NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A8007B
SPONSOR: Hevesi TITLE OF BILL: An act to amend the insurance law, the vehicle and
traffic law and the general business law, in relation to consumer motor
vehicle rental programs
PURPOSE: The purpose of this bill is to permit consumer motor vehicle
rental programs to operate in New York State.
SUMMARY OF PROVISIONS:
Section 1 of the bill would amend Insurance Law § 308(a)( I) to permit
the Superintendent of Financial Services ("Superintendent") to address
to a consumer motor vehicle rental program administrator ("administra-
tor"), or any officers thereof, any inquiry in relation to its trans-
actions or condition or any matter connected therewith.
Section 2 would amend the Insurance Law by adding a new Article 80 enti-
tled, "Consumer Motor Vehicle Rental Programs." Insurance Law § 8001
sets forth definitions, § 8002 requires a consumer motor vehicle rental
program administrator to register with the Superintendent, § 8003 sets
forth requirements for doing business in New York State, § 8004 sets
forth provisions pertaining to revocation or suspension of an adminis-
trator's registration or certificate of authority, § 8005 permits an
administrator to provide self-funded motor vehicle physical damage
insurance, § 8006 pertains to stop-loss insurance, § 8007 applies to
recordkeeping, and § 8008 sets forth penalties.
Section 3 would amend Insurance Law § 1108 by adding a new subsection
that exempts from licensing and other requirements of the Insurance Law
a consumer motor vehicle program administrator that has a certificate of
authority to provide self-funded motor vehicle physical damage insurance
and complies with the requirements of Insurance Law Article 80 to the
extent therein stated.
Section 4 would amend Insurance Law § 2305(b)(13) to require rates for a
group policy issued pursuant to Insurance Law § 3455 to be subject to
prior approval, except as provided in Insurance Law § 2350.
Section 5 would amend Insurance Law § 3440(b) to include within the
definition of "rental vehicle" a motor vehicle rented under a consumer
motor vehicle rental program.
Section 6 would amend the Insurance Law by adding a new § 3455 entitled,
"Group Insurance Policy for Consumer Motor Vehicle Rental Program."
Section 7 would amend Insurance Law § 5103(b) by adding a new paragraph
four to permit an insurer to exclude from coverage under an owner's
policy of liability insurance issued on a motor vehicle in satisfaction
of the requirements of the Vehicle and Traffic Law a person who is
injured while the motor vehicle is under the operation or control of a
renter pursuant to a consumer motor vehicle rental program provided that
the administrator's group policy provides coverage to the owner in
accordance with Insurance Law § 3455.
Section 8 would amend the Vehicle and Traffic Law by adding a new § 124,
which defines "consumer motor vehicle rental program."
Section 9 would amend Vehicle and Traffic Law § 311(4) by adding a new
paragraph (e) that includes in the definition of "owner's policy of
liability insurance" in the case of a vehicle rented pursuant to a
consumer motor vehicle rental program, a group insurance policy issued
by an insurer duly authorized to transact business in New York State,
pursuant to Insurance Law § 3455, that provides coverage in satisfaction
of the financial responsibility requirement set forth in Vehicle and
Traffic Law § 311(4), when the vehicle is being rented pursuant to the
consumer motor vehicle rental program.
Section 10 would amend Vehicle and Traffic Law § 311 by adding a new
subdivision I I, which defines "insured" as the first named insured,
except the term shall mean the group policyholder with regard to a group
insurance policy issued pursuant to Insurance Law § 3455.
Section 11 would amend Vehicle and Traffic Law § 370(3) to exclude from
that section an administrator or an owner under a consumer motor vehicle
rental program registered with the Superintendent provided that: (1) the
owner is an individual; (2) each rental period does not exceed 30 days;
(3) the owner does not have more than four motor vehicles in consumer
motor vehicle rental programs at any one time; (4) the owner does not
rent motor vehicles through consumer motor vehicle rental programs for
more than 4,300 hours in one calendar year; and (5) the owner is not
otherwise subject to the provisions of Vehicle and Traffic Law § 370.
Section 12 would amend Vehicle and Traffic Law § 388 by adding a new
subdivision five that states that notwithstanding any provision of §
388, an owner of a motor vehicle that rents (including under a consumer
motor vehicle rental program) or leases the vehicle to a person (or an
affiliate of the owner) shall not be liable for harm to persons or prop-
erty that results or arises out of the use, operation, or possession of
the vehicle during the period of the rental or lease if: (1) the owner
(or an affiliate of the owner) is engaged in the trade or business of
renting or leasing motor vehicles, or participates in a consumer motor
vehicle rental program; and (2) there is no negligence or criminal
wrongdoing on the part of the owner (or an affiliate of an owner). The
term "affiliate" means a person other than the owner who directly or
indirectly controls, is controlled by, or is under common control with,
the owner. The term "control" means the power to direct the management
and policies of a person whether through ownership of voting securities
or otherwise.
