HF 606 (LSB 1042HZ (2) 86)

HOUSE FILE 606

BY  COMMITTEE ON WAYS AND MEANS

(SUCCESSOR TO HF 514)
(SUCCESSOR TO HSB 97)

A BILL FOR

An Act establishing a motor vehicle insurance verification program, establishing fees, and including penalty and effective date provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 321.11, subsection 3, Code 2015, is amended to read as follows:
   3.  Notwithstanding other provisions of this section to the contrary, the department shall not release personal information to a person, other than to an officer or employee of a law enforcement agency, an employee of a federal or state agency or political subdivision in the performance of the employee’s official duties, a contract employee of the department of inspections and appeals in the conduct of an investigation, or a licensed private investigation agency or a licensed security service or a licensed employee of either, if the information is requested by the presentation of a registration plate number.  However, the department may release personal information to the department’s designated agent for the purposes of chapter 321B. In addition, an officer or employee of a law enforcement agency may release the name, address, and telephone number of a motor vehicle registrant to a person requesting the information by the presentation of a registration plate number if the officer or employee of the law enforcement agency believes that the release of the information is necessary in the performance of the officer’s or employee’s duties.
    Sec. 2.  NEW SECTION.  321B.1  Short title.

   This chapter shall be known and may be cited as the “Motor Vehicle Insurance Verification Act”.
    Sec. 3.  NEW SECTION.  321B.2  Definitions.

   As used in this chapter, unless the context otherwise requires:

