The New York Office of General Counsel has affirmed repairers’ right to waive or discount a customer’s deductible. Last month’s opinion represents the position of the New York State Insurance Department.
The department wanted to determine if a shop’s payment to the insured of all or part of the insurance deductible constituted a rebate program in violation of New York insurance law. The state concluded that it did not, as there is no apparent relationship between the shop and any insurance company, and the shop is neither a licensee under the insurance law nor acting on the part of a licensee.
The Insurance Department released its first opinion on the matter in October 2007 after a shop advertised that it would pay a customer’s deductible, or a portion of it. An individual alerted the department, inquiring if the shop was violating state laws by offering to pay insurance deductibles for its customers before any work is actually done.
The October 2007 opinion stated that there may be circumstances in which a plan to waive or reduce a deductible could be permissible under New York law. The inquirer then submitted a second request for an opinion, asking whether a shop’s payment of the deductible to the insured after work is done constitutes an unlawful rebate. The Office of General Counsel responded with its March 26 opinion, noting that a shop entices any and all vehicle owners to use its services, irrespective of the vehicle owner’s insurance.
For more information, contact Senior Attorney Susan A. Dess at the New York City office at [email protected] or (212) 480-5259.
To read the opinion, click HERE.