I received some good questions from an upstate member last week about the Motor Vehicle Law Enforcement Fee. This is the $5 per vehicle charge that shows up on all auto insurance policies written in New York (IIABNY successfully lobbied to have an increase in the fee to $20 stricken from the new state budget). The member had some questions about how and when it applies and whether an insurer has to refund it in the event of cancellation or removal of the vehicle from the policy.
The N.Y. Insurance Department issued a circular letter on this fee shortly after the legislature "temporarily" raised it to $5 in 2003. It's worth reading and bookmarking for anyone who ever has to answer clients' questions about it. Among the types of vehicles not subject to the fee:
- Fire and police vehicles other than ambulances
- Certain types of farm equipment
However, for vehicles subject to the fee, once the insurer charges it, the law usually forbids refunding it. The circular specifically states,
There shall be no refund of the fee for vehicles eliminated from the policy.
It also states,
The refund of a fee by an insurer shall be made only if the policy for which it is received is cancelled without having become effective.
So, if your insurers are hanging onto that $5 charge, it's because the law says they have to.