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Motor Vehicle Law Enforcement Fee FAQs
The Department of Motor Vehicles has received a number of inquiries concerning the increase in the Motor Vehicle Law Enforcement fee from $1 to $5. In an effort to assist companies in implementing the fee increase, the Department has prepared the following examples in a "question and answer" format which should be useful.
When should the fee be collected for a vehicle added on or after June 1, 2003 to a policy with an effective date prior to June 1, 2003?
While the policy was issued prior to June 1, 2003, the vehicle is added or replaced to the policy on or after June 1, 2003, so the insured will be charged the $5 fee. This $5 fee will be collected at the time the vehicle is added or replaced to the policy. It is the date the vehicle is added to the policy that is controlling, not the effective date of the policy.
How do the insurance companies handle those renewals that were mailed out prior to June 1, 2003 but have effective dates after June 1, 2003?
Since the policy takes effect on or after June 1, 2003, the $5 fee must be charged. It does not matter when the renewal notice was mailed – it is the policy’s effective date that is controlling. However, if the company included the $1 fee in their renewal notice mailing, then the Insurance Department will allow companies to collect the remaining $4 either when the next premium payment is due or at the six-month renewal interval, whichever is applicable. In the event the insured paid the entire premium up-front on a one-year policy, then the company must collect the $4 balance in a separate mailing. The company cannot wait until the next annual anniversary date to collect the $4 balance.
For policies with an annual anniversary date prior to June 1, 2003, but with a six-month policy renewal date after June 1, 2003, how much should be paid at the six-month renewal?
The statute imposes an annual fee, so the $1 fee that was paid prior to June 1, 2003 will cover that vehicle until its next anniversary date. There will be no charge at the six-month renewal date.
How do the companies that previously split the fee, collecting $.50 every six months, handle the increase to $5 if they already collected $.50 for the first half of the year prior to June 1, 2003?
The Department does not support the splitting of the Motor Vehicle Law Enforcement fee and such collection will no longer be permitted. The entire fee must be paid at the start of the policy period or when a vehicle is added to or replaced on a policy. For those companies that previously split the fee, if the policy was issued or renewed prior to June 1, 2003, then the company must collect an annual fee of $1. The Department will allow the company to collect the remaining $.50 at the six-month renewal interval. For policies issued or renewed after June 1, 2003, the company must collect an annual fee of $5.
Can a policy be cancelled for nonpayment of the fee?
A policy may not be cancelled solely for nonpayment of the Motor Vehicle Law Enforcement Fee, since it is not part of the premium, but rather a fee remitted to the Superintendent.
A policy has an annual anniversary date of May 1, 2003. It is written as a one-year policy. When will the company start collecting the $5 fee on existing vehicles?
Since the policy was issued or renewed prior to June 1, 2003 and already applied the $1 fee, the $5 fee will not be collected until the policy’s next annual anniversary date, May 1, 2004.
A policy has an annual anniversary date of May 1, 2003. It is renewed at six-month intervals. When will the company start collecting the $5 fee?
Again, since the policy was issued or renewed prior to June 1, 2003, the $5 fee will not be charged until its next annual anniversary date which is May 1, 2004. It does not matter that this policy is renewed at six-month intervals.
A policy has an annual anniversary date of May 1, 2003. It is written as a one-year policy. When additional or replacement vehicles are added to the policy on or after June 1, 2003, how much will be charged?
While the policy was issued or renewed prior to June 1, 2003, the vehicle was added or replaced to that policy on or after June 1, 2003, so the $5 fee will be charged. The $5 fee will be charged at the time the vehicle is added to the policy.
A policy has an annual anniversary date of May 1, 2003. It is renewed at six-month intervals. When additional or replacement vehicles are added to the policy on or after June 1, 2003 how much will be charged?
Again, while the policy was issued or renewed prior to June 1, 2003, the vehicle was added or replaced to that policy on or after June 1, 2003 so the $5 fee will be charged. It does not matter that the policy is renewed at six-month intervals.
A policy has an annual anniversary date of June 2, 2003. It is written as a one-year policy. The insurer bills the existing vehicles the $5 fee on June 2, 2003. On July 1, 2003, the insured replaces a vehicle. How much does the company charge for the replacement vehicle and when is it paid?
The policy was issued or renewed after June 1, 2003, so the $5 fee will be charged. Any vehicles added or replaced to a policy will be charged the $5 fee which will be paid at the time the vehicle is added to the policy. There will be no refund of the $5 fee in the vehicle that was replaced.
A policy has an annual anniversary date of Dec. 2, 2003; however, the policy had a six-month renewal on June 2, 2003. On July 1, 2003, the insured replaces the vehicle. How much will be charged on the replacement vehicle at the time it is added to the policy and how much will be charged on its next annual anniversary date, December 2, 2003?
