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BizIPEsq.
BizIPEsq., Attorney
Category: Business Law
Satisfied Customers: 996
Experience:  I am a business attorney. I represent individuals and companies with all business related matters.
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Resolved Question:

We are looking for someone who may be able to assist us in determining the prudence of our business structure to ensure that we are following all applicable NYS regulations and that WE ARE NOT OPERATING AS AN INSURANCE COMPANY. As we fully operate and conduct all services and guarantees within NYS, we simply want to know if we are breaching NYS insurance guidelines. We are under the assumption that we are not an insurance company altogether. We provide a service of Online Order Verifications who “reimburses” in the event of a loss due to our opinions. We don’t insure/reimburse for actions or losses unrelated to our Verification Service Opinions. We investigate/verify credit card orders conducted over the internet and give the online store an opinion if the credit card number is XXXXX or not. In the unlikely event of a loss due to our actions/opinions, we pay the merchant back for the damages we have caused. Is this considered insurance or merely a reimbursement?
Please reply ONLY if you are a NYS insurance lawyer and please provide link(s) showing your findings.
Submitted: 1 year ago.
Category: Business Law
Expert:  BizIPEsq. replied 1 year ago.

TheLegalistEsq :

Hello I will be assisting you.

TheLegalistEsq :

These are excellent questions. Let me review New York Insurance law.

TheLegalistEsq :

according to N.Y. ISC. LAW § 1101:

TheLegalistEsq :

(a)(1) "Insurance contract" means any agreement or other transaction
whereby one party, the "insurer", is obligated to confer benefit of
pecuniary value upon another party, the "insured" or "beneficiary",
dependent upon the happening of a fortuitous event in which the insured
or beneficiary has, or is expected to have at the time of such
happening, a material interest which will be adversely affected by the
happening of such event.
(2) "Fortuitous event" means any occurrence or failure to occur which
is, or is assumed by the parties to be, to a substantial extent beyond
the control of either party.


 


 


 

TheLegalistEsq :

You have indicated that you will be reviewing certain information and then rendering an opinion. You then provide a guarantee to your client that if your review was not accurate that you will bear the consequences.

TheLegalistEsq :

according to section (a)(2) since the review you are providing is within your control then it would be your contention that you do not meet the statutory qualification of a Fortuitous Event and therefor the contract you will have with your customers is not an insurance contract

TheLegalistEsq :

Do you then a provider of a contract of warranty?

TheLegalistEsq :

in accordance with an opinion published by the State of NY Insurance Dept (which can be found here: http://www.dfs.ny.gov/insurance/ogco2000/rg008091.htm) N.Y. Ins. Law 1101(b)(1)(B) provides that the making, or proposing to make, as warrantor, guarantor or surety, any contract of warranty, guaranty or suretyship as a vocation and not as merely incidental to any other legitimate business or activity of the warrantor, guarantor or surety, constitutes doing an insurance business.

TheLegalistEsq :

In addition, where warranty coverage is provided without separate or additional consideration (beyond the price of the product/service), it may be a warranty. Where the warranty coverage is sold for separate or additional consideration, it is a service contract and the obligor must be registered as a service contract provider.

TheLegalistEsq :

It seems that your main business is to investigate/verify credit card orders conducted over the internet and give an online store an opinion if the credit card number is XXXXX or not. The warranty part is incidental to the main work therefore you can claim that the warranty is merely incidental to your other legitimate business of verifying cc numbers.

TheLegalistEsq :

based on the above analysis you could claim that you are not an insurance company rather you are in the business of analyzing CC numbers and you merely warranty your analysis.'

TheLegalistEsq :

good luck!

TheLegalistEsq :

Disclaimer: This post has been written for educational purposes only and was not meant to be legal advice and should not be construed as legal advice or be relied upon. No intention exists to create an attorney-client relationship or any other special relationship or privilege through this post. The post may contain errors, inaccuracies and/or omissions. You should always consult an attorney admitted to practice in your jurisdiction for specific advice. This post may be deemed as Attorney Advertising.

BizIPEsq., Attorney
Category: Business Law
Satisfied Customers: 996
Experience: I am a business attorney. I represent individuals and companies with all business related matters.
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