HF 2259 (LSB 5267YH (4) 91)

HOUSE FILE 2259

BY  CROKEN, MADISON, KURTH, WILSON, KRESSIG, WILBURN, AMOS JR., SCHOLTEN, WESSEL-KROESCHELL, EHLERT, R. JOHNSON, JAMES, and RAMIREZ

A BILL FOR

An Act relating to an insurer’s use of credit information for a motor vehicle financial liability coverage policy.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 515.103, subsection 1, paragraph j, Code 2026, is amended to read as follows:
   j.  “Personal insurance” means personal insurance and not commercial insurance and is limited to private passenger automobile, homeowners, farm owners, personal farm liability, motorcycle, mobile home owners, noncommercial dwelling fire, boat, and personal watercraft, snowmobile, and recreational vehicle insurance policies, that are individually underwritten for personal, family, farm, or household use. No other type of insurance is included as personal insurance for the purposes of this section.
    Sec. 2.  Section 515.103, Code 2026, is amended by adding the following new subsection:
   NEW SUBSECTION.  1A.  Prohibited use of credit information.  An insurer authorized to do business in this state shall not use credit information to underwrite or rate risks for a motor vehicle financial liability coverage policy. For purposes of this subsection, “financial liability coverage” means as defined in section 321.1, subsection 24B, paragraph “a”.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   Under current law, an insurer authorized to operate in Iowa is authorized to use credit information to underwrite or rate risks for a policy of personal insurance, including for private passenger automobiles, snowmobiles, and recreational vehicles. However, an insurer cannot use credit information to deny, cancel, or refuse renewal of a policy solely on credit information, without considering other relevant underwriting factors; to determine renewal rates based solely on credit information, ignoring other applicable factors; to take adverse action because a consumer lacks a credit card account, without considering other factors; to consider absence of credit information in underwriting as a negative factor; to take adverse action based on credit information unless the insurer has an updated credit report or insurance score from the prior 90 days; or use credit information 36 months or later after obtaining the credit information, with certain exceptions provided.
   This bill prohibits an insurer authorized to do business in Iowa from using credit information to underwrite or rate risks for a motor vehicle financial liability coverage policy. For purposes of the bill, “financial liability coverage” means an owner’s policy of liability insurance which is issued by an insurance carrier authorized to do business in Iowa to or for the benefit of the person named in the policy as insured, and insuring the person named as insured and any person using an insured motor vehicle with the express or implied permission of the named insured against loss from liability imposed by law for damages arising out of the ownership, maintenance, or use of an insured motor vehicle within the United States or Canada, but subject to minimum limits, exclusive of interest and costs.