20-1631. Definition of motor vehicle; cancellation of or failure to renew coverage; limitations; limitation of liability; exceptions; insurance producers; definitions
A. In this article, unless the context otherwise requires, "motor vehicle" means a licensed land, motor-driven vehicle but does not mean:
1. A private passenger or station wagon type vehicle used as a public or livery conveyance or rented to others.
2. Any other four-wheel motor vehicle of a load capacity of fifteen hundred pounds or less that is used in the business of transporting passengers for hire, used in business primarily to transport property or equipment, used as a public or livery conveyance or rented to others.
3. Any motor vehicle with a load capacity of more than fifteen hundred pounds.
4. A vehicle that otherwise qualifies as a motor vehicle under this subsection but only while the driver of the vehicle is logged in to a transportation network company's digital network or software application to be a driver or is providing transportation network services, unless expressly covered by the private passenger policy.
B. A motor vehicle used as a public or livery conveyance or rented to others does not include a motor vehicle used in the course of volunteer work for a tax-exempt organization as described in section 501(c)(3) of the internal revenue code.
C. An insurer shall not cancel or refuse to renew a motor vehicle insurance policy solely because of the location of residence, age, race, color, religion, sex, national origin or ancestry of anyone who is an insured, except that an insurer may refuse to renew a motor vehicle insurance policy if a named insured establishes a primary residence in a state other than this state.
D. An insurer shall not issue a motor vehicle insurance policy in this state unless the cancellation and renewal conditions of the policy or the endorsement on the policy includes the limitations required by this section. After a policy issued in this state has been in effect for sixty days, or if the policy is a renewal, effective immediately, the company shall not exercise its right to cancel the insurance afforded under the policy unless:
1. The named insured fails to discharge when due any of the obligations of the named insured in connection with the payment of premium for this policy or any installment of the premium.
2. The insurance was obtained through fraudulent misrepresentation.
3. The named insured, any person who resides in the same household as the named insured and who customarily operates a motor vehicle insured under the policy or any other person who regularly and frequently operates a motor vehicle insured under the policy:
(a) Has had the person's driver license suspended or revoked during the policy period.
(b) Develops a permanent disability, either physically or mentally, and the person does not produce a certificate from a physician or a registered nurse practitioner testifying to the person's ability to operate a motor vehicle.
(c) Is or has been convicted during the thirty-six months immediately preceding the effective date of the policy or during the policy period of:
(i) Criminal negligence resulting in death, homicide or assault and arising out of the operation of a motor vehicle.
(ii) Operating a motor vehicle while in an intoxicated condition or while under the influence of drugs.
(iii) Leaving the scene of an accident.
(iv) Making false statements in an application for a driver license.
(v) Reckless driving.
4. The insurer is placed in rehabilitation or receivership by the insurance supervisory official in its state of domicile or by a court of competent jurisdiction or the director has suspended the insurer's certificate of authority based on its financially hazardous condition.
5. The named insured, any person who resides in the same household as the named insured and who customarily operates a motor vehicle insured under the policy or any other person who regularly and frequently operates a motor vehicle insured under the policy uses a motor vehicle rated or insured under the policy as a private passenger motor vehicle regularly and frequently for commercial purposes.
6. The named insured, any person who resides in the same household as the named insured and who customarily operates a motor vehicle insured under the policy or any other person who regularly and frequently operates a motor vehicle insured under the policy uses a motor vehicle rated or insured under the policy to provide transportation network services unless, while the driver is logged in to the transportation network company's digital network or software application to be a driver or is providing transportation network services, the named insured either:
(a) Has procured an endorsement to the private passenger policy that expressly provides such coverage.
(b) Is covered by a motor vehicle liability insurance policy issued by another insurer expressly providing such coverage.
7. The director determines that the continuation of the policy would place the insurer in violation of the laws of this state or would jeopardize the solvency of the insurer.
E. An insurer may nonrenew a motor vehicle insurance policy if the insurer complies with this article. An insurer shall provide notice of a nonrenewal to the named insured as prescribed by section 20-1632. A named insured who disputes the nonrenewal of the named insured's policy may file an objection with the director pursuant to section 20-1633.
