OGC Op. No. 08-06-12

The Office of General Counsel issued the following opinion on June 30, 2008, representing the position of the New York State Insurance Department.

RE: Dent Armor Protection Plan

Question Presented:

May XYZ, Inc. market and sell in New York a Dent Armor Protection Plan, which provides paintless dent removal (“PDR”) services to its members for a membership fee, plus a discounted fee for each service that covers the cost and overhead associated with the repair, without it constituting “doing an insurance business” in New York under the New York Insurance Law?


Yes. The sale of the Dent Armor Protection Plan offered by XYZ, Inc. does not constitute the doing of an insurance business in New York pursuant to N.Y. Insurance Law § 1101 (McKinney 2006), provided that the additional discounted fee for each service it charges covers the cost and overhead associated with the repair, or the cost of rendition.


The inquirer provided a membership agreement from XYZ, Inc. for its Dent Armor Protection Plan. Under that Plan, members may register for membership terms of one to five years. The process used to repair is called PDR, and involves the use of specialized hand tools to permanently remove door dings and minor dents in repairable areas. Collision damage or very deep sharp dents are not covered under the agreement. During the term of membership, XYZ, Inc. agrees to repair up to six service requests per year at the “wholesale rate” of ten dollars per service request for the member’s vehicle identified on the membership agreement. Repairable areas are limited to exterior vertical painted sheet metal body panels, including fenders, doors, quarter panels and rear-lift panel. Repairs are done by technicians in the XYZ, Inc. network.

In response to an inquiry from the Office of General Counsel about the nature of the protection plan, XYZ, Inc.’s attorney stated that the membership agreement “mandates a fee per service request which covers the cost of the services and overhead of each repair based upon the wholesale rate charged by paintless dent repair technicians.” The inquirer asks whether the Dent Armor Repair System may lawfully be marketed and sold in New York.


Insurance Law § 1101(a) is relevant to the inquiry. That statute defines the term “insurance contract” and “fortuitous event” as follows:

(1) "Insurance contract" means any agreement or other transaction whereby one party, the "insurer", is obligated to confer benefit of pecuniary value upon another party, the "insured" or "beneficiary", dependent upon the happening of a fortuitous event in which the insured or beneficiary has, or is expected to have at the time of such happening, a material interest which will be adversely affected by the happening of such event.

(2) “Fortuitous event” means any occurrence or failure to occur which is, or is assumed by the parties to be, to a substantial extent beyond the control of either party.

The definition of the “doing of an insurance business” is set forth in Insurance Law § 1101(b)(1) as follows:

Except as provided in paragraph two, three or three-a of this subsection, any of the following acts in this state, effected by mail from outside this state or otherwise, by any person, firm, association, corporation or joint-stock company shall constitute doing an insurance business in this state and shall constitute doing business in the state within the meaning of section three hundred two of the civil practice law and rules:

(A) making, or proposing to make, as insurer, any insurance contract, including either issuance or delivery of a policy or contract of insurance to a resident of this state or to any firm, association, or corporation authorized to do business herein, or solicitation of applications for any such policies or contracts;

(B) making, or proposing to make, as warrantor, guarantor or surety, any contract of warranty, guaranty or suretyship as a vocation and not as merely incidental to any other legitimate business or activity of the warrantor, guarantor or surety;

(C) collecting any premium, membership fee, assessment or other consideration for any policy or contract of insurance;

(D) doing any kind of business, including a reinsurance business, specifically recognized as constituting the doing of an insurance business within the meaning of this chapter;

(E) doing or proposing to do any business in substance equivalent to any of the foregoing in a manner designed to evade the provisions of this chapter.

Insurance Law § 1102(a) prohibits any person, firm, association, corporation, or joint-stock corporation from doing an insurance business in New York unless authorized by a license in force pursuant to the Insurance Law, or exempted by the provisions of the Insurance Law from such requirement.

A service plan for which there is a pre-paid membership fee, and where certain services occasioned by the happening of a fortuitous event are offered by the provider of the services for an additional fee per service (even if such charge is less than the usual fee for such service), does not constitute the doing of an insurance business that requires a license, so long as the additional fee covers the cost of rendering the service, or the cost of rendition, including reasonable overhead. See Office of General Counsel (“O.G.C.”) Opinion No. 08-02-05 (February 8, 2008); O.G.C. Opinion No. 07-04-08 (April 10, 2007); O.G.C. Opinion No. 02-05-20 (May 17, 2002).

Therefore, under the facts presented, and based upon XYZ, Inc.’s representation that the fee for service covers the cost of rendition, the Dent Armor Protection Plan is not an insurance contract under Insurance Law § 1101(a)(1), and XYZ, Inc., by marketing and selling it in New York, is not doing an insurance business within the meaning of Insurance Law § 1101.

For further information you may contact Associate Attorney Alexander Tisch at the New York City Office.