GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1995

H	1 

HOUSE BILL 140

Short Title:  Insurance Lapse Penalty Changes.	(Public)

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Sponsors: Representative R. Hunter.

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Referred to:  Judiciary II.

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February 8, 1995

A BILL TO BE ENTITLED
AN ACT TO REVISE THE PENALTIES FOR DRIVING A VEHICLE WITHOUT INSURANCE.
The General Assembly of North Carolina enacts:
Section 1.  G.S. 20-309(e) reads as rewritten:
"(e)	An insurer that, by cancellation or failure to renew, terminates a liability insurance policy must notify the Division of the termination.  This requirement does not apply when an insurer issues a new liability insurance policy to replace the terminated policy and no lapse in coverage results.  In this circumstance, however, the insurer must notify the Division of the issuance of the new 
		policy. The Commissioner of Insurance may assess a civil penalty of two hundred dollars ($200.00) against an insurer that fails to notify the Division, as required by this subsection, unless the insurer establishes good cause for the failure."
Sec. 2.  G.S. 20-311 reads as rewritten:
"§ 20-311. Action by Division when notified that a vehicle is not insured.
(a)	Action. – When the Division receives evidence, by a notice of termination of a liability insurance policy or otherwise, that the owner of a motor vehicle registered or required to be registered in this State does not have financial responsibility for the operation of the vehicle, the Division must send the owner a letter.  The letter must notify the owner of the evidence and inform the owner that the owner must respond to the letter within 10 days of the date on the letter and explain how the owner has met the duty to have continuous financial responsibility for the vehicle.  Based on the owner's response, the Division must take the appropriate action listed:
(1)	Division Correction. – If the owner responds within the required time and the response establishes that the owner has not had a lapse in financial responsibility, the Division must correct its records.
(2)	Penalty Only. – If the owner responds within the required time and the response establishes all of the following, the Division must assess the owner a penalty in the amount set in subsection (b) of this section:
a.	The owner had a lapse in financial responsibility, but the owner now has financial responsibility.
b.	The vehicle was not involved in an accident during the lapse in financial responsibility.
c.	The owner did not operate the vehicle during the lapse with knowledge that the owner had no financial responsibility for the vehicle.
(3)	Penalty and Revocation. – If the owner responds within the required time and the response establishes any of the following, the Division must assess the owner a penalty in the amount set in subsection (b) of this section and revoke the registration of the owner's vehicle for the period set in subsection (c) of this section:
a.	The owner had a lapse in financial responsibility and still does not have financial responsibility.
b.	The owner now has financial responsibility even though the owner had a lapse, but the vehicle was involved in an accident during the lapse, the owner operated the vehicle during the lapse with knowledge that the owner had no financial responsibility for the vehicle, or both.
(4)	Revocation Pending Response. – If the owner does not respond within the required time, the Division must revoke the registration of the owner's vehicle for the period set in subsection (c) of this section.  When the owner responds, the Division must take the appropriate action listed in subdivisions (1) through (3) of this subsection as if the response had been timely.
(b)	Penalty Amount. – The penalty amount is the greater of the following:
(1)	Twenty-five dollars ($25.00).
(2)	One dollar ($1.00) multiplied by the product of the number of days the owner had no financial responsibility and the owner's driving points under G.S. 20-16 on the day the lapse in financial responsibility began.
A lapse in financial responsibility that results from failure to make an installment payment of a premium on a liability insurance policy begins the day after the installment was due rather than the effective date of the policy.
If a vehicle owner is subject to a penalty because the owner had a lapse in financial responsibility and still does not have financial responsibility, the Division must assess part of the  penalty when it establishes that the owner is subject to a penalty and part of it when the owner applies to the Division to register a vehicle upon obtaining financial responsibility.  The Division must calculate the first part of the penalty based on the number of days in the lapse up to the date of the revocation notice the Division sends the owner.  The Division must calculate the second part of the penalty based on the number of days in the lapse from the date of the revocation notice to the date the owner obtains financial responsibility.
(c)	Revocation Period. – The revocation period for a revocation based on a response that establishes that a vehicle owner does not have financial responsibility is indefinite and ends when the owner obtains financial responsibility or transfers the vehicle to an owner who has financial responsibility.  The revocation period for a revocation based on a response that establishes the occurrence of an accident during a lapse in financial responsibility or the knowing operation of a vehicle without financial responsibility is 30 days.  The revocation period for a revocation based on failure of a vehicle owner to respond is indefinite and ends when the owner responds.
(d)	Revocation Notice. – When the Division revokes the registration of an owner's vehicle, it must notify the owner of the revocation.  The notice must inform the owner of the following:
(1)	That the owner must return the vehicle's license plate and registration card to the Division, if the owner has not done so already, and that failure to do so is a Class 2 misdemeanor under G.S. 20-45.
(2)	That the vehicle's license plate and registration card are subject to seizure by a law enforcement officer.
(3)	That the registration of the vehicle cannot be renewed while the registration is revoked.
(4)	That the owner must pay any penalties assessed, a restoration fee, and the fee for a license plate when the owner applies to the Division to register a vehicle whose registration was revoked.
A vehicle whose registration has been revoked may not be registered during the revocation period in the name of the owner, a child of the owner, the owner's spouse, or a child of the owner's spouse.  This restriction does not apply to a spouse who is living separate and apart from the owner.
(f)	Registration After Revocation. – At the end of a revocation period, a vehicle owner who has financial responsibility may apply to register a vehicle whose registration was revoked.  The owner must pay any penalty assessed, a restoration fee of twenty-five dollars ($25.00), and the fee for a license plate."
Sec. 3.  G.S. 20-316 reads as rewritten:
"§ 20-316. Divisional hearings upon lapse of liability insurance coverage.
Any person whose license plate has been revoked under G.S. 	20-311 may request a hearing. Upon receipt of a request, the Division must hold a hearing as soon as practical.  At the hearing, the duly authorized agents of the Division may administer oaths and issue subpoenas for the attendance of witnesses and the production of relevant books and documents. If it appears that continuous financial responsibility existed for the vehicle involved, or if it appears the lapse of financial responsibility is not reasonably attributable to the neglect or fault of the person whose license plate was revoked, the Division shall withdraw its order of revocation and the person may retain the license plate. Otherwise, the order of revocation shall be affirmed and the license plate surrendered."
Sec. 4.  This act becomes effective January 1, 1996, and applies to lapses of financial responsibility occurring on or after that date.