In April 2006, plaintiffs Jamila Z. Wright and Claudette Jennings purchased a 2002 Lexus automobile for $28,000. The plaintiffs applied for insurance through defendant DCAP Bayside, Inc., an insurance broker, which alleged that it informed them that they had to obtain a photo inspection of the vehicle in order to have coverage for physical damage, including theft. The broker allegedly gave the plaintiffs a notice which read in relevant part: This notice will also serve as a reminder that the above described vehicle must be inspected by the date indicated or physical damage coverage will be suspended 12:01 a.m. on the above inspection completed date. If you need to have the photo inspection done please call CARCO at 1-800-969-2272.

Plaintiff Jamila Wright signed a document captioned Acknowledgment of Requirement for Photo Inspection, by means of which the plaintiff admitted that she had been informed of the requirement concerning the photo inspection and the consequences of a failure to comply. The defendant insurer also sent by mail to Wright a confirmation of physical damage coverage with notice of mandatory photo inspection requirement.

The plaintiffs did not have their vehicle inspected.

On April 25, 2006, defendant Progressive sent plaintiff Wright a Confirmation of Suspension of Physical Damage Coverage notifying her that coverage had been suspended but could be restored upon compliance with the inspection requirements. On October 15, 2006, a thief stole the 2002 Lexus automobile owned by Wright and plaintiff Claudette Jennings. The vehicle was never recovered.

This lawsuit ensued after the defendant insurer denied coverage on the ground that the plaintiffs had not obtained a photo inspection of the vehicle. Wright denied that the requirement of a physical inspection was called to her attention in a meaningful manner, and plaintiff Jennings swore that she never received any information about the need for a photo inspection of any automobile I owned from Defendant DCAP Bayside, Inc. either orally or in writing....

The court ruled, 11 NYCRR Part 67 is captioned Mandatory Underwriting Requirements for Private Passenger Automobiles. 11 NYCRR 67.1(c) defines Automobile physical damage insurance to include comprehensive and theft.

11 NYCRR 67.2 essentially prohibits an insurer from issuing a policy covering a private passenger automobile for physical damage unless the insurer has inspected the automobile. 11 NYCRR 67.4(c)(1) provides in relevant part: an insurer shall either immediately confirm physical damage coverage and remind the insured of the inspection requirement on a prescribed confirmation letter or immediately obtain the prescribed acknowledgment signed by the insured (applicant).

11 NYCRR 67.6 provides in relevant part: (a) If the mandatory inspection is not conducted prior to the expiration of the five-calendar-day deferral period specified in section 67.4 of this part, automobile physical damage coverage on the automobile shall be suspended at 12:01 a.m. of the day following the fifth calendar day, and such suspension shall continue until the inspection is effected....(c) If the automobile is not inspected pursuant to this part due to the fault of the insurer, or the insurer fails to give the oral notice required by section 67.4(c) of this part, or mail or deliver the Confirmation of Physical Damage Coverage " Notice of Mandatory Photo Inspection Requirement (NYS APD form B) or obtain the Acknowledgment of Requirements for Photo Inspection (NYS APD form D), contained in section 67.11 of this part, physical damage coverage on the automobile shall not lapse. (See Siddiqui v Nationwide Mut. Ins. Co., 282 AD2d 149; Mella v State Farm Ins. Co., 270 AD2d 318; Siddiqui v Nationwide Mut. Ins. Co., 255 AD2d 30).

[T]he proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact. Defendant DCAP and defendant Progressive failed to carry this burden. The policy issued by the insurer names both plaintiff Jamila Z. Wright and plaintiff Claudette Jennings as insureds. However, only plaintiff Wright signed the acknowledgment authorized by 11 NYCRR 67.4(c)(1). The insurer sent the Notice of Mandatory Photo Inspection requirement and subsequent Confirmation of Suspension of Physical Damage Coverage only to plaintiff Wright.

The defendants cited no authority for the proposition that the requirements of 11 NYCRR Part 67 need only be satisfied as to one of two named insureds. Indeed, since the failure to obtain a physical inspection leads in effect to the cancellation of coverage, it would appear that the requirements of 11 NYCRR Part 67 must be satisfied as to both of the two named insureds.

The insurer must give notice of cancellation to both of two named insureds, or the entire insurance policy continues in full force and effect as to all parties.

The insurer has a strict obligation to comply with 11 NYCRR Part 67. (See Mella v State Farm Ins. Co., supra.) Under the circumstances, the defendants did not eliminate the issue of fact concerning whether the requirements of 11 NYCRR Part 67 were satisfied as to plaintiff Claudette Jennings. Accordingly, the motion and the cross motion are denied.

Wright and Jennings v. Progressive Northeastern Ins. Co. and DCAP Bayside Inc., 2007 NY Slip Op 52315(U), Supreme Court, Queens County, (Weiss, J.)