   1.  “Database” means the motor vehicle insurance verification database created under this chapter.
   2.  “Department” means the department of transportation.
   3.  “Designated agent” means the third party with which the department contracts under section 321B.3.
   4.  “Financial institution” means financial institution as defined in 18 U.S.C. §20.
   5.  “Motor vehicle” means motor vehicle as defined in section 321.1.
   6.  “Program” means the motor vehicle insurance verification program created under this chapter.
    Sec. 4.  NEW SECTION.  321B.3  Motor vehicle insurance verification program.
   1.  A motor vehicle insurance verification program is created within the department to be administered by the department. The purposes of the program include all of the following:
   a.  To establish a motor vehicle insurance verification database to verify compliance with the requirements of section 321.20B.
   b.  To assist in reducing the number of uninsured motor vehicles on the highways of the state.
   c.  To assist in increasing compliance with motor vehicle registration requirements and for other law enforcement purposes.
   d.  To assist in protecting the bona fide security interests of financial institutions in motor vehicles.
   2.  The department shall contract with a third party to act as the department’s designated agent for administration of this chapter. The designated agent shall establish and maintain a computer database containing the following information:
   a.  Information provided by insurers under section 321B.5.
   b.  Information provided by the department under subsection 5.
   c.  Any other information provided by the department pursuant to this chapter.
   3.  The database shall be developed and maintained in accordance with guidelines established by the department by rule to allow authorized state and local law enforcement agencies and financial institutions to efficiently access the records of the database, including reports useful for the implementation of this chapter.
   a.  Database reports shall be in a form and contain information approved by the department.
   b.  Database reports may be made available through the department’s internet site or through other electronic media if the department determines that sufficient security is provided to ensure compliance with the provisions of this chapter regarding limitations on disclosure of information in the database.
   4.  At least twice monthly, the designated agent shall do the following, using information provided by the department:
   a.  Update the database with motor vehicle insurance information provided by insurers in accordance with section 321B.5.
   b.  Compare all current motor vehicle registrations against the database.
   5.  On or before the seventh day of each calendar month, the department shall provide the designated agent with the make, model, year, and vehicle identification number of each vehicle in the department’s motor vehicle database, and the name and address of each person listed on each vehicle’s registration.
   6.  The department shall adopt rules in accordance with chapter 17A establishing procedures for using the department’s motor vehicle database for the purposes of administering and enforcing this chapter.
   7.  a.  The designated agent shall archive database files at least semiannually for auditing purposes.
   b.  The department shall audit the program at least annually. The audit shall include verification of:
   (1)  Billings made by the designated agent.
   (2)  The accuracy of the designated agent’s matching of vehicle registration records with insurance data.
    Sec. 5.  NEW SECTION.  321B.4  Enforcement of financial responsibility requirements —— penalty.
   1.  If records in the database indicate that a registered motor vehicle is not covered under an owner’s policy of liability insurance for three consecutive months, at the direction of the department, the designated agent shall provide notice by first-class mail to the owner of the motor vehicle that the owner has fifteen days from the date the notice was mailed to provide one of the following:
   a.  Proof of financial liability coverage as defined in section 321.1, subsection 24B.
   b.  Proof that the owner is exempt from the requirement to maintain proof of financial liability coverage under section 321.20B.
   2.  If, after fifteen days, the owner of the motor vehicle fails to provide satisfactory proof of financial liability coverage, the designated agent shall provide a second notice by first-class mail to the owner of the motor vehicle allowing the owner an additional fifteen days from the date the second notice was mailed to provide the information requested under subsection 1.
   3.  a.  The designated agent shall update the database regarding each notice sent to a motor vehicle owner under subsections 1 and 2, indicating the information provided by the motor vehicle owner or the owner’s failure to provide proof of financial liability coverage, as applicable.
   b.  If the owner of a motor vehicle provides proof to the department or the designated agent that the owner’s motor vehicle is covered by an acceptable form of financial liability coverage described in section 321.1, subsection 24B, paragraph “b”, “c”, or “d”, the information shall be recorded in the database.
   4.  a.  If the owner of a motor vehicle fails to provide proof of financial liability coverage following receipt of the second notice under subsection 2, the designated agent shall notify the department, and the department shall revoke the registration of the motor vehicle.
   b.  The department shall provide to the owner of the motor vehicle appropriate notice of the revocation, order the owner to surrender the registration plates and registration receipt for the vehicle to the county treasurer, advise the owner of the legal consequences of operating a vehicle with revoked registration and without financial liability coverage, and instruct the owner on how to reinstate the vehicle registration once the owner has obtained financial liability coverage for the vehicle.
   5.  a.  A person shall not provide a false or fraudulent statement to the department or the department’s designated agent in regard to proceedings under this chapter.
   b.  In addition to any other penalties, a person who violates paragraph “a” is guilty of a simple misdemeanor.
   6.  A revocation of registration under this chapter is in addition to any other penalty imposed by law. This chapter does not affect other actions or penalties that may be taken or imposed for a violation of section 321.20B or other law.
   7.  a.  A registration that has been revoked under this section shall not be reinstated and a new registration shall not be issued to the holder of the revoked registration until the person does all of the following:
   (1)  Pays to the department an administrative reinstatement fee of one hundred dollars, in addition to any other penalty imposed by law.
   (2)  Complies with the requirements of section 321.20B and this chapter.
   b.  Reinstatement fees collected under this subsection shall be retained by the department as repayment receipts as defined in section 8.2 and shall be used exclusively to offset the costs of administering the program. Fees collected by the department that are in excess of the amount necessary for administration of the program shall be transferred to the road use tax fund annually on June 30.
    Sec. 6.  NEW SECTION.  321B.5  Motor vehicle insurance reporting —— penalty.
   1.  a.  Except as provided in paragraph “b”, each insurer that issues a policy to a motor vehicle owner in this state that includes motor vehicle liability coverage, uninsured motorist coverage, underinsured motorist coverage, or personal injury coverage shall, on or before the seventh and twenty-first days of each calendar month, submit to the department’s designated agent a record of each motor vehicle insurance policy that was issued by the insurer and in effect for a vehicle registered or garaged in this state as of the date of the previous submission.
   b.  An insurer is not required to provide a record of a motor vehicle insurance policy under paragraph “a” if the policy covers a vehicle that is registered under chapter 326.
   c.  This subsection does not preclude more frequent reporting.
   2.  A record provided by an insurer under subsection 1, paragraph “a”, shall include all of the following:
   a.  The name, date of birth, and driver’s license number, if the insured provides a driver’s license number to the insurer, of each insured owner or operator, and the address of the named insured.
   b.  The make, year, and vehicle identification number of each insured vehicle.
   c.  The policy number and effective date of each policy.
   3.  An insurer shall provide the information required under this section via electronic means or via another means the designated agent agrees to accept.
   4.  a.  The department may assess a civil penalty of not more than two hundred fifty dollars for each day an insurer fails to comply with this section.
   b.  If an insurer shows that the failure to comply with this section was inadvertent, accidental, or the result of excusable neglect, the department may waive the civil penalty.
   c.  An insurer that discloses records to the department’s designated agent in a reasonable, good-faith effort to comply with the requirements of this section shall not be subject to a civil penalty under paragraph “a”.
    Sec. 7.  NEW SECTION.  321B.6  Disclosure of database information —— penalty.
   1.  Information provided to the designated agent and information contained in the database under this chapter are confidential. Such information may not be disclosed, except as follows:
   a.  For the purpose of investigating, litigating, or enforcing the financial liability coverage requirements of section 321.20B, the designated agent shall provide an electronic record to a state or local government agency or court verifying motor vehicle financial liability coverage information.
   b.  For the purpose of investigating, litigating, or enforcing the financial liability coverage requirements of section 321.20B, the designated agent shall, upon request, issue to any state or local government agency or court a certificate documenting motor vehicle financial liability coverage, according to the database, of a specific individual or motor vehicle for the time period designated by the government agency or court.
   c.  Upon request, the department or its designated agent shall disclose whether an individual is covered under a motor vehicle insurance policy and the insurance company name to:
   (1)  The individual or, if the individual is deceased, any person who is an interested party in the estate of the individual as provided under chapter 633.
   (2)  The parent or legal guardian of the individual if the individual is an unemancipated minor.
   (3)  The legal guardian of the individual if the individual is legally incapacitated.
   (4)  A person who has power of attorney for the individual.
   (5)  A person who submits a notarized release from the individual dated no more than ninety days before the date the request is made.
   (6)  A person suffering loss or injury in a motor vehicle accident in which the individual was involved, but only as part of an accident report as authorized in section 321.271 relating to access to accident reports.
   d.  For the purpose of investigating, enforcing, or prosecuting laws or issuing citations, information related to a motor vehicle owner or operator’s financial liability coverage under section 321.20B may be provided to state or local law enforcement agencies.
   e.  Upon request of a peace officer acting in an official capacity under the provisions of paragraph “d”, the department or the designated agent shall, upon request, disclose relevant information contained in the database.
   f.  For the purpose of the state auditor conducting audits of the program.
   g.  Upon request of a financial institution for the purpose of protecting the financial institution’s bona fide security interest in a motor vehicle.
   2.  a.  The department may allow the designated agent to prepare and deliver, upon request, a report on the insurance information of a person or motor vehicle in accordance with this section. The report may be in the form of:
   (1)  A certified copy that is considered admissible in any court proceeding in the same manner as the original.
   (2)  Information accessible through the internet or through another electronic medium if the department determines that sufficient security is provided to ensure compliance with this section.
   b.  The department may allow the designated agent to charge a fee established by the department for each of the following:
   (1)  Authenticating a document, including preparation and delivery of a certified copy.
   (2)  Accessing a record through the internet or through another electronic medium.
   (3)  Providing a record to a financial institution under subsection 1, paragraph “g”.
   3.  Any person who knowingly releases or discloses information from the database for a purpose other than those authorized in this section or to a person who is not entitled to such information is guilty of a class “D” felony.
   4.  Neither the state nor the department’s designated agent is liable to any person for gathering, managing, or using the information in the database in compliance with this chapter.
    Sec. 8.  EFFECTIVE DATE.  This Act takes effect July 1, 2016.
EXPLANATION
The inclusion of this explanation does not constitute agreement with

