AN ACT to revise the penalties for operating a motor vehicle without having in full force and effect a liability insurance policy providing financial responsibility.

The General Assembly of North Carolina enacts:

SECTION 1.  Article 13 of Chapter 20 of the General Statutes is amended by adding a new section to read:
"§ 20‑309.2.  Insurer shall notify Division of actions on insurance policies.
(a)	Notice Required. – An insurer shall notify the Division upon any of the following with regard to a motor vehicle liability policy:
(1)	Issues a new or replacement policy.
(2)	Terminates a policy, either by cancellation or failure to renew, unless the same insurer issues a replacement policy complying with this Article at the same time the insurer terminates the old policy and no lapse in coverage results.
(3)	Reinstates a policy after the insurer has notified the Division of a cancellation or termination.
(b)	Time Period. – An insurer shall notify the Division as required by subsection (a) of this section within 20 business days.
(c)	Form of Notice. – Any insurer with twenty‑five million dollars ($25,000,000) or more in annual vehicle insurance premium volume shall submit the notices required under this section by electronic means. All other insurers may submit the notices required under this section by either paper or electronic means.
(d)	Trade Secret Protection. – The names of insureds and the beginning date and termination date of insurance coverage provided to the Division by an insurer under this section constitutes a designated trade secret under G.S. 132‑1.2.
(e)	Civil Penalty. – 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 section. The Commissioner may waive the penalty if the insurer establishes good cause for the failure."
SECTION 2.  G.S. 20‑311 reads as rewritten:
"§ 20‑311.  Action by the Division when notified of a lapse in financial responsibility.

(a)	Action. – When the Division receives evidence, by a notice of termination of a motor vehicle liability 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 shall send the owner a letter. The letter shall notify the owner of the evidence and inform the owner that the owner shall 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 shall 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 shall correct its records.
(2)	Penalty only. – If the owner responds within the required time and the response establishes all of the following, the Division shall 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 shall 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 shall revoke the registration of the owner's vehicle for the period set in subsection (c) of this section. When the owner responds, the Division shall take the appropriate action listed in subdivisions (1) through (3) of this subsection as if the response had been timely.
(b)	Penalty Amount. – The following table determines the amount of a penalty payable under this section by an owner who has had a lapse in financial responsibility; the amount is based on the number of times the owner has been assessed a penalty under this section during the three‑year period before the date the owner's current lapse began: 

	Number of Lapses in Previous Three Years		Penalty Amount
			None							  $50.00
			One							$100.00
			Two or More						$150.00

(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 shall notify the owner of the revocation. The notice shall inform the owner of the following:
(1)	That the owner shall return the vehicle's registration 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 registration 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 shall pay any penalties assessed, a restoration fee, and the fee for a registration plate when the owner applies to the Division to register a vehicle whose registration was revoked.
(e)	Registration After Revocation. – 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. 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 shall pay any penalty assessed, a restoration fee of fifty dollars ($50.00), and the fee for a registration plate."
SECTION 3.  G.S. 20‑316 reads as rewritten:
"§ 20‑316.  Divisional hearings upon lapse of liability insurance coverage.
Any person whose registration plate has been revoked under G.S. 20‑311 may request a hearing. Upon receipt of such request, the Division shall, as early as practical, afford an opportunity for hearing. 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 registration plate was revoked, the Division shall withdraw its order of revocation and such person may retain the registration plate. Otherwise, the order of revocation shall be affirmed and the registration plate surrendered."
SECTION 4.  G.S. 20‑63(h) reads as rewritten:
"(h)	Commission Contracts for Issuance of Plates and Certificates. – All registration plates, registration certificates, and certificates of title issued by the Division, outside of those issued from the Raleigh offices of the Division and those issued and handled through the United States mail, shall be issued insofar as practicable and possible through commission contracts entered into by the Division for the issuance of the plates and certificates in localities throughout North Carolina with persons, firms, corporations or governmental subdivisions of the State of North Carolina. The Division shall make a reasonable effort in every locality, except as noted above, to enter into a commission contract for the issuance of the plates and certificates and a record of these efforts shall be maintained in the Division. In the event the Division is unsuccessful in making commission contracts, it shall issue the plates and certificates through the regular employees of the Division. Whenever registration plates, registration certificates, and certificates of title are issued by the Division through commission contract arrangements, the Division shall provide proper supervision of the distribution. Nothing contained in this subsection will allow or permit the operation of fewer outlets in any county in this State than are now being operated.
Commission contracts entered into by the Division under this subsection shall provide for the payment of compensation on a per transaction basis. The collection of the highway use tax shall be considered a separate transaction for which one dollar and twenty‑seven cents ($1.27) compensation shall be paid. The performance at the same time of one or more of the remaining transactions listed in this subsection shall be considered a single transaction for which one dollar and forty‑three cents ($1.43) compensation shall be paid.
A transaction is any of the following activities:
…
(7)	Receipt of the civil penalty imposed by G.S. 20‑311 for a lapse in financial responsibility or receipt of the restoration fee imposed by that statute.
…"
SECTION 5.  The following statutes are repealed: G.S. 20‑309(e), 20‑312, and 20‑316.1.
SECTION 6.  This act becomes effective July 1, 2008, and applies to lapses occurring on or after that date.
In the General Assembly read three times and ratified this the 25th day of July, 2006.

	s/	 Beverly E. Perdue
	 President of the Senate

	s/	 James B. Black
	 Speaker of the House of Representatives

	s/	 Michael F. Easley
	 Governor

Approved 10:00 a.m. this 8th day of August, 2006