House Study Bill 631 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON TRANSPORTATION BILL BY CHAIRPERSON BYRNES) A BILL FOR An Act establishing a motor vehicle insurance verification 1 program, establishing fees, and including penalty and 2 effective date provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 6027YC (3) 86 ns/nh
H.F. _____ Section 1. Section 321.11, subsection 3, Code 2016, is 1 amended to read as follows: 2 3. Notwithstanding other provisions of this section to the 3 contrary, the department shall not release personal information 4 to a person, other than to an officer or employee of a law 5 enforcement agency, an employee of a federal or state agency 6 or political subdivision in the performance of the employee’s 7 official duties, a contract employee of the department of 8 inspections and appeals in the conduct of an investigation, or 9 a licensed private investigation agency or a licensed security 10 service or a licensed employee of either, if the information is 11 requested by the presentation of a registration plate number. 12 However, the department may release personal information to the 13 department’s designated agent for the purposes of chapter 321B. 14 In addition, an officer or employee of a law enforcement agency 15 may release the name, address, and telephone number of a motor 16 vehicle registrant to a person requesting the information by 17 the presentation of a registration plate number if the officer 18 or employee of the law enforcement agency believes that the 19 release of the information is necessary in the performance of 20 the officer’s or employee’s duties. 21 Sec. 2. NEW SECTION . 321B.1 Short title. 22 This chapter shall be known and may be cited as the “Motor 23 Vehicle Insurance Verification Act” . 24 Sec. 3. NEW SECTION . 321B.2 Definitions. 25 As used in this chapter, unless the context otherwise 26 requires: 27 1. “Database” means the motor vehicle insurance verification 28 database created under this chapter. 29 2. “Department” means the state department of 30 transportation. 31 3. “Designated agent” means the third party with which the 32 department contracts under section 321B.3. 33 4. “Financial institution” means as defined in 18 U.S.C. 34 §20. 35 -1- LSB 6027YC (3) 86 ns/nh 1/ 11
H.F. _____ 5. “Motor vehicle” means as defined in section 321.1. 1 6. “Program” means the motor vehicle insurance verification 2 program created under this chapter. 3 Sec. 4. NEW SECTION . 321B.3 Motor vehicle insurance 4 verification program. 5 1. A motor vehicle insurance verification program is 6 created within the department to be administered by the 7 department. The purposes of the program include all of the 8 following: 9 a. To establish a motor vehicle insurance verification 10 database to verify compliance with the requirements of section 11 321.20B. 12 b. To assist in reducing the number of uninsured motor 13 vehicles on the highways of the state. 14 c. To assist in increasing compliance with motor vehicle 15 registration requirements and for other law enforcement 16 purposes. 17 d. To assist in protecting the bona fide security interests 18 of financial institutions in motor vehicles. 19 2. The department shall contract with a third party to act 20 as the department’s designated agent for administration of this 21 chapter for a period of four years. For the period of the 22 contract, the designated agent shall establish and maintain a 23 computer database containing the following information: 24 a. Information provided by insurers under section 321B.5. 25 b. Information provided by the department under subsection 26 5. 27 c. Information obtained by the designated agent for the 28 purposes of this chapter using a real-time internet services 29 system. 30 d. Any other information provided by the department pursuant 31 to this chapter. 32 3. The database shall be developed and maintained in 33 accordance with guidelines established by the department by 34 rule pursuant to chapter 17A to allow authorized state and 35 -2- LSB 6027YC (3) 86 ns/nh 2/ 11
H.F. _____ local law enforcement agencies and financial institutions to 1 efficiently access the records of the database, including 2 reports useful for the implementation of this chapter. The 3 department shall consult with the chief information officer 4 appointed under section 8B.2 for the purpose of developing 5 network security requirements for the database. 6 a. Database reports shall be in a form and contain 7 information approved by the department. 8 b. Database reports may be made available through the 9 department’s internet site or through other electronic media 10 if the department determines that sufficient security is 11 provided to ensure compliance with the provisions of this 12 chapter regarding limitations on disclosure of information in 13 the database. 14 4. At least twice monthly, the designated agent shall do the 15 following, using information provided by the department: 16 a. Update the database with motor vehicle insurance 17 information provided by insurers in accordance with section 18 321B.5. 19 b. Compare all current motor vehicle registrations against 20 the database. 21 5. On or before the seventh day of each calendar month, the 22 department shall provide the designated agent with the make, 23 model, year, and vehicle identification number of each vehicle 24 in the department’s motor vehicle database, and the name and 25 address of each person listed on each vehicle’s registration. 26 6. The department shall adopt rules in accordance with 27 chapter 17A establishing procedures for using the department’s 28 motor vehicle database for the purposes of administering and 29 enforcing this chapter. 30 7. a. The designated agent shall archive database files at 31 least semiannually for auditing purposes. 32 b. The department shall audit the program at least annually. 33 The audit shall include verification of: 34 (1) Billings made by the designated agent. 35 -3- LSB 6027YC (3) 86 ns/nh 3/ 11
