Binder Language for Auto

    Posted by MAIA on Jun 10, 2019, 12:01:00 AM

    QUESTION

    This question was answered based upon current rules, regulations & statutes in effect on May 03, 2019

    I am told you are a wiz in the industry and would likely provide the best answer to my question.

    When stamping an RMV-1 for a dealership and providing a binder, should there be some kind of blurb on the binder saying that coverage is bound once processed in MA RMV? I have seen people do it with and without any kind of statement so I was just curious as to whether or not I should be doing it.

    ANSWER

    Irene Morrill:  We  have always suggested something to the effect of “coverage is bound upon transfer of title and vehicle may be subject to pre-inspection regulation”

    If one currently has a MAP …the definition of your auto talks about private passenger autos, pickups, vans “to which you take title”

    The registration is not as important

    If it is the first policy …the coverage can become effective upon completing the application but insured still needs to “own” the vehicle …take title.  If they never get a plate then the policy will be cancelled

    I’m sending this to Kathy Cormier, CPPL, Member Relations Advocate and RMV guru for her input.

    Kathy Cormier:  I agree with Irene...the trigger of coverage in the MAP is when you take title.  We recommend that you put “Coverage becomes effective upon transfer of title or lease”...this way everyone knows that there is not coverage if the title is not assigned and this should also allow the lienholder to release the funds.

    Once you receive the proper assignment of title, then you can stamp the forms.

    I hope this helps.

    Agent:  Okay. That makes perfect sense and that’s what prompted my question. Thank you both.

    So typically, say when endorsing a policy to add a new vehicle or transfer coverage from one vehicle to another, should the title day be used as the endorsement date or the registration date (particularly in the event of plate transfer).

    I sincerely appreciate your time on this 😊

    Kathy Cormier:  I would ask my carrier what day they want you to use...this is usually an upload issue with the carrier. Some say to use the date stamped, some say to use the registration date, but coverage is triggered when the client takes title.  We never backdate a stamp, but if there was a loss and the client took title the carrier is covering the loss and the company has every right to charge for coverage at assignment of title.

    Agent:  Thanks so much! And that’s how we do it now, it’s dependent on the carrier. I just wanted to make sure it was okay to be inconsistent so long as it is what the carrier wants.

    This document is not a legal opinion and should not be relied upon as such. The intent of this document is to provide a general background regarding the topic or topics discussed, not to provide legal advice. Producers and agencies should consult an attorney regarding specific situations and specific questions with respect to the topic or topics covered in this document. Neither the Massachusetts Association of Insurance Agents, Number One Insurance Agency nor any of its employees shall be responsible for any errors or omissions regarding any statements made in this document, nor any errors or omissions regarding any statutes, regulations, court rules, and/or any other government documents cited in this document.

    Topics: Personal, 2019

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