Over at our Arbiters of NY No-Fault blog, my associate, Bethany Mazur, just posted about the treatment manipulation under anesthesia has been getting in American Arbitration Association no-fault arbitrations. I commend that blog post to New York no-fault practitioners and claims professionals. Read it here.
Friday, September 10, 2010
Monday, September 6, 2010
I don't know why, but it seems that the number of NYS Insurance Department Office of General Counsel opinion letters being posted to the the Department's website has decreased this year. From the 2010 Selected Opinions of the Office of General Counsel come these two opinion letters, the first from May and the second from June, relevant to property and casualty insurers doing business in New York, both involving auto physical damage coverage.
Appearance Allowances Prohibited
OGC Op. No. 10-05-01 (May 10, 2010)
May an automobile insurer offer to a claimant an “appearance allowance” in lieu of repairing or replacing a damaged part on the claimant’s automobile?
No. To the extent that an automobile insurer offers to a claimant less than the fair and reasonable amount sufficient to return the vehicle to its condition immediately prior to the loss, the insurer stands in violation of N.Y. Ins. Law § 3411(i) (McKinney 2007) and New York Comp. Codes R. & Reg. (“NYCRR”) tit. 11, Part 216 (Regulation 64).
The inquirer represents ABC Insurance Company (“ABC”). He reports that ABC offers “appearance allowances” to claimants. An “appearance allowance” is a monetary amount paid by an insurer to a claimant in lieu of restoring the claimant’s automobile to its condition immediately prior to the loss. In a July 1, 2009 memorandum from ABC to the Department, in which ABC explains its use of “appearance allowances,” ABC states that its current business plan includes offering an “appearance allowance” to a claimant in instances where the claimant seeks repair or reimbursement for minor cosmetic damage to a part of the automobile. The memorandum states that ABC’s trained insurance adjusters offer claimants: 1) an “appearance allowance,” 2) repair, or 3) replacement of the damaged automobile part. Furthermore, in the memorandum, ABC claims that the offer of an “appearance allowance” is merely one option addressed with the claimant, and that ABC does not require the claimant to choose the appearance allowance as a condition of payment.
Additionally, ABC has provided the Department with a section of its handbook, which describes ABC’s policies regarding “appearance allowances.” The handbook expressly states that there is “no set amount for an appearance allowance.” Furthermore, ABC’s Handbook sets forth an example of an instance where an adjuster may offer an “appearance allowance” to a claimant:
Moreover, ABC’s handbook states that “[t]he appearance allowance should not exceed what [ABC] would have to pay to repair or replace the part.”An example of this would be a front bumper with a small dent or scrapes. In this example, the value of the bumper is $600.00. We might offer the owner an appearance allowance of $100.00 in lieu of repairing or replacing the bumper. The company may still pay to align the bumper if necessary.
The inquirer asks whether the “appearance allowance” comports with the Insurance Law and the regulations promulgated thereunder.
Insurance Law § 3411(i) is relevant to the inquiry. That statute governs automobile physical damage insurance covering private passenger automobiles, and states:
Thus, an insurer may not condition its payment of a claim to a claimant upon repair of the automobile, provided that an insured must replace an airbag that was inflated and deployed, or stolen. In other words, an insurer is obligated to repair the vehicle or pay the cost of the repair. In fact, the Memorandum in Support of Chapter 161 of the Laws of 1996, which was enacted as Insurance LawPayment of a physical damage claim shall not be conditioned upon the repair of the automobile, provided, however, the insured shall replace any inflatable restraint system (airbag), as defined in subparagraph (b) of S 18.104.22.168 of standard 208 of part 571 of title 49 of the code of federal regulations, that inflated and deployed, or that was stolen, which is included in a physical damage or theft claim. The insurer may request that the automobile be made available for inspection whether or not the automobile is repaired. The results of such inspection may form a basis for determining the value of the automobile in the event of a subsequent loss. If the automobile is repaired the insurer shall request the repair invoice and shall require the insured and the automobile repairer to certify, under penalties of perjury, whether the applicable deductible has been paid to the automobile repairer, whether any repairs have been made and whether the repairs did not include all items allowed by the insurer.
In addition, 11 NYCRR
Furthermore, 11 NYCRRIn any case where there is no dispute as to coverage, it shall be the duty of every insurer to offer claimants, or their authorized representatives, amounts which are fair and reasonable as shown by its investigation of the claim, providing the amounts so offered are within policy limits and in accordance with the policy provisions.
