2014 -- H 7541 AS AMENDED

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LC004488

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2014

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A N   A C T

RELATING TO MOTOR AND OTHER VEHICLES - SELF INSURANCE

     Introduced By: Representatives Finn, O`Grady, Kazarian, Kennedy, and Keable

     Date Introduced: February 26, 2014

     Referred To: House Corporations

     (Business Regulation/Revenue)

It is enacted by the General Assembly as follows:

     SECTION 1. Section 31-33-9 of the General Laws in Chapter 31-33 entitled "Safety

Responsibility Violations - General Provisions" is hereby amended to read as follows:

     31-33-9. Self-insurers. -- (a) Any person in whose name more than twenty-five (25)

vehicles are registered in this state may qualify as a self-insurer by obtaining a certificate of self-

insurance issued by the division of motor vehicles department of business regulation as provided

in subsection (b) of this section.

      (b) The division of motor vehicles department of business regulation may, in its

discretion, upon the application of such a person, issue a certificate of self-insurance when it is

satisfied that the person is possessed, and will continue to be possessed, of the ability to pay

judgment obtained against the person. The certificate may be issued authorizing a person to act as

a self-insurer for either property damage or bodily injury, or both.

      (c) Upon not less than five (5) days' notice and a hearing pursuant to notice, the division

of motor vehicles department of business regulation may upon reasonable grounds cancel a

certificate of self-insurance. Failure to pay any judgment within thirty (30) days after the

judgment shall have become final shall constitute a reasonable ground for the cancellation of a

certificate of self-insurance.

     (d) Entities applying to, or previously authorized to, permissibly self-insure are subject

to the jurisdiction of the department of business regulation. The department of business regulation

is authorized to promulgate and enforce rules and regulations that may be necessary to carry out

the provisions of this section including, but not limited to:

     (1) Obtaining and reviewing financial statements and related information necessary to

ascertain the applicant’s ability to self-insure.

     (2) Apportioning the cost of review to the applicant in a manner similar to that utilized to

charge insurance companies for review and analysis of their financial statements.

     (3) Imposing and enforcing upon entities authorized to permissibly self-insure any and all

claims handling and settlement practices required of insurers in the settlement of claims.

     SECTION 2. Section 31-34-2.1 of the General Laws in Chapter 31-34 entitled

"Responsibility of Owners of Rental Vehicles" is hereby amended to read as follows:

     31-34-2.1. Self-insurers. -- (a) Any person or company in whose name more than four

hundred (400) vehicles are registered in this state may qualify as a self-insurer by obtaining a

certificate of self-insurance issued by the division of motor vehicles department of business

regulation as provided in subsection (b).

      (b) Upon the application of the person or company, the division department of business

regulation may issue a certificate of self-insurance at its discretion if it is satisfied that the person

or company has and will have the ability to pay any judgment obtained against the person or

company. The certificate may be issued authorizing a person or company to act as a self-insurer

for either property damage or bodily injury, or both.

      (c) Upon not less than five (5) days' notice and a hearing pursuant to notice, the division

department of business regulation upon reasonable grounds may cancel a certificate of self-

insurance. Failure to pay any judgment within thirty (30) days after the judgment has become

final constitutes a reasonable ground for the cancellation of a certificate of self-insurance.

     (d) Entities applying to or previously authorized to permissibly self-insure are subject to

the jurisdiction of the department of business regulation. The department of business regulation is

authorized to promulgate and enforce rules and regulations that may be necessary to carry out the

provisions of § 31-34-2.1 including, but not limited to:

     (1) Obtaining and reviewing financial statements and related information necessary to

ascertain the applicant’s ability to self-insure.

     (2) Apportioning the cost of review to the applicant in a manner similar to that utilized to

charge insurance companies for review and analysis of their financial statements.

     (3) Imposing and enforcing upon entities authorized to permissibly self-insure any and all

claims handling and settlement practices required of insurers in the settlement of claims.

     SECTION 3. Sections 31-47-2 and 31-47-7 of the General Laws in Chapter 31-47

entitled "Motor Vehicle Reparations Act" are hereby amended to read as follows:

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     31-47-2. Definitions. -- As used in this chapter the term:

      (1) "Accident" or "motor vehicle accident" means any accident involving a motor vehicle

which that results in bodily injury to, or death of, any person, or damage to the property of any

person in excess of five hundred dollars ($500).

      (2) "Administrator " means the administrator of the division of motor vehicles in the

department of revenue.

      (3) "Commissioner" means the insurance commissioner of this state.

      (4) "Dealer engaged in the business of leasing motor vehicles" means any person

engaged in the business of regularly making available, offering to make available, or arranging

for another person to use a motor vehicle pursuant to a bailment, lease, or other contractual

arrangement.

      (5) "Driver" means every person who drives or is in actual physical control of a motor

vehicle.

      (6) "Financial security bond" means for each motor vehicle a bond executed by the

owner and by a surety company duly authorized to transact business in this state.

      (7) "Financial security deposit" means for each motor vehicle the deposit with the

assistant director of seventy-five thousand dollars ($75,000) in cash, or securities, such as may

legally be purchased by savings banks or trust funds, of a market value of seventy-five thousand

dollars ($75,000).

      (8) "License" includes any license, permit, or privilege to operate a motor vehicle issued

under the laws of this state including:

      (i) Any temporary instruction permit or examiner's driving permit;

      (ii) The privilege of any person to drive a motor vehicle whether or not the person holds

a valid license; or

      (iii) Any nonresident's operating privilege.

      (9) "Motor vehicle" means every vehicle required to display registration plates for

operation upon public highways of this state.

      (10) "Nonresident" means every person who is not a resident of this state.

