OGC Op. No. 07-08-10
The Office of General Counsel issued the following opinion on August 29, 2007, representing the position of the New York State insurance.
RE: Vehicle Inspections Under Regulation 79
1. May an insurer require a window sticker or dealer invoice in addition to a bill of sale in order to waive inspection of a new automobile?
2. Is an automobile dealer required to supply an insurance agent with a window sticker, invoice, bill of sale, or manufacturer’s statement of origin if one or more of these items are required by an insurer providing physical damage coverage in order to waive inspection of a motor vehicle?
1. Yes. An insurer may require a window sticker or dealer invoice in addition to a bill of sale as a condition to waive inspection of a new automobile pursuant to N.Y. Ins. Law § 3411 (McKinney 2007) and NYCRR, Title 11, Pt. 67 (Regulation 79).
2. No. The Insurance Law and regulations promulgated thereunder do not require automobile dealers to supply an insurance agent with a window sticker, invoice, bill of sale, or manufacturer’s statement of origin.
The inquirer reports that an insurer requires an automobile dealer’s window sticker or a copy of the dealer’s invoice, in addition to a bill of sale, in order to waive inspection of a new automobile. The inquirer states that some insurers will waive inspection simply upon presentation of a bill of sale and manufacturer statement of origin. The inquirer asks about the documentation that an automobile dealer must supply to an insurance agent.
Insurance Law § 3411(d) is relevant to the inquiry. It sets forth an inspection requirement for new motor vehicle insurance policies as follows:
(d) A newly issued policy shall not provide coverage for automobile physical damage perils prior to an inspection of the automobile by the insurer.
Thus, a purchaser or lessor of a new automobile must have the automobile inspected by the insurer if the insurer is to provide physical damage insurance for the vehicle.
11 NYCRR § 67 implements the provisions of Insurance Law § 3411 and sets forth the standards and procedures for the requisite inspections. 11 NYCRR § 67.1 defines “physical damage insurance” for the purposes of the inspection requirement. It states in pertinent part:
(c) Automobile physical damage insurance means a policy providing one or more of the following insurance coverages:
(3) fire or theft.
11 NYCRR § 67.2 sets forth automobile inspection requirements. It states in pertinent part:
(a) No new policy or endorsement insuring a private passenger automobile shall be issued in this State to provide coverage for automobile physical damage unless the insurer has inspected the automobile.
However, Insurance Law § 3411(m)(2) provides for exceptions to the inspection requirement as follows:
The inspections provided for in this section may be dispensed with or deferred under circumstances specified in the regulations of the superintendent. Such circumstances may include but are not limited to, the insuring of a new automobile, the insuring of an automobile whose inspection would constitute a serious hardship to the insurer, the insured or an applicant for insurance, and the insuring of an automobile for a limited specified period of time.
11 NYCRR § 67.3 details the exceptions relevant to the situation in the fact pattern presented here. The regulatory provision reads as follows:
(b) An insurer may waive or dispense with a mandatory inspection under any of the following circumstances:
* * *
(2) Where a new, unused automobile is purchased or leased from a franchised automobile dealership and the insurer is provided with either a copy of the bill of sale which contains a full description of such automobile, including all options and accessories, or a copy of the lease or MV-50 form, provided by the Department of Motor Vehicles, which establishes transfer of ownership from the dealer to the customer and a copy of the window sticker or advanced dealer shipping notice (invoice) showing the itemized options and equipment in addition to the total retail price of the vehicle on which will be added any dealer installed options installed on the vehicle at the time of sale or lease. The physical damage coverage on such new, unused automobile shall not be suspended during the term of the policy due to the insured’s failure to provide the required document(s). Payment of a claim shall be conditioned upon the receipt by the insurer of such document(s) and no physical damage loss occurring after the effective date of coverage shall be payable until the document(s) are provided to the insurer. If the above document(s) are not submitted by the insured 60 days prior to the annual renewal date, the insurer, upon renewal of the automobile physical damage insurance must require a physical inspection, pursuant to the provisions of section 67.7 of this Part (emphasis added).
Thus, there is no requirement that an insurer waive inspection on any new automobile simply because the Insurance Law and regulations promulgated thereunder provide that an insurer may in certain circumstances waive inspection.
However, if an insurer is willing to waive an inspection, it must adhere to Regulation 79. A bill of sale that sets forth a full description of the automobile, including all options and accessories, is one document that may suffice. But, a bill of sale that fails to include the required detailed description of the automobile is unacceptable, even if the information is obtained in conjunction with a window sticker, dealer invoice, or manufacturer’s statement of origin. See Office of General Counsel Opinion (April 5, 2007).
An insurer also may waive the inspection if it receives an MV-50 form and a copy of the window sticker or dealer invoice, either of which must show the itemized options and equipment, in addition to the total retail price of the vehicle, including any dealer-installed options. Thus, a copy of the window sticker or dealer invoice is only required under 11 NYCRR § 67.3(b)(2) if an MV-50 form is used instead of a bill of sale.
Further, an inspection may be waived on a new automobile that is leased if a copy of the lease agreement is provided together with a copy of the window sticker or dealer invoice. See id.
Nothing in 11 NYCRR § 67.3(b)(2) provides that a manufacturer’s statement of origin is an acceptable document for the purpose of inspection waivers.
Nevertheless, an insurer may request additional documentation beyond that which is required by Regulation 79, because 11 NYCRR § 67.3(b)(2) only sets forth minimum requirements for an insurer to waive inspection. In this situation, the insurer has required a bill of sale and either a window sticker or dealer invoice. That is permissible under the Insurance Law and regulations promulgated thereunder, provided that the insurer files its inspection procedures with the Superintendent pursuant to 11 NYCRR § 67.0(b). These procedures must include a description of the documentation that the insurer requires in order to waive inspection.
The Insurance Law and regulations promulgated thereunder are silent with regard to your question of whether an automobile dealer must provide an agent with the documentation required by the insurer for a waiver of inspection, and the Insurance Department does not regulate automobile dealers. Thus, the Department does not require an automobile dealer to provide such documentation to an insurance agent.
For further information you may contact Associate Counsel Alexander Tisch at the New York City Office.