H.F. _____ (2) The accuracy of the designated agent’s matching of 1 vehicle registration records with insurance data. 2 Sec. 5. NEW SECTION . 321B.4 Enforcement of financial 3 responsibility requirements —— penalty. 4 1. If records in the database indicate that a registered 5 motor vehicle is not covered under an owner’s policy of 6 liability insurance for three consecutive months, and if at 7 the direction of the department the designated agent using a 8 real-time internet services system determines the registered 9 motor vehicle is not covered by the owner’s policy of liability 10 insurance, the designated agent shall provide notice by 11 first-class mail to the owner of the motor vehicle that the 12 owner has fifteen days from the date the notice was mailed to 13 provide one of the following: 14 a. Proof of financial liability coverage as defined in 15 section 321.1, subsection 24B. 16 b. Proof that the owner is exempt from the requirement to 17 maintain proof of financial liability coverage under section 18 321.20B. 19 2. If, after fifteen days, the owner of the motor vehicle 20 fails to provide satisfactory proof of financial liability 21 coverage, the designated agent shall provide a second notice 22 by first-class mail to the owner of the motor vehicle allowing 23 the owner an additional fifteen days from the date the second 24 notice was mailed to provide the information requested under 25 subsection 1. 26 3. a. The designated agent shall update the database 27 regarding each notice sent to a motor vehicle owner under 28 subsections 1 and 2, indicating the information provided by the 29 motor vehicle owner or the owner’s failure to provide proof of 30 financial liability coverage, as applicable. 31 b. If the owner of a motor vehicle provides proof to the 32 department or the designated agent that the owner’s motor 33 vehicle is covered by an acceptable form of financial liability 34 coverage described in section 321.1, subsection 24B, paragraph 35 -4- LSB 6027YC (3) 86 ns/nh 4/ 11
H.F. _____ “b” , “c” , or “d” , the information shall be recorded in the 1 database. 2 c. If the designated agent determines the motor vehicle 3 is insured using a real-time internet services system, that 4 information shall be added to the database. 5 4. a. If the owner of a motor vehicle fails to provide 6 proof of financial liability coverage following receipt of the 7 second notice under subsection 2, the designated agent shall 8 notify the department, and the department shall revoke the 9 registration of the motor vehicle. 10 b. The department shall provide to the owner of the motor 11 vehicle appropriate notice of the revocation, order the owner 12 to surrender the registration plates and registration receipt 13 for the vehicle to the county treasurer, advise the owner of 14 the legal consequences of operating a vehicle with revoked 15 registration and without financial liability coverage, and 16 instruct the owner on how to reinstate the vehicle registration 17 once the owner has obtained financial liability coverage for 18 the vehicle. 19 5. a. A person shall not provide a false or fraudulent 20 statement to the department or the department’s designated 21 agent in regard to proceedings under this chapter. 22 b. In addition to any other penalties, a person who violates 23 paragraph “a” is guilty of a simple misdemeanor. 24 6. A revocation of registration under this chapter is in 25 addition to any other penalty imposed by law. This chapter 26 does not affect other actions or penalties that may be taken or 27 imposed for a violation of section 321.20B or other law. 28 7. a. A registration that has been revoked under this 29 section shall not be reinstated and a new registration shall 30 not be issued to the holder of the revoked registration until 31 the person does all of the following: 32 (1) Pays to the department an administrative reinstatement 33 fee of one hundred dollars, in addition to any other penalty 34 imposed by law. 35 -5- LSB 6027YC (3) 86 ns/nh 5/ 11
H.F. _____ (2) Complies with the requirements of section 321.20B and 1 this chapter. 2 b. Reinstatement fees collected under this subsection shall 3 be retained by the department as repayment receipts as defined 4 in section 8.2 and shall be used exclusively to offset the 5 costs of administering the program, including payments made by 6 the department to the department’s designated agent. 7 Sec. 6. NEW SECTION . 321B.5 Motor vehicle insurance 8 reporting —— penalty. 9 1. a. Except as provided in paragraph “b” , each insurer 10 that issues a policy to a motor vehicle owner in this state 11 that includes motor vehicle liability coverage, uninsured 12 motorist coverage, underinsured motorist coverage, or 13 personal injury coverage shall, on or before the seventh 14 and twenty-first days of each calendar month, submit to the 15 department’s designated agent a record of each motor vehicle 16 insurance policy that was issued by the insurer and in effect 17 for a vehicle registered or garaged in this state as of the 18 date of the previous submission. 