Question from an IIABNY member: Why is it in New York State for commercial lines Additional Personal Injury Protection (a/k/a, APIP or "additional no-fault) is offered to customers up to a maximum of $150,000 and for personal lines the max is $100,000 APIP. Is it just because one is commercial and one is personal.? Are there different amounts approved by New York State?
Answer: This is an interesting question. I checked the New York rating pages for both personal and commercial auto, and sure enough the personal auto page shows APIP limits up to $100,000 and the commercial auto page shows APIP limits up to $150,000. However, nothing in New York insurance law or regulations puts a limit on the amount of APIP benefits an insurer may offer, either for personal or commercial.
New York Insurance Law Section 5102(a) defines “basic economic loss,” which is the formal name for no-fault benefits. It states, “ ‘Basic economic loss’ means, up to fifty thousand dollars per person of the following combined items …” However, Section 5102 does not contain a definition of “extended economic loss,” which is what the APIP endorsements provide. Section 5103 is the law that actually requires insurers to include no-fault coverage on all auto liability policies; the only reference it makes to higher limits is in subsection (c), which deals with deductibles:
(c) Insurance offered by any company to satisfy the requirements of subsection (a) hereof shall be offered (i) without a deductible and (ii) with a family deductible of up to two hundred dollars (which deductible shall apply only to the loss of the named insured and members of his household). The superintendent may approve a higher deductible in the case of insurance policies providing additional benefits or pursuant to a plan designed and implemented to coordinate first party benefits with other benefits.
New York Insurance Regulation 68-A (11 NYCRR 65-1.3) contains the rules for APIP coverage. Most of the regulation is the actual text of the APIP endorsement, and it includes a definition of “extended economic loss”:
Extended economic loss shall consist of the following:
(a) basic economic loss sustained on account of an accident occurring within the United States of America, its possessions or territories, or Canada, which is not recovered or recoverable under a policy issued in satisfaction of the requirements of article 6 or 8 of the New York Vehicle and Traffic law and article 51 of the New York Insurance Law;
(b) the difference between
(i) basic economic loss; and
(ii) basic economic loss recomputed in accordance with the time and dollar limits set out in the declarations; and
(c) an additional death benefit in the amount set out in the declarations
Note there is no stated maximum limit for extended economic loss here, either. Also, a New York State Department of Financial Services opinion dated May 15, 2008 states:
As set forth in 11 NYCRR § 65-1.3(b)(ii), APIP extends basic economic loss by permitting insurers to alter time and dollar limits in the policy declaration page beyond the limits of PIP basic economic loss. Although APIP must confer an additional benefit on the insured by altering the time and/or dollar limits available under PIP, the manner by which APIP confers this additional benefit is left to the discretion of the insurer. [EMPHASIS ADDED]
Here, the declaration page that the inquirer provided to the Insurance Department states that the inquirer's basic economic loss was increased to $200,000. …
Not only is the manner of providing APIP benefits up to the insurer’s discretion, but the attorney casually mentions that the policy in question provided a $200,000 APIP limit. I’ve read enough department opinions to know that, when an insurer offers something outside the parameters of New York law, the attorney writing the opinion always labels it as a violation. The attorney who wrote this opinion didn’t do that. Lastly, New York Insurance Regulation 41, which regulates excess line brokers, contains the so-called “export list,” the list of coverages for which an excess line broker is not required to obtain declinations from the voluntary market. Among the items on that list is, “Automobile Personal Injury Protection (PIP) Excess of $150,000.”
The only conclusion I can draw is that New York law and regulations do not limit the amount of APIP coverage an insurer may offer, but admitted insurers are unwilling to offer limits above $100,000 or $150,000. I’m sure you’re wondering where the options in the ISO rating manuals came from, and I really don’t have an answer to that. ISO works with industry panels; I served on a producer committee for three years that met with ISO annually, and I know that ISO has carrier panels as well. It’s possible that the carriers told ISO that the $100,000 and $150,000 limits were the most they typically offer. Maybe they offer more for commercial auto because commercial limits, in general, are typically higher than personal limits. That’s just a guess, however.