Section 13 would amend General Business Law § 396-z(1)(c) to exclude
from the definition of "rental vehicle company" an administrator or an
owner under a consumer motor vehicle rental program registered with the
Superintendent provided that: (1) the owner is an individual; (2) each
rental period does not exceed 30 days; (3) the owner does not have more
than four motor vehicles in consumer motor vehicle rental programs at
any one time; (4) the owner does not rent motor vehicles through consum-
er motor vehicle rental programs for more than 4,300 hours in one calen-
dar year; and (5) the owner is not otherwise subject to the provisions
of General Business Law § 396-z.
Section 14 would state that the bill will take effect 120 days after it
becomes law, provided that effective immediately, any addition, amend-
ment, or repeal of any rule or regulation for the implementation of the
bill on its effective date is authorized and directed to be made and
completed on or before the effective date.
JUSTIFICATION: Public policy that nurtures the sharing economy can be
an important catalyst of future economic development and growth. Econom-
ic progress is often driven by marshaling available resources more effi-
ciently rather than simply creating new resources. And history has
taught us that when technological progress leads to more efficient
production, such technologies will always have a positive overall
economic impact. Technologies and platforms which facilitate better use
of assets we already have will lead to growth that is sustainable, and
create value that is income equalizing.
Peer-to-peer marketplaces like those created by cars sharing programs
add tremendous value to our existing asset base. Creating a widespread
car-sharing or ride-sharing platform can achieve the same goals as
building a new transportation network with little or no additional phys-
ical resource utilization, and in a manner that lowers a population's
average ecological footprint.
Currently, New York law does not permit consumer motor vehicle rental
programs. A motor vehicle owner's liability insurance policy for
personal use provides coverage to any person who drives the vehicle with
the owner's permission. The Insurance Law does not permit an insurer to
exclude coverage for a renter. As a result, an owner may be liable
personally for any accident that occurs while the vehicle is being rent-
ed.
A vehicle owner's insurer is not prohibited from non-renewing the
owner's policy if the owner rents out the vehicle through a consumer
motor vehicle rental program. An insurer may raise the owner's insurance
rates if the insurer finds out that the owner is renting out his or her
vehicle since such use could be considered to be "commercial," and
therefore a significantly different risk than the risk that the insurer
thought it was insuring.
Group property/casualty insurance is permissible in limited circum-
stances only', and the Insurance Law currently does not permit an insur-
er to issue a liability insurance policy covering vehicle owners and
renters on a group basis.
The Insurance Law prohibits a person from reimbursing motor vehicle
owners for physical damage to a vehicle without being licensed to do an
insurance business in New York State. In addition, a person may not
investigate or adjust claims on behalf of another person doing an insur-
ance business in New York State without an independent adjuster's
license, and may not sell, solicit, or negotiate insurance without an
insurance producer's license.
49 U.S.C. § 30106(a) states that an owner of a motor vehicle that rents
or leases the vehicle to a person (or an affiliate of the owner) will
not be liable under the law of any state or political subdivision there-
of, by reason of being the owner of the vehicle (or an affiliate of the
owner), for harm to persons or people that results or arises out of the
use, operation, or possession of the vehicle during the period of the
rental or lease if the owner (or an affiliate of the owner) is engaged
in the trade or business of renting or leasing motor vehicles and there
is no negligence or criminal wrongdoing on the part of the owner (or an
affiliate of the owner).
This bill would amend the law to provide the necessary insurance and
motor vehicle oversight to protect both consumers and vehicle owners so
that peer to peer car share companies may operate in New York State.
LEGISLATIVE HISTORY: This is a new bill.
FISCAL IMPLICATIONS: The bill may provide additional revenue because
it requires the Department of Financial Services to collect fees associ-
ated with the registration of consumer motor vehicle rental programs.
However, the Department of Financial Services will incur costs during
the first year in processing new applications and updating licensing
software. The Department of Motor Vehicles also may incur costs to
update its systems, as necessary.
EFFECTIVE DATE: This bill would take effect 120 days following enact-
ment, provided that effective immediately, any addition, amendment or
repeal of any rule or regulation for the implementation of the bill on
its effective date is authorized and directed to be made and completed
on or before the effective date.