      (11) "Nonresident's operating privilege" means the privilege conferred upon a

nonresident by the laws of this state pertaining to the operation by that person of a motor vehicle,

or the use of a motor vehicle owned by that person, in this state.

      (12) "Owner" means a person who holds the legal title of a motor vehicle. If a motor

vehicle is the subject of an agreement for conditional sale or lease with the right of purchase upon

performance of the conditions stated in the agreement and with an immediate right of possession

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vested in the conditional vendee or lessee, the vendee or lessee is the owner. If a mortgagor of a

motor vehicle is entitled to possession, the mortgagor is the owner.

      (13) (i) "Owner's policy of liability insurance" means a policy:

      (A) Affording coverage as defined in the minimum provisions prescribed in a regulation

which that shall be promulgated by the commissioner. The commissioner, before promulgating

the regulations or any amendments to them, shall consult with all insurers licensed to write

automobile liability insurance in this state and shall not prescribe minimum provisions which that

fail to reflect the provisions of automobile liability insurance policies issued within this state at

the date of the regulation or amendment of it. Nothing contained in regulation or in this chapter

shall prohibit any insurer from affording coverage under an owner's policy of liability insurance

more liberal than that required by the minimum provisions. Every owner's policy of liability

insurance shall provide insurance subject to the regulation against loss from the liability imposed

by law for damages, including damages for care and loss of services, because of bodily injury to,

or death of, any person and injury to or destruction of property arising out of the ownership,

maintenance, use, or operation of a specific motor vehicle or motor vehicles within the state of

Rhode Island or elsewhere in the United States, in North America, or the Dominion of Canada,

subject to a limit, exclusive of interest and costs, with respect to each motor vehicle of twenty-

five thousand dollars ($25,000) because of bodily injury to, or death of, one person in any one

accident,; and subject to the limit for one person, to a limit of fifty thousand dollars ($50,000),

because of bodily injury to, or death of, two (2) or more persons in any one accident,; and a limit

of twenty-five thousand dollars ($25,000) because of injury to, or destruction of, property of

others in any one accident,; or seventy-five thousand dollars ($75,000) combined single limit.

Any insurer authorized to issue an owner's policy of liability insurance as provided for in this

chapter may, pending the issue of the policy, make an agreement to be known as a binder, or may,

in lieu of the policy, issue a renewal endorsement or evidence of renewal of an existing policy,

each of which shall be construed to provide indemnity or protection in like manner and to the

same extent as the policy. The provisions of this chapter shall apply to such binders, renewal

endorsements, or evidences of renewal; and

      (B) In the case of a vehicle registered in this state, a policy issued by an insurer duly

authorized to transact business in this state; or

      (C) In the case of a vehicle registered in another state in the name of a nonresident, either

a policy issued by an authorized insurer, or a policy issued by an unauthorized insurer authorized

to transact business in the state of the nonresident's residence if the unauthorized insurer files with

the commissioner, in a form to be approved by him or her, a statement consenting to service of

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process and declaring its policies shall be deemed to be varied to comply with the requirements of

this chapter; and

      (D) The form of which has been approved by the commissioner.

      (ii) No such policy shall be issued or delivered in this state until a copy of the form of the

policy shall have been on file with the commissioner for at least thirty (30) days, unless sooner

approved in writing by the commissioner, nor, if within that period of thirty (30) days, the

commissioner shall have notified the carrier in writing that in the commissioner's opinion

specifying the reasons for it, the form of the policy does not comply with the laws of the state.

      (14) "Person" includes every natural person, firm, partnership, association, or

corporation.

      (15) "Proof of financial security" means proof of ability to respond in damages for

liability arising out of the ownership, maintenance, or use of a motor vehicle as evidenced by an

owner's policy of liability insurance, a financial security bond, a financial security deposit, or

qualification as a self insurer under this title, or in the case of a nonresident, under self-insurance

provisions of the laws of the jurisdiction of that nonresident.

      (16) "Registration" means registration certificates and registration plates issued under the

laws of this state pertaining to the registration of motor vehicles.

      (17) "Self insurer" means a person who shall have been determined by the assistant

director department of business regulation, in accordance with this title, to be financially

responsible.

      (18) "State" when used in this chapter, unless the context clearly indicates otherwise,

means any state, territory, or possession of the United States, the District of Columbia, or any

province of the Dominion of Canada.

     31-47-7. Self-insurers. -- The administrator of the division of motor vehicles director of

the department of business regulation, in his or her discretion, may upon the application of a

person having registered in his or her name in this state more than twenty-five (25) motor

vehicles, issue a certificate of self insurance when he or she is reasonably satisfied that the person

is possessed, and will continue to be possessed, of financial ability to respond to judgments

obtained against the person, arising out of the ownership, maintenance, use, or operation of the

person's motor vehicles. Entities applying to, or previously authorized to, permissibly self-insure

are subject to the jurisdiction of the department of business regulation. Upon due notice and

hearing, the assistant director of the department of business regulation may, in his or her

discretion and upon reasonable grounds, cancel a certificate of self insurance. The department of

business regulation is authorized to promulgate and enforce rules and regulations that may be

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necessary to carry out the provisions of this section, including, but not limited to:

     (1) Obtaining and reviewing financial statements and related information necessary to

ascertain the applicant’s ability to self-insure.

     (2) Apportioning the cost of review to the applicant in a manner similar to that utilized to

charge insurance companies for review and analysis of their financial statements; and

     (3) Imposing and enforcing upon entities authorized to permissibly self-insure any and all

claims handling and settlement practices required of insurers in the settlement of claims.

     SECTION 4. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO MOTOR AND OTHER VEHICLES - SELF INSURANCE

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     This act would transfer the responsibility of determining whether an entity qualifies as a

self-insurer from the division of motor vehicles to the department of business regulation.

     This act would take effect upon passage.

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