While the policy has an effective date prior to June 1, 2003, the replacement vehicle was added to the policy after June 1, 2003 so the $5 fee will be charged. It does not matter that this policy is renewed at six-month intervals. The $5 fee will be charged at the time the vehicle is added to the policy and there will be no refund of the $1 fee that was paid on the vehicle that was replaced. On the policy’s next annual anniversary date, December 2, 2003, the vehicle will again be charged the $5 fee.
While the policy was issued prior to June 1, 2003, the vehicle is added or replaced to the policy on or after June 1, 2003, so the insured will be charged the $5 fee. This $5 fee will be collected at the time the vehicle is added or replaced to the policy. It is the date the vehicle is added to the policy that is controlling, not the effective date of the policy.
How do the insurance companies handle those renewals that were mailed out prior to June 1, 2003 but have effective dates after June 1, 2003?
Since the policy takes effect on or after June 1, 2003, the $5 fee must be charged. It does not matter when the renewal notice was mailed – it is the policy’s effective date that is controlling. However, if the company included the $1 fee in their renewal notice mailing, then the Insurance Department will allow companies to collect the remaining $4 either when the next premium payment is due or at the six-month renewal interval, whichever is applicable. In the event the insured paid the entire premium up-front on a one-year policy, then the company must collect the $4 balance in a separate mailing. The company cannot wait until the next annual anniversary date to collect the $4 balance.
For policies with an annual anniversary date prior to June 1, 2003, but with a six-month policy renewal date after June 1, 2003, how much should be paid at the six-month renewal?
The statute imposes an annual fee, so the $1 fee that was paid prior to June 1, 2003 will cover that vehicle until its next anniversary date. There will be no charge at the six-month renewal date.
How do the companies that previously split the fee, collecting $.50 every six months, handle the increase to $5 if they already collected $.50 for the first half of the year prior to June 1, 2003?
The Department does not support the splitting of the Motor Vehicle Law Enforcement fee and such collection will no longer be permitted. The entire fee must be paid at the start of the policy period or when a vehicle is added to or replaced on a policy. For those companies that previously split the fee, if the policy was issued or renewed prior to June 1, 2003, then the company must collect an annual fee of $1. The Department will allow the company to collect the remaining $.50 at the six-month renewal interval. For policies issued or renewed after June 1, 2003, the company must collect an annual fee of $5.
Can a policy be cancelled for nonpayment of the fee?
A policy may not be cancelled solely for nonpayment of the Motor Vehicle Law Enforcement Fee, since it is not part of the premium, but rather a fee remitted to the Superintendent.
A policy has an annual anniversary date of May 1, 2003. It is written as a one-year policy. When will the company start collecting the $5 fee on existing vehicles?
Since the policy was issued or renewed prior to June 1, 2003 and already applied the $1 fee, the $5 fee will not be collected until the policy’s next annual anniversary date, May 1, 2004.
A policy has an annual anniversary date of May 1, 2003. It is renewed at six-month intervals. When will the company start collecting the $5 fee?
Again, since the policy was issued or renewed prior to June 1, 2003, the $5 fee will not be charged until its next annual anniversary date which is May 1, 2004. It does not matter that this policy is renewed at six-month intervals.
A policy has an annual anniversary date of May 1, 2003. It is written as a one-year policy. When additional or replacement vehicles are added to the policy on or after June 1, 2003, how much will be charged?
While the policy was issued or renewed prior to June 1, 2003, the vehicle was added or replaced to that policy on or after June 1, 2003, so the $5 fee will be charged. The $5 fee will be charged at the time the vehicle is added to the policy.
A policy has an annual anniversary date of May 1, 2003. It is renewed at six-month intervals. When additional or replacement vehicles are added to the policy on or after June 1, 2003 how much will be charged?
Again, while the policy was issued or renewed prior to June 1, 2003, the vehicle was added or replaced to that policy on or after June 1, 2003 so the $5 fee will be charged. It does not matter that the policy is renewed at six-month intervals.
A policy has an annual anniversary date of June 2, 2003. It is written as a one-year policy. The insurer bills the existing vehicles the $5 fee on June 2, 2003. On July 1, 2003, the insured replaces a vehicle. How much does the company charge for the replacement vehicle and when is it paid?
The policy was issued or renewed after June 1, 2003, so the $5 fee will be charged. Any vehicles added or replaced to a policy will be charged the $5 fee which will be paid at the time the vehicle is added to the policy. There will be no refund of the $5 fee in the vehicle that was replaced.
A policy has an annual anniversary date of Dec. 2, 2003; however, the policy had a six-month renewal on June 2, 2003. On July 1, 2003, the insured replaces the vehicle. How much will be charged on the replacement vehicle at the time it is added to the policy and how much will be charged on its next annual anniversary date, December 2, 2003?
While the policy has an effective date prior to June 1, 2003, the replacement vehicle was added to the policy after June 1, 2003 so the $5 fee will be charged. It does not matter that this policy is renewed at six-month intervals. The $5 fee will be charged at the time the vehicle is added to the policy and there will be no refund of the $1 fee that was paid on the vehicle that was replaced. On the policy’s next annual anniversary date, December 2, 2003, the vehicle will again be charged the $5 fee.