Therefore, an automobile insurer is required to detail each item of damage to a claimant’s automobile, commence negotiations with the claimant, and offer a good faith settlement to the claimant that is sufficient to repair the vehicle to its condition immediately prior to the loss. If there is no dispute as to coverage, the insurer must offer to the claimant a fair and reasonable amount as shown by its investigation, provided the amount offered is with policy limits and in accordance with the policy provisions.
By paying an “appearance allowance” in lieu of the full claim, ABC is not complying with Insurance Law
In sum, to the extent that an automobile insurer offers to a claimant less than the fair and reasonable amount of the full claim as found by an insurer’s adjuster, the insurer’s actions do not comply with Insurance Law
Deductibles for Automobile Physical Damage Insurance Policies
OGC Op. No. 10-06-08 (June 3, 2010)
1) May an authorized insurer offer a zero deductible for a policy of comprehensive or collision automobile insurance coverage?
2) Is there an exception to the deductible requirements for antique, special, or historical vehicle programs, since these are not standard automobile programs?
1) No. N.Y. Ins. Law
2) No, there is no exception to the deductible requirements for antique, special, or historical vehicle programs.
1) Deductibles under private passenger motor vehicle insurance policies
The inquirer asks, on behalf of an insurer who is a customer of the inquirer, about whether an insurer may offer automobile physical damage insurance with a zero deductible for automobiles registered in New York.
Section 3411(k) reads, in pertinent part, as follows:
A zero deductible on either comprehensive or collision insurance coverage is not permissible under automobile physical damage insurance policies covering New York State registered private passenger automobiles under Ins. LawEach insurer which offers physical damage insurance subject to the provisions of this section shall offer such insurance with a standard deductible of two hundred dollars for each occurrence. The insured shall, however, at the inception of the policy or at the annual anniversary date, or at the time of the replacement or addition of an automobile, have the option of purchasing a policy with a lesser deductible, but in no event may the insurer sell a policy with a deductible of less than fifty dollars for fire, theft or comprehensive insurance coverages (one hundred dollars for assigned risk policies. . .) and one hundred dollars for collision insurance coverage except that window glass coverage may be sold without a deductible. . . .
2) Deductibles under antique, special, or historical private passenger motor vehicle insurance policies
The inquirer also asks whether there is an exception for antique, special, or historical vehicles to the limitations on deductibles set forth in Ins. Law
For further information you may contact Associate Attorney Jeffrey A. Stonehill at the New York City Office.
The Part of No New York No-Fault Insurers Must Understand -- HCRA Surcharges May No Longer Be Offset Against Aggregate No-Fault Limits
Back in December 2009, I posted about the New York State Insurance Department's withdrawal after only 81 days of Circular Letter No. 21 (2009), entitled "The New York State Health Care Reform Act and No-Fault Insurance", which for a time superseded Circular Letter No. 16 (1996) and Supplement No. 1 to Circular Letter No. 16 (1996). It all had to do with the the Department's position on whether New York no-fault insurers and self-insurers could offset an applicant's aggregate no-fault benefit limit by the amount of any HCRA surcharges paid directly to the New York State Department of Health's (“DOH”) Office of Pool Administration. The Department's position on that question from November 22, 1996 through September 16, 2009 was YES, such HCRA surcharge payments could be applied as an offset, NO from September 16 through December 6, 2009, and YES again from December 7, 2009 to present, retroactive to its 1996 circular letter.
Once again, the answer is NO, and it's likely to stay that way indefinitely. On August 24, 2010, the Department released Circular Letter No. 12 (2010). Alike its withdrawn 2009 predecessor, this circular letter again supersedes and withdraws Circular Letter No. 16 (1996) and Supplement No. 1 to Circular Letter No. 16 (1996) and again advises New York no-fault insurers and self-insurers that the Department has "reconsidered its position on this issue."
Quoting a June 16, 2010 opinion of the Department's Office of General Counsel, the circular letter states:
The Legislature clearly intended payment to health providers to be included as part of basic economic loss when it enacted Article 51 of the Insurance Law. There is no similar evidence, however, that the Legislature intended payment of the surcharge to be included as a reimbursable health expense under the no-fault law. To the contrary, when it enacted the law providing for HCRA surcharge, the Legislature did not amend the no-fault law in any manner. Accordingly, the interpretive guidance set forth in Circular Letter No. 16 no longer should be followed, and insurers may not offset the HCRA surcharge against any no-fault benefits to which an injured person is entitled under Insurance Law § 5102(a).
Since there is no effective date to this circular letter, it took effect immediately upon its issuance. No more offsetting HCRA surcharges against aggregate no-fault limits.In light of OGC Opinion No. 10-06-05, insurers and self-insurers may not offset an applicant's aggregate no-fault benefit limit for the payment of a surcharge when the surcharge is paid directly to the DOH's Office of Pool Administration.