F. The company shall not cancel the insurance when a person other than the named insured has violated subsection D, paragraph 3 of this section, if the named insured in writing agrees to exclude as insured the person by name when operating a motor vehicle and further agrees to exclude coverage to the named insured for any negligence that may be imputed by law to the named insured arising out of the maintenance, operation or use of a motor vehicle by the excluded person. The written agreement that excludes coverage under a policy for a named individual is effective for each renewal of the policy by the insurer and remains in effect until the insurer agrees in writing to provide coverage for the named individual who was previously excluded from coverage.
G. This article does not apply to any policy that has been in effect less than sixty days at the time notice of cancellation is mailed or delivered by the insurer unless the policy is a renewal policy, or to policies:
1. Insuring any motor vehicle other than a private passenger motor vehicle as defined in section 20-117.
2. Insuring the motor vehicle hazard of garages, motor vehicle sales agencies, repair shops, service stations or public parking places.
3. Providing insurance only on an excess basis.
H. If a consumer purchases motor vehicle insurance coverage from an insurance producer licensed in this state, the insurance producer that owns the policy expiration shall remain the insurance producer of record for that insured. If the insurer terminates the insurance producer's contract, the insurance producer shall continue to provide customary services to the insured. The insurer shall provide the insurance producer with a minimum degree of authority necessary to provide customary services to the insured and shall provide the same level of compensation for these services that were in effect before the termination of the insurance producer contract.
I. Subsection H of this section does not apply if one or more of the following conditions exist:
1. The insurance producer of record has had its license suspended or revoked by the department.
2. The insurance producer of record is indebted to the insurer.
3. The insured has supplied the insurer with a written request that its insurance producer of record be changed to another insurance producer of the insurer.
4. The insurance producer of record has authorized transfer of this account to another licensed insurance producer of the insurer.
5. The director has determined after a public hearing that continuation of this relationship is not in the best interest of the public.
6. The insurance producer of record is under an exclusive contract or contract requiring the insurance producer to submit all eligible business to an insurer or group of insurers under a common management.
J. Subsection H of this section does not apply to any transaction in which the expiration of the policies is owned by the insurer.
K. Notwithstanding any law to the contrary, if an insurer chooses to renew a policy, the issuance at renewal of revised policy provisions to modify an existing policy by adding coverages or policy provisions, modifying coverages or policy provisions or eliminating coverages or policy provisions is not a nonrenewal or cancellation of the policy if the modification of a basic coverage does not eliminate the essential benefit of that basic coverage. If the modification of the basic coverage eliminates the essential benefit of the basic coverage, the director shall order the insurer to remove the modification from the policy. This subsection does not allow the insurer, without the written consent of the insured, to eliminate the basic coverages of the policy or to reduce the monetary limits of any of the basic coverages of the policy that were selected and agreed on. If an insurer chooses to renew a policy, this subsection does not limit a policyholder from continuing to renew uninsured or underinsured motorist coverage pursuant to section 20-259.01. For the purposes of this subsection, "basic coverage" means any of the following:
1. Bodily injury coverage.
2. Property damage coverage.
3. Uninsured motorist coverage.
4. Underinsured motorist coverage.
5. Medical payments coverage.
6. Comprehensive coverage.
7. Collision coverage.
L. For the purposes of this section, fail to renew or nonrenewal does not include the issuance and delivery of a new policy within the same insurer or an insurer under the same ownership or management as the original insurer as provided in this subsection. An insurer may transfer any of its policies to an affiliated insurer. An insurer may not transfer policyholders because of their location of residence, age, race, color, religion, sex, national origin or ancestry. A transfer by an insurer pursuant to this subsection does not allow the insurer to apply a new unrestricted sixty-day period for cancellation or nonrenewal.