19 b. An insurer is not required to provide a record of a motor 20 vehicle insurance policy under paragraph “a” if the policy 21 covers a vehicle that is registered under chapter 326. 22 c. This subsection does not preclude more frequent 23 reporting. 24 2. A record provided by an insurer under subsection 1, 25 paragraph “a” , shall include all of the following: 26 a. The name, date of birth, and driver’s license number, if 27 the insured provides a driver’s license number to the insurer, 28 of each insured owner or operator, and the address of the named 29 insured. 30 b. The make, year, and vehicle identification number of each 31 insured vehicle. 32 c. The policy number and effective date of each policy. 33 3. An insurer shall provide the information required under 34 this section via electronic means or via another means the 35 -6- LSB 6027YC (3) 86 ns/nh 6/ 11
H.F. _____ designated agent agrees to accept. 1 4. a. The department may assess a civil penalty of not more 2 than two hundred fifty dollars for each day an insurer fails to 3 comply with this section. 4 b. If an insurer shows that the failure to comply with this 5 section was inadvertent, accidental, or the result of excusable 6 neglect, the department may waive the civil penalty. 7 c. An insurer that discloses records to the department’s 8 designated agent in a reasonable, good-faith effort to comply 9 with the requirements of this section shall not be subject to a 10 civil penalty under paragraph “a” . 11 Sec. 7. NEW SECTION . 321B.6 Disclosure of database 12 information —— penalty. 13 1. Information provided to the designated agent and 14 information contained in the database under this chapter are 15 confidential and subject to the provisions and penalties 16 provided under 18 U.S.C. ch. 123. Such information shall not 17 be disclosed, except as follows: 18 a. For the purpose of investigating, litigating, or 19 enforcing the financial liability coverage requirements 20 of section 321.20B, the designated agent shall provide an 21 electronic record to a state or local government agency or 22 court verifying motor vehicle financial liability coverage 23 information. 24 b. For the purpose of investigating, litigating, or 25 enforcing the financial liability coverage requirements of 26 section 321.20B, the designated agent shall, upon request, 27 issue to any state or local government agency or court a 28 certificate documenting motor vehicle financial liability 29 coverage, according to the database, of a specific individual 30 or motor vehicle for the time period designated by the 31 government agency or court. 32 c. Upon request, the department or its designated agent 33 shall disclose whether an individual is covered under a motor 34 vehicle insurance policy and the insurance company name to: 35 -7- LSB 6027YC (3) 86 ns/nh 7/ 11
H.F. _____ (1) The individual or, if the individual is deceased, 1 any person who is an interested party in the estate of the 2 individual as provided under chapter 633. 3 (2) The parent or legal guardian of the individual if the 4 individual is an unemancipated minor. 5 (3) The legal guardian of the individual if the individual 6 is legally incapacitated. 7 (4) A person who has power of attorney for the individual. 8 (5) A person who submits a notarized release from the 9 individual dated no more than ninety days before the date the 10 request is made. 11 (6) A person suffering loss or injury in a motor vehicle 12 accident in which the individual was involved, but only as part 13 of an accident report as authorized in section 321.271 relating 14 to access to accident reports. 15 d. For the purpose of investigating, enforcing, or 16 prosecuting laws or issuing citations, information related to a 17 motor vehicle owner or operator’s financial liability coverage 18 under section 321.20B may be provided to state or local law 19 enforcement agencies. 20 e. Upon request of a peace officer acting in an official 21 capacity under the provisions of paragraph “d” , the department 22 or the designated agent shall, upon request, disclose relevant 23 information contained in the database. 24 f. For the purpose of the state auditor conducting audits 25 of the program. 26 g. Upon request of a financial institution for the purpose 27 of protecting the financial institution’s bona fide security 28 interest in a motor vehicle. 29 2. a. The department may allow the designated agent to 30 prepare and deliver, upon request, a report on the insurance 31 information of a person or motor vehicle in accordance with 32 this section. The report may be in the form of: 33 (1) A certified copy that is considered admissible in any 34 court proceeding in the same manner as the original. 35 -8- LSB 6027YC (3) 86 ns/nh 8/ 11
