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New York auto insurance fee confuses insurers

The New York State Insurance Department issued a bulletin to remind auto insurers in the state that a new law requires auto insurance carriers to collect a $10 annual fee for each policyholder.

The new fee goes into effect June 1 for every insured vehicle in the state, but because of some confusion in the way the law was written, the department said it is seeking clarification from the legislature.

The law regarding the Motor Vehicle Law Enforcement Fee gets confusing, the department admitted, in an amendment that provides "that such fee shall be reduced by fifty percent per insured motor vehicle registered pursuant to the provisions of paragraph b of subdivision one of section four hundred one of the vehicle and traffic law where a policy issued in the state or for delivery in the state for motor vehicle liability insurance coverage is for a term of six months or less."

Since insurers are already issuing renewal notices on policies to be effective on and after June 1, 2009 and cannot wait for possible amendments to the law, the department advises New York insurers to collect a $5 fee per insured vehicle under a policy with a term of six months or less when the policy is first issued and upon renewal of the policy.

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