M. Except as provided in this subsection, an insurer shall not refuse to renew a policy, based on an insured's failure to maintain membership in a bona fide association, until both the insurer and bona fide association have complied with this subsection and shall not refuse to renew any coverage continuously in effect before September 1, 1998, subject to all the following:
1. In addition to any other reason provided in this section, an insurer may refuse to renew an insurance policy issued pursuant to this article if all of the following conditions apply:
(a) The insurer clearly discloses to the applicant and the insured in the application for insurance and insurance policy that both the payment of dues and current membership in the bona fide association are prerequisites to obtaining or renewing the insurance.
(b) Any money paid to the bona fide association as a membership fee:
(i) Is not used by the insurer directly or indirectly to defray any costs or expenses in connection with the sale or purchase of the insurance.
(ii) Is set independently of any factor used by the insurer to make any judgment or determination about the eligibility of any individual, including the member, an employee of a member or a dependent of a member, to purchase or renew the insurance.
(c) The bona fide association has filed a certification with the director verifying the eligibility of the insurer to refuse to renew an insurance policy based on membership in the bona fide association.
2. To qualify as a bona fide association pursuant to this subsection, the association shall meet all of the requirements of this paragraph. The association shall file a statement with the director at least thirty days before the commencement of the offer or sale of insurance as provided by this subsection verifying that the association meets the requirements of this paragraph. The association shall update the filing required by this paragraph at least thirty days before the effective date of any material change in the information contained in the statement and shall file a separate notice with the director if the insurance described in the statement is no longer available through the association. The statement shall include the following information:
(a) That the association has been in active existence for at least five consecutive years immediately before the filing of the statement.
(b) That the association has been formed and maintained in good faith for purposes other than obtaining or providing insurance and does not condition membership in the association on the purchase of insurance.
(c) That the association has articles of incorporation and bylaws or other similar governing documents.
(d) That the association does not condition membership in the association or set membership fees on the eligibility of any individual, including the member, an employee of the member or a dependent of the member, to purchase or renew the insurance, or on any factor that the insurer could not lawfully consider when setting rates.
(e) That the association has a relationship with a specific insurer or insurers and identifies the insurer or insurers.
3. Membership fees collected by the bona fide association are not premiums of the insurer that issued the coverage unless the bona fide association:
(a) Uses any portion of the membership fees directly or indirectly to defray any costs or expenses in connection with the sale or purchase of the insurance.
(b) Sets or adjusts membership fees for any member of the bona fide association based on any factor used by the insurer that issues the insurance to make any judgment or determination about the eligibility of any individual, including the member, an employee of the member or a dependent of the member, to purchase or renew the insurance.
4. If the membership fees constitute premiums pursuant to paragraph 3 of this subsection, an insurer shall not refuse to renew a policy as otherwise allowed by this subsection.
N. An insurer or insurance producer shall not inquire on an application for a motor vehicle insurance policy whether the applicant, any person who resides in the same household as the applicant and who customarily operates a motor vehicle to be insured under the policy or any other person who regularly and frequently operates a motor vehicle to be insured under the policy has been nonrenewed by an insurer.
O. An insurer may issue an endorsement to a private passenger policy that expressly provides coverage for the provision of transportation network services, but that endorsement may not be treated as basic coverage as defined in subsection K of this section and any termination of the endorsement may not be treated as a modification of basic coverage. An insurer may terminate the endorsement allowed by this subsection by giving advance notice of the termination. Any notice by the insurer to the policyholder to terminate the endorsement allowed by this subsection shall be sent to the named insured at least forty-five days before the effective date of the termination. The notice shall include an explanation to the named insured that the further provision of transportation network services following the effective date of the termination might subject the insured to cancellation or nonrenewal of the insured's private passenger motor vehicle policy.
P. This section and section 28-4009 do not create an obligation of an insurer to offer, provide or issue a policy or an endorsement that includes coverage for any liability incurred while a transportation network company driver is logged in to the transportation network company's digital network or software application to be a driver or is providing transportation network services.
Q. For the purposes of this section, "transportation network company", "transportation network company driver" and "transportation network services" have the same meanings prescribed in section 28-9551.