BILL NUMBER: S2803
SPONSOR: LANZA
 
TITLE OF BILL:
An act to amend the insurance law, in relation to inspections of private
passenger automobiles prior to the provision of coverage for physical
damage thereto
 
PURPOSE:
This bill allows an auto insurer to waive the right to inspect a motor
vehicle prior to issuing an insurance policy if such insurer has titled
a plan of operation to ensure that vehicles covered under such policy
have not sustained physical damage.
 
SUMMARY OF PROVISIONS:
Section 1: Amends Insurance Law section 3411 to permit an auto insurer
to waive the physical inspection of an automobile prior to insuring such
a vehicle. In addition, an insured can receive coverage after sustaining
an accident without first having the vehicle inspected if such insurance
carrier has filed a plan of operation with the Superintendent of Insur-
ance.
 
EXISTING LAW:
Under current law, all motor vehicles must be inspected prior to being
covered under an auto insurance policy.
 
JUSTIFICATION:
The prior inspection law was first enacted almost a quarter century ago
to address problems of fraudulent damages to motor vehicles that were
covered after the accident had been sustained. Since 1984, mandatory
equipment can be verified by standardized Vehicle Identification Numbers
(VIN) adopted by the auto industry in the 1980's. Fraudulent policies
purchased after an accident has taken place can easily be identified
through today's new computer technology that pinpoints where and when a
call was made and when a vehicle had been in an accident or repaired.
While some may still attempt to purchase policies for phantom vehicles,
today's modern Special Investigation Units (SIU's) are far better
equipped to identify such issues that their counterparts of the 1970's.
The magnitude of this aspect of auto insurance' fraud is not large
enough to warrant the cost and unintended consequences of the existing
law. The current regulation, as prescribed by section 3411, is complex
and expensive for insurers to comply with, which drives up the overall
cost for all auto insurance in New York.
In addition, under current law, people who have no intention of commit-
ting auto insurance fraud can find at the time of an accident, that they
have lost coverage for such an accident because no auto inspection was
performed. In this situation, the insured has purchased coverage and
paid the premium, but will not be covered if his or her auto sustains
physical property damage simply because the auto was inadvertently not
inspected.
The intent of this bill is simply to remove the burden from the Depart-
ment of crafting a one size fits all solution to reform this requirement
that all vehicles must be physically inspected. It allows each insurer
to either comply with the existing physical inspection laws or, if it
wants to, to develop its own plan of operation to ensure that it does
not cover autos after a physical damage claim has been sustained. For
example, an insurer may require physical inspections for auto that are
valued over a certain monetary threshold or rely more on new technolo-
gies that can identify those vehicles that have already sustained phys-
ical damages.
 
LEGISLATIVE HISTORY:
2022: S.4312-Referred to Insurance/A.4199 - Referred to Insurance
2021: S.4312-Referred to Insurance/A.4199 - Referred to Insurance
2020: S.801-Referred to Insurance/A.2809 - Referred to Insurance
2019: S.801-Referred to Insurance/A.2809 - Referred to Insurance
2018: S.5768-Referred to Insurance/A.1312 - Referred to Insurance
2017: S.5768-Referred to Insurance/A.1312 - Referred to Insurance
2016: S.4629-Referred to Insurance/A.1995 - Referred to Insurance
2015: S. 4629-Referred to Insurance/A.1995 - Referred to Insurance
2014: S.4047-Referred to Insurance/A.1305 - Referred to Insurance
2013: S.4047-Referred to Insurance/A.1305 - Referred to Insurance
2012: S.2496-Referred to Insurance/A.2931 - Referred to Insurance
2011: S.2496-Referred to Insurance/A.2931 - Referred to Insurance
2010: S.1039-Referred to Insurance/A.10171- Referred to Insurance
2009: S.1039-Referred to Insurance
2008: S.2023-Referred to Insurance
2007: S.2023-Referred to Insurance
 
FISCAL IMPLICATIONS:
None.
 
EFFECTIVE DATE:
January first, next succeeding the date upon which it shall have become
law, and apply to policies issued or renewed after such date.