SENATE BILL REPORT

SB 5778

BYSenators Bailey, Bender and Bauer

Requiring that all vehicles licensed by the state have insurance.

Senate Committee on Financial Institutions & Insurance

Senate Hearing Date(s):February 23, 1989

Senate Staff:Walt Corneille (786-7416)

AS OF FEBRUARY 22, 1989

BACKGROUND:

The financial responsibility law requires drivers and owners of motor vehicles to pay for damages caused by the negligent operation of a motor vehicle or face suspension of their driving privileges and possible suspension of the motor vehicle registration.  The operation of a motor vehicle without insurance is not prohibited.

If an automobile driver negligently causes an accident, the driver must arrange for payment of the damages and show future proof of financial responsibility by obtaining a vehicle liability insurance policy, self-insuring, posting a bond, or obtaining a certificate of deposit.

SUMMARY:

No application for the original, renewal or reinstatement of a motor vehicle license may be approved unless the applicant certifies that he or she has the required financial responsibility.

Financial responsibility is established if the driver or owner of a vehicle is insured under a liability policy pursuant to the financial responsibility law, is the holder of a certificate of deposit, has a certificate of self-insurance, or is a government entity.

A violation of the act is a traffic infraction carrying a penalty of $240.  The penalty may be reduced if the court determines it is in the interest of justice and the court states the reasons for reduction on the record.  Community service may be required in lieu of the fine.

If asked by a police officer, a driver must give evidence of financial responsibility by providing the insurance company's name and the ID number of the policy, bond, certificate of deposit or certificate of self-insurance.  The law enforcement officer may issue a traffic infraction for failure to have the required financial responsibility.  The traffic infraction must appear on the same citation as the original violation for which the driver was stopped.

Any policy issued as required by this act may contain conditions, limitations, and exclusions approved by the Insurance Commissioner.  The financial responsibility law does not govern a motor vehicle liability policy other than a policy that is required for proof of future financial responsibility pursuant to the financial responsibility act.  The stacking of one policy's coverage upon another is not permitted unless the policy specifically provides therefore.

The Department of Licensing must annually verify on a random basis the insurance information in at least 1 percent of all certifications received.  The verification must be accomplished by requesting information from the insurance or bonding company which is required to notify the department only if the insurer or bonding company determines that no insurance policy or bond is in force during the period of time for which the department is requesting the information.

Providing false evidence of financial responsibility is a misdemeanor carrying a fine of up to $1,000 and/or up to 30 days in jail.  Any person convicted of providing false evidence of financial responsibility must have their license suspended for one year from the date of the conviction.  After the period of suspension, the driver must establish proof of future responsibility as required by the financial responsibility law to obtain a license.

Appropriation:    none

Revenue:    none

Fiscal Note:      requested

Effective Date:January 1, 1990