the explanation’s substance by the members of the general assembly.
   This bill establishes a motor vehicle insurance verification program within the department of transportation. The department is required to contract with a third party to act as the department’s designated agent for administration of the program.
   The designated agent is required to establish and maintain a database containing information from insurers relating to motor vehicle insurance coverage for registered motor vehicles, motor vehicle identification information, personal identification information for registered owners of motor vehicles, and any other information provided to the designated agent by the department.
   At least twice a month, the designated agent shall update the database and compare current motor vehicle registrations with updated insurance information. The files in the database shall be archived semiannually and audited by the department at least annually. The bill requires the department to adopt rules for administration of the database.
   If database records show that a registered motor vehicle is not covered under an owner’s policy of liability insurance for three months, the designated agent shall send a notice to the owner requiring the owner to respond within 15 days by providing proof of financial liability coverage or proof that the owner is exempt from the requirement to maintain financial liability coverage. If the owner fails to respond, a second notice will be sent. If the owner does not respond to the second notice, the owner’s motor vehicle registration will be revoked by the department and the owner will be required to surrender the registration plates and registration receipt for the vehicle to the county treasurer. In order to obtain a new registration for the vehicle, the owner must comply with financial responsibility requirements and pay an administrative fee of $100. The fees are to be used by the department exclusively to offset the costs of administering the program. Any fees in excess of the amount needed for administration of the program are to be transferred to the road use tax fund annually on June 30.
   The bill provides that if a motor vehicle is covered by a form of financial liability coverage other than an insurance policy, that fact shall be noted in the database.
   The bill prohibits a person from providing false or fraudulent information to the department or the department’s designated agent in relation to the motor vehicle insurance verification program. A violation is a simple misdemeanor.
   The bill requires each insurer that issues a policy that includes motor vehicle liability coverage, uninsured motorist coverage, underinsured motorist coverage, or personal injury coverage to the owner of a motor vehicle to provide, before the 7th and the 21st of each month, to the department’s designated agent a record of each motor vehicle insurance policy issued by the insurer and in effect for vehicles registered or garaged in this state as of the date of the previous submission. Vehicles subject to apportioned registration are not included in this requirement. Insurers that fail to comply with the reporting requirement may be assessed a civil penalty of $250 per day. However, the department may waive the penalty upon a showing that the failure was inadvertent, accidental, or the result of excusable neglect. An insurer that discloses records to the department’s designated agent in a reasonable, good-faith effort to comply with the bill is not subject to the penalty.
   Information contained in the database is confidential, but the bill provides exceptions for disclosures to state or local government agencies and courts for specified purposes; to individuals and certain other authorized persons; for purposes of an accident investigation; to law enforcement agencies and peace officers for certain official purposes; to the state auditor; and to financial institutions with a security interest in a motor vehicle. The designated agent may be authorized to provide certified copies or electronic records, as appropriate, and to charge a fee for the provision of records and authentication of documents.
   A person who knowingly releases or discloses information from the database for a purpose other than those authorized in the bill or to a person who is not entitled to such information is guilty of a class “D” felony.
   The bill provides that the state and the department’s designated agent are not liable to any person for gathering, managing, or using the information in the database in compliance with the bill. 
   The bill provides for an effective date of July 1, 2016.