H.F. _____ (2) Information accessible through the internet or through 1 another electronic medium if the department determines that 2 sufficient security is provided to ensure compliance with this 3 section. 4 b. The department may allow the designated agent to charge a 5 fee established by the department for each of the following: 6 (1) Authenticating a document, including preparation and 7 delivery of a certified copy. 8 (2) Accessing a record through the internet or through 9 another electronic medium. 10 (3) Providing a record to a financial institution under 11 subsection 1, paragraph “g” . 12 3. The designated agent or any other person who knowingly 13 releases or discloses information from the database for a 14 purpose other than those authorized in this section or to a 15 person who is not entitled to such information is guilty of a 16 class “D” felony. 17 4. Neither the state nor the department’s designated agent 18 is liable to any person for gathering, managing, or using the 19 information in the database in compliance with this chapter. 20 5. An insurer acting in compliance with the provisions 21 of this chapter shall not be liable to any person for the 22 disclosure of information supplied to the department or the 23 department’s designated agent pursuant to this chapter. 24 Sec. 8. EFFECTIVE DATE. This Act takes effect July 1, 2017. 25 EXPLANATION 26 The inclusion of this explanation does not constitute agreement with 27 the explanation’s substance by the members of the general assembly. 28 This bill establishes a motor vehicle insurance verification 29 program within the department of transportation (DOT). The 30 DOT is required to contract with a third party for four years 31 to act as the DOT’s designated agent for administration of the 32 program. 33 The designated agent is required to establish and maintain 34 a database containing information from insurers, the DOT, 35 -9- LSB 6027YC (3) 86 ns/nh 9/ 11
H.F. _____ and an internet services system relating to motor vehicle 1 insurance coverage for registered motor vehicles, motor 2 vehicle identification information, personal identification 3 information for registered owners of motor vehicles, and any 4 other information provided to the designated agent by the DOT. 5 At least twice a month, the designated agent shall update 6 the database and compare current motor vehicle registrations 7 with updated insurance information. The files in the database 8 shall be archived semiannually and audited by the DOT at 9 least annually. The bill requires the DOT to adopt rules for 10 administration of the database. 11 If database records show that a registered motor vehicle 12 is not covered under an owner’s policy of liability insurance 13 for three months, the designated agent shall send a notice 14 to the owner requiring the owner to respond within 15 days 15 by providing proof of financial liability coverage or proof 16 that the owner is exempt from the requirement to maintain 17 financial liability coverage. If the owner fails to respond, 18 a second notice will be sent. If the owner does not respond 19 to the second notice, the owner’s motor vehicle registration 20 will be revoked by the DOT and the owner will be required to 21 surrender the registration plates and registration receipt for 22 the vehicle to the county treasurer. In order to obtain a 23 new registration for the vehicle, the owner must comply with 24 financial responsibility requirements and pay an administrative 25 fee of $100. The fees are to be used by the DOT exclusively to 26 offset the costs of administering the program. 27 The bill provides that if a motor vehicle is covered by a 28 form of financial liability coverage other than an insurance 29 policy, that fact shall be noted in the database. 30 The bill prohibits a person from providing false or 31 fraudulent information to the DOT or the DOT’s designated 32 agent in relation to the motor vehicle insurance verification 33 program. A violation is a simple misdemeanor. 34 The bill requires each insurer that issues a policy that 35 -10- LSB 6027YC (3) 86 ns/nh 10/ 11
H.F. _____ includes motor vehicle liability coverage, uninsured motorist 1 coverage, underinsured motorist coverage, or personal injury 2 coverage to the owner of a motor vehicle to provide, before the 3 7th and the 21st of each month, to the DOT’s designated agent 4 a record of each motor vehicle insurance policy issued by the 5 insurer and in effect for vehicles registered or garaged in 6 this state as of the date of the previous submission. Vehicles 7 subject to apportioned registration are not included in this 8 requirement. Insurers that fail to comply with the reporting 9 requirement may be assessed a civil penalty of $250 per day. 10 However, the DOT may waive the penalty upon a showing that the 11 failure was inadvertent, accidental, or the result of excusable 12 neglect. An insurer that discloses records to the DOT’s 13 designated agent in a reasonable, good-faith effort to comply 14 with the bill is not subject to the penalty. 15 Information contained in the database is confidential, 16 but the bill provides exceptions for disclosures to state or 17 local government agencies and courts for specified purposes, 18 to individuals and certain other authorized persons, for 19 purposes of an accident investigation, to law enforcement 20 agencies and peace officers for certain official purposes, 21 to the state auditor, and to financial institutions with a 22 security interest in a motor vehicle. The designated agent 23 may be authorized to provide certified copies or electronic 24 records, as appropriate, and to charge a fee for the provision 25 of records and authentication of documents. 26 A person who knowingly releases or discloses information 27 from the database for a purpose other than those authorized in 28 the bill or to a person who is not entitled to such information 29 is guilty of a class “D” felony. 30 The bill provides that the state and the DOT’s designated 31 agent are not liable to any person for gathering, managing, 32 or using, and insurers are not liable for disclosing, the 33 information in the database in compliance with the bill. 34 The bill provides for an effective date of July 1, 2017. 35 -11- LSB 6027YC (3) 86 ns/nh 11/ 11