PIANJ Offers Suggestions on Auto Application Requirements

January 15, 2004

The Professional Insurance Agents of New Jersey has commented on the proposed changes to the rules for effecting coverage of private passenger automobile insurance by the state’s Department of Banking and Insurance (DOBI).

“The department has proposed a change that would require as part of the completed written application either a copy of a motor vehicle registration of all vehicles insured under the policy or satisfactory proof of ownership and a copy of an application for the registration of each vehicle,” said the bulletin.” In the summary of the proposal, the department explains the amendment is designed to eliminate misinterpretation of the current rule. The department believes the
rule can be construed to imply that the owner of the newly acquired vehicle is required to register the vehicle before insurance can be obtained. Of course, this is not possible since the DMV requires an applicant for registration to provide proof of insurance to register a newly acquired vehicle.”

The PIANJ said that while it appreciates “the department’s attempt to remedy potential confusion with the rule,” it is “concerned that the approach it has taken will unnecessarily burden applicants for insurance.While the rule proposal would allow insurers to accept a satisfactory proof of ownership and a copy of the application for registration as an alternative to the motor vehicle registration, in practice, most companies will accept a proof of ownership alone to satisfy the requirements of the completed written application rule.

“By requiring both a proof of ownership and a copy of the application for registration, the department has added an additional step for the consumer. Consumers now would have to make a trip to the DMV to obtain a copy of an application for registration in addition to providing proof of ownership.”

The PIANJ suggested that the rule provide that “satisfactory proof of ownership alone be an acceptable alternative to the copy of the motor vehicle registration. Since many companies already accept proof of ownership by itself, the department might be able to accomplish this by simply issuing a bulletin to insurers to advise them that a satisfactory proof of ownership is acceptable under the rule.”
It also noted another alternative: “The department could require a satisfactory proof of ownership with the application and then require the motor vehicle registration to be provided within a certain number of days after transmittal of the application. This is another practice that some companies currently allow.”

In conclusion the PIANJ remarked that the DOBI’s summary of the proposal is “inconsistent with the text of the changes. The summary states that the new rule would allow, ‘satisfactory proof of ownership or a copy of the motor vehicle registration or of an application for the registration of each vehicle.’

Therefore, the department’s summary contemplates one of three options, whereas in the text of the proposal it has allowed two options, 1) the registration, or 2) proof of ownership and an application for registration. If the department chooses not to incorporate the above noted alternatives, it could adopt what it has provided in its summary: 1) registration, or 2) proof of ownership, or 3) an application for registration.”

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