Report Title:

Motor Vehicle Insurance; Sixty-Day Underwriting Period

Description:

Allows motor vehicle insurers to cancel a policy within 60 days of its issuance.

THE SENATE

S.B. NO.

2208

TWENTY-SECOND LEGISLATURE, 2004

 

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. Hawaii's current motor vehicle insurance laws were largely designed around a system of insurance that mandated insurers to insure any motor vehicle where the owner was able to pay the premium.

The purpose of this Act is to conform Hawaii's motor vehicle insurance law to that of most other states. This measure allows an insurer to cancel a policy on or before the sixtieth day after issuance, a time period commonly referred to as a "sixty-day underwriting period". During the sixty-day underwriting period, insurers can perform driving record and claims history searches to ensure that a policy is properly rated and cancel the policy if there are differences between the information obtained from the searches and that contained in an applicant's statement.

This measure benefits consumers as well. Many insurers require prospective insureds to obtain traffic abstracts prior to issuing a policy. With a sixty-day underwriting period, this requirement will no longer be necessary, and consumers will be better able to obtain motor vehicle insurance in a timely manner.

In addition, driving record surcharges for undisclosed traffic violations and accidents often result in very large additional premiums, and a number of these cases result in collection activities. The sixty-day underwriting period will reduce the number of cases referred for collection.

SECTION 2. Section 431:10C-111, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) An insurer may not cancel or refuse to renew a motor vehicle insurance policy, including required optional additional insurance meeting section 431:10C-302, once issued except when:

(1) The license of the principal operator to operate the type of motor vehicle is suspended or revoked;

(2) Premium payments for the policy are not made after reasonable demand therefor; [or]

(3) The nonrenewal or conditional renewal is limited in accordance with section 431:10C-111.5[.]; or

(4) The policy has been in effect for sixty days or less."

SECTION 3. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun, before its effective date.

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

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

INTRODUCED BY:

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