor vehicle with the unloaded weight of a trailer that the motor vehicle was hauling at the time of an accident, in order to reach a combined weight of more than 6,500 lbs. and pursue loss transfer as authorized under N.Y. Ins. Law § 5105(a)?

Conclusion:

No. An insurer may not combine the weight of the motor vehicle and a trailer in order to qualify for the 6500 lb. limit requirement which would allow transfer of loss to the insurer of the at-fault vehicle.

Facts:

An insurance company that insures a person's pickup truck that weighed 5,452 lbs. unloaded. The pickup truck was hauling a horse trailer which weighed 3,025 lbs. unloaded, for a total attached weight of 8,477 lbs. A passenger in the insured's horse trailer was injured when another vehicle crossed the dividing line and struck the insured's pickup and attached horse trailer. The insurer of the injured party would like to pursue its loss transfer recovery rights for No-Fault benefits paid against the insurer of the at-fault party.

Analysis:

N.Y. Ins. Law § 5105(a) allows for recovery for damages in No-Fault under certain conditions and provides in part:

Any insurer liable for the payment of first party benefits to or on behalf of a covered person and any compensation provider paying benefits in lieu of first party benefits which another insurer would otherwise be obligated to pay pursuant to subsection (a) of section five thousand one hundred three of this article or section five thousand two hundred twenty-one of this chapter has the right to recover the amount paid from the insurer of any other covered person to the extent that such other covered person would have been liable, but for the provisions of this article, to pay damages in an action at law. In any case, the right to recover exists only if at least one of the motor vehicles involved is a motor vehicle weighing more than six thousand five hundred pounds unloaded or is a motor vehicle used principally for the transportation of persons or property for hire. However, in the case of occupants of a bus other than operators, owners, and employees of the owner or operator of the bus, an insurer which, pursuant to paragraph one of subsection (a) of section five thousand one hundred three of this article, provides coverage for first party benefits for such occupants under a policy providing first party benefits to the injured person and members of his household for loss arising out of the use or operation of any vehicle of such household, shall have no right to recover the amount of such benefits from the insurer of such bus.

Therefore, Section 5105(a) permits loss transfer between No-Fault insurers only under limited circumstances, including when a motor vehicle involved in an accident weighs at least 6500 lbs. unloaded. A motor vehicle which is towing a vehicle is considered loaded since it is carrying more than its own weight.

The original No-Fault legislation, enacted in 1973, did not include an exemption for vehicles of a certain weight or those used for hire in Section 674 (now Section 5105). A bill introduced in 19771 attempted to amend Section 674(1) as follows:

Such right to recover shall exist, however, only if at least one of the motor vehicles involved is: (a) used principally for the transportation of persons or property for hire or other commercial purpose; or (b) is hauling any vehicle not propelled by its own power. (Emphasis added)

While the draft of the 1977 bill initially included "motor vehicles… hauling any vehicle not propelled by its own power," that towing clause was not included in the final version of the statute enacted in 1977. Therefore, based upon the statutory language which was enacted, it must be concluded that motor vehicles weighing less than 6500 lbs. which are used for towing other vehicles, and which do not qualify for other statutory exceptions, do not have the right to recover through a loss transfer claim. Thus, in the factual case presented, inter-company loss transfer is not available.

The inquiry refers to two cases relating to situations with trailers and No-Fault benefits. The first case, Unigard Mut. Ins. Co. v. Hartford Ins. Group, 485 N.Y.S. 2d 805 (N.Y. A.D. 2nd Dept) (1985) is a dispute between the insurer of a trailer and insurer of the motor vehicle that was towing the trailer. That case suggests that the trailer and the towing unit can be seen as one. However, the dispute was between two insurers insuring the same party and does not apply to the relevant provision of Section 5105(a), which involves separate parties and separate vehicles.

The second case referred to is Kessler v. Liberty Mutual Insurance Company, 551 N.Y.S.2d (N.Y. A.D. 4th Dept.) (1990). In this case, the question before the court was whether an accident involving a tractor and attached flatbed trailer arose out of the "use or operation of a motor vehicle" in order to be covered under No-Fault pursuant to N.Y. Ins. Law § 5102(b), and therefore, was not dispositive of any question relating to the availability of No-Fault loss transfer under Section 5105(a).

For further information you may contact Supervising Attorney Lawrence M. Fuchsberg at the New York City Office.

1  S.A. 55748 1977-1978 Regular Sessions (N.Y. 1977).