20-1631

20-1631. Definition of motor vehicle;
cancellation of or failure to renew coverage; limitations;
limitation of liability; exceptions; insurance producers

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.

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 43-1201, paragraph 4.

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.

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 or fail to renew 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 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) Becomes permanently disabled, either physically or mentally, and such
individual does not produce a certificate from a physician or a registered nurse
practitioner testifying to such 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 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 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.

7. If the insured and the insured's family members are eligible for insurance based
solely on the insured's employment with the insurer, employment of the insured with that
insurer is terminated and the insurer exercises its right to nonrenew the policy within
twelve months following the insured's termination of employment.

E. In addition to the authorization to fail to renew insurance provided by
subsection D of this section, an insurer may exercise its right to fail to renew a motor
vehicle insurance policy pursuant to this subsection. An insurer shall provide notice of
the nonrenewal to the named insured as prescribed by section 20-1632 at least forty-five
days before the nonrenewal. 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. An
insurer shall not fail to renew more than one-half of one per cent of its policies
annually pursuant to this subsection. An insurer may fail to renew a motor vehicle
insurance policy if 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 has had at any time during the thirty-six months immediately before the notice
of nonrenewal three or more at-fault accidents under any motor vehicle insurance policy
issued by this insurer in which the property damage paid by the insurer for each accident
that occurred prior to January 1, 2000 is more than one thousand eight hundred
dollars. For accidents occurring on or after January 1, 2000, the department of
insurance shall annually adjust and publish, to the nearest ten dollars, the threshold
amount of property damages in this subsection by the percentage change in the all items
component of the consumer price index for all urban consumers of the United States
department of labor, bureau of labor statistics. The insurer shall not exercise its
right to fail to renew the insurance under this subsection unless the same individual has
had all the accidents that make the policy subject to nonrenewal under this subsection.
The insurer shall not exercise its right to fail to renew a motor vehicle insurance
policy pursuant to this subsection due to the accident record of the named insured if the
named insured has been insured for standard automobile bodily injury coverage for at
least ten consecutive years with the same insurer prior to the most recent accident that
makes the policy subject to nonrenewal under this subsection. For the purposes of this
subsection, "at-fault" means the insured is at least fifty per cent responsible for the
accident.

F. The company shall not cancel or fail to renew the insurance when a person other
than the named insured has violated subsection D, paragraph 3 of this section, or fail to
renew the insurance pursuant to subsection E of this section due to the driving record of
an individual other than the named insured, 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. In the event 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 prior to the termination of the insurance producer contract.

I. Subsection H of this section shall 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 shall not apply to any transaction in which the
expiration of the policies is owned by the insurer.

K. Notwithstanding any law to the contrary, 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. 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 up to one per cent of its policies to an affiliated
insurer within one calendar year if under a policy to be transferred one or more of the
insureds that are insured under the policy have individually within the past thirty-six
months had two or more at-fault accidents under any motor vehicle insurance policy issued
by this insurer in which the property damage paid by the insurer for each accident
exceeded one thousand five hundred dollars or individually have had three or more moving
violations. Moving violations for which an insured completes an approved traffic school
program shall not be considered as a moving violation under this section. A company shall
not transfer a policy if a named insured agrees in writing to exclude as an insured a
person or persons who each individually meet the criteria for transfer pursuant to this
subsection and further agrees to exclude coverage 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 such excluded person or persons. An insurer shall transfer only those
individuals responsible for the at-fault accidents or moving violations, and the excluded
or transferred insured's driving record shall not be used in determining rates,
surcharges or premiums for the nonexcluded or nontransferred insured. The one per cent
limit set forth in this subsection shall not apply to transfers of policies from the
original insurer to another insurer under the same ownership or management as the
original insurer if the rates charged by the other insurer are the same as or lower than
the rates charged by the original insurer. No insurer shall transfer policyholders
because of their location of residence, age, race, color, religion, sex, national origin
or ancestry. Transfers by an insurer pursuant to this subsection shall not be construed
to permit 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 until after August 31, 1998, 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.

(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 permitted by this
subsection.