The following procedures shall be applicable to all merit
rating plans which are subject to the provisions of section
2334 of the
Insurance Law.
(a) Property damage
threshold. An accident that does not result in aggregate damage to property in
excess of $2,000 shall not result in the assignment of points or any surcharge
under the rules of any merit rating plan. However, if an insured has two or
more accidents involving any property damage during the experience period, a
surcharge may be imposed.
(b)
Comprehensive coverage and comprehensive claims. Comprehensive premiums may not
be surcharged under any merit rating plan. Comprehensive claims may not be used
to surcharge any other coverage.
(c) Claims for bodily injury. A surcharge may
be imposed for an occurrence involving bodily injury (including a no-fault
injury subject to article 51 of the Insurance Law), provided the motor vehicle
was in operation and the insured was at fault. The establishment of a residual
bodily injury liability reserve shall not in itself imply that the insured was
at fault. An additional surcharge may not be imposed for bodily injury, if the
accident which resulted in the bodily injury is already surchargeable under
subdivision (a) of this section.
(d)
Other exceptions and
restrictions.
(1) No points or
surcharge may be imposed for an accident occurring under the following
circumstances:
(i) when the motor vehicle was
lawfully parked;
(ii) when the
motor vehicle of the insured or other operator resident in the same household
was struck in the rear by another motor vehicle, and the insured or other
resident operator has not been convicted of a moving traffic violation in
connection with the accident;
(iii)
when the motor vehicle operated by the insured or other operator was struck by
a hit-and-run vehicle, if the accident is reported to the proper authority
within 24 hours by the insured or resident operator;
(iv) when the insured or other resident in
the insured's household operates a vehicle for hire or a motor vehicle other
than a noncommercial motor vehicle, and the accident occurred while in the
course of employment and said accident did not result in a conviction for a
moving traffic violation;
(v) when
the insured has had an accident while operating, as an employee, a commercial
motor vehicle in the course of employment and in the discharge of the
employee's duties at the time of the accident, unless the accident is
determined to have been caused by the intentional action or gross negligence of
the insured. For purposes of this rule only, the term gross negligence shall
not mean the insured's failure to refuse to drive or operate a commercial motor
vehicle which has a defective condition that is known to the insured, provided
the insured had reported such defective condition to the insured's immediate
supervisor or employer;
(vi) when
the insured or other resident in the insured's household has had an accident
while, pursuant to article 44-B of the Vehicle and Traffic Law, the insured or
other resident in the insured's household was logged onto a TNC's digital
network but not engaged in a pre-arranged trip or engaged in a TNC prearranged
trip, and the accident did not result in a conviction for a moving traffic
violation, unless the policy is providing coverage for such operation of the
motor vehicle. If the coverage is provided pursuant to an endorsement, then the
insurer may impose a surcharge on the separate premium for the endorsement ;
or
(vii) when the insured or other
resident in the insured's household has had an accident while, pursuant to
article 40 of the General Business Law, the insured or other resident was
operating a shared vehicle through a peer-to-peer car sharing program during
the peer-to-peer car sharing period, unless the policy is providing coverage
for such operation of the motor vehicle. If the coverage is provided pursuant
to an endorsement, then the insurer may impose a surcharge on the separate
premium for the endorsement.
(e) Upper limits to surcharges. Under
additive type plans, the maximum surcharge that can be added to an insured's
premium as a result of merit rating is three times the applicable total limits
premium for the base (adult) class for the liability coverages (including
personal injury protection), and three times the applicable base (adult)
premium for collision coverage. Under multiplicative type plans, the maximum
surcharge that can be added to an insured's premium as a result of merit rating
is two times the otherwise applicable premium for liability (including personal
injury protection) and collision coverages. The above rules should be complied
with prior to any expense flattening.
(f) Multicar surcharge rule. In a multicar
risk, i.e., where more than one motor vehicle is insured under a policy, the
insurer may allocate the surcharge among any or all of the motor vehicles, but
the aggregate surcharge shall be no greater than the amount of surcharge that
would have been generated if only one motor vehicle were insured under the
policy.
