Report Title:

Motor Vehicle Insurance

Description:

Strengthens enforcement of the requirement that all motorists are insured by requiring motor vehicle insurers to notify lien holders on motor vehicles, of cancellations of insurance policies that occur within ninety days of the date of issuance.

THE SENATE	S.B. NO.	1250
TWENTY-FOURTH LEGISLATURE, 2007
STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO MOTOR VEHICLE INSURANCE.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  Most states require drivers to possess liability insurance before they can legally drive a car.  When the liability insurance policyholder is at fault in an auto accident, liability insurance pays for the other party's car repair, medical, and other costs.

     However, the legislature finds that there is a large number of people who purchase an insurance policy as needed to qualify for a loan for their vehicle, then cancel it as soon as they obtain the loan.  This creates a significant problem:  uninsured and underinsured drivers impose tens of millions of dollars each year in costs on the victims of accidents or their insurers.

     With the percentage of uninsured motorists as high as thirty per cent in some states, it is costly to track down these individuals.  And unless there is a good chance of getting caught and having to pay hefty penalties, drivers will continue to circumvent the law.

     Therefore, the purpose of this Act is to strengthen enforcement of the requirement that all motorists are insured by requiring motor vehicle insurers to notify lien holders on motor vehicles, of cancellations of insurance policies, so the lien holders may cancel loans as necessary.  The legislature believes such a measure will deter vehicle owners from driving without insurance.

     SECTION 2.  Chapter 431, Hawaii Revised Statutes, is amended by adding a new section to article 10C, to be appropriately designated and to read as follows:

     "§431:10C-    Lienholder of new motor vehicle. (a)  Before an insurer issues a policy of motor vehicle insurance for a new motor vehicle, the insurer shall:

(1) Obtain from the person insuring the vehicle, the name of any financial institution that holds a lien on the vehicle and the name of the dealer from which the vehicle was purchased; and

(2) Verify such information with the dealer.

Insurers shall request information under paragraph (1) only for new motor vehicles that will be insured by the insurer.

(b)  Upon cancellation of the motor vehicle insurance policy within ninety days of the date of issuance, the insurer shall, within thirty days of the date of cancellation, inform the lienholder of the cancellation."

     SECTION 3.  Chapter 437, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§437-   Disclosure of motor vehicle lienholder.  A motor vehicle dealer shall disclose to a motor vehicle insurer, upon request, the name of the financial institution that holds a lien on a motor vehicle purchased from the dealer."

     SECTION 4.  New statutory material is underscored.

     SECTION 5.  This Act shall take effect upon its approval.

INTRODUCED BY:

_____________________________