(g) Minimum percentage of
reimbursement required for exemption from surcharge. An insured may not be
surcharged for an incident for which that insured or the insurer has received
reimbursement or a judgment, equal to one third or more of the value of the
insured's property damage claim. For the purposes of this Part, the value of
the property damage claim is defined as the lesser of the adverse carrier's or
the insured's estimate.
(h) Refund
of surcharge.
(1) All merit rating plans must
contain a provision, applicable to present and former insureds, to refund the
additional portion of the premium representing a merit rating surcharge in any
of the following circumstances:
(i) it is
subsequently established that the accident for which a surcharge was applied
falls under one of the exceptions enumerated in the insurer's merit
plan;
(ii) the conviction for a
chargeable violation or traffic infraction is ultimately reversed;
(iii) a surcharge was levied through mistake,
carelessness, misinformation or other error;
(iv) the insurer has established a reserve,
but no claim was submitted for a period of three years after the date of the
incident, or the statute of limitations has run and no suit has been
filed.
(2) All such
refunds shall be the portion of the premium due to the surcharge for all policy
periods since the inception of the surcharge. An insurer may refund the amount
of the surcharge or credit the insured's policy. However, the insured shall
have the option of receiving a dollar refund in lieu of a credit.
(i) Providing noncommercial motor
vehicle insureds with clear notice of premium surcharges under merit rating
plans. Where a policy has been surcharged under a merit rating plan, the
insurer shall state prominently, either on the declarations page, on the
premium bill, or on a notice accompanying the declarations page or premium
bill, the following, or its substantive equivalent:
"YOUR PREMIUM REFLECTS A SURCHARGE AND, THEREFORE, IS
HIGHER THAN IT OTHERWISE WOULD BE BECAUSE, DURING THE MEASURING EXPERIENCE
PERIOD WHICH APPLIED TO YOUR INSURANCE, YOU HAD ONE OR MORE CHARGEABLE
ACCIDENTS OR CHARGEABLE TRAFFIC CONVICTIONS UNDER OUR MERIT RATING PLAN. THE
ATTACHED DESCRIPTION OF OUR MERIT RATING PLAN INCLUDES A LIST OF EVENTS FOR
WHICH WE MAY SURCHARGE YOU AND THE CIRCUMSTANCES UNDER WHICH SURCHARGES MAY BE
REMOVED OR REFUNDED. IF YOU HAVE ANY QUESTIONS, YOU MAY (WISH TO CONSULT YOUR
AGENT OR BROKER)* OR (CALL US AT COMPANY TELEPHONE NO. ________)[FN*]"
(j) Rate surcharges to be
expressed in dollar amounts. Where a policy has been surcharged under a merit
rating plan, the insurer shall state prominently, either on the premium bill,
on a notice accompanying the premium bill, or on the declarations page, the
total dollar amount of such surcharge. This disclosure shall be made:
(1) at the inception of each policy
period;
(2) at the time of any
premium change during the policy period, where the dollar amount of the
surcharge is changed; and
(3) in no
event less than once a year.
(k) Providing noncommercial motor vehicle
insureds with notice of chargeable accident dates and conviction dates of
chargeable violations. For all policies issued or renewed on or after July 1,
1992 (or, at the insurer's option, an earlier date), where a policy has been
surcharged under a merit rating plan, the insurer shall state prominently, as
part of the disclosure required by subdivision (j) of this section:
(1) the date on which each chargeable
accident occurred; and
(2) the
conviction date of each chargeable violation.
(l) Attachment of any applicable merit rating
plan. All companies writing noncommercial motor vehicle liability or physical
damage motor vehicle insurance are required to include, with the rating
information form that accompanies all new and renewal policies, a merit rating
description that clearly specifies the essential elements of the rules and
classifications of the merit rating plan, including a statement informing
insureds that if they receive any reimbursement or judgment, such should be
reported to the insurer. This description should be clear enough so that an
insured can be able to determine his/her merit rating classification, the
surcharge level associated with this classification, the duration of the
surcharge, the circumstances under which surcharges will be removed,
etc.
(m) Exception from the above
rules. The superintendent may exempt a merit rating plan from the requirement
of meeting one or more of the above standards if the superintendent determines
that the plan contains innovative features of sufficient merit, and that plan
is, on balance, in the public interest.
[FN*] Insurer May Select Appropriate Phrase Or Use Both
Phrases.