Session of 1998
                   
HOUSE BILL No. 2634
         
By Representative Swenson
         
1-16
            9             AN ACT amending the Kansas automobile injury reparations act; requir-
10             ing noncancelable coverage for certain persons; increasing reinstate-
11             ment fees; amending K.S.A. 1997 Supp. 40-3104 and 40-3118 and
12             repealing the existing sections.
13            
14       Be it enacted by the Legislature of the State of Kansas:
15           Section 1. K.S.A. 1997 Supp. 40-3104 is hereby amended to read as
16       follows: 40-3104. (a) Every owner shall provide motor vehicle liability
17       insurance coverage in accordance with the provisions of this act for every
18       motor vehicle owned by such person, unless such motor vehicle: (1) Is
19       included under an approved self-insurance plan as provided in subsection
20       (f); (2) is used as a driver training motor vehicle, as defined in K.S.A. 72-
21       5015, and amendments thereto, in an approved driver training course by
22       a school district or an accredited nonpublic school under an agreement
23       with a motor vehicle dealer, and such motor vehicle liability insurance
24       coverage is provided by the school district or accredited nonpublic school;
25       (3) is included under a qualified plan of self-insurance approved by an
26       agency of the state in which such motor vehicle is registered and the form
27       prescribed in subsection (b) of K.S.A. 40-3106, and amendments thereto,
28       has been filed; or (4) is expressly exempted from the provisions of this
29       act.
30           (b) An owner of an uninsured motor vehicle shall not permit the
31       operation thereof upon a highway or upon property open to use by the
32       public, unless such motor vehicle is expressly exempted from the provi-
33       sions of this act.
34           (c) No person shall knowingly drive an uninsured motor vehicle upon
35       a highway or upon property open to use by the public, unless such motor
36       vehicle is expressly exempted from the provisions of this act.
37           (d) Any person operating a motor vehicle upon a highway or upon
38       property open to use by the public shall display, upon demand, evidence
39       of financial security to a law enforcement officer. The law enforcement
40       officer shall issue a citation to any person who fails to display evidence of
41       financial security upon such demand. The law enforcement officer shall
42       attach a copy of the insurance verification form prescribed by the secre-
43       tary of revenue to the copy of the citation forwarded to the court.

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  1           No citation shall be issued to any person for failure to provide proof of
  2       financial security when evidence of financial security meeting the stan-
  3       dards of subsection (e) is displayed upon demand of a law enforcement
  4       officer. Whenever the authenticity of such evidence is questionable, the
  5       law enforcement officer may initiate the preparation of the insurance
  6       verification form prescribed by the secretary of revenue by recording
  7       information from the evidence of financial security displayed. The officer
  8       shall immediately forward the form to the department of revenue, and
  9       the department shall proceed with verification in the manner prescribed
10       in the following paragraph. Upon return of a form indicating that insur-
11       ance was not in force on the date indicated on the form, the department
12       shall immediately forward a copy of the form to the law enforcement
13       officer initiating preparation of the form.
14           (e) Unless the insurance company subsequently submits an insurance
15       verification form indicating that insurance was not in force, no person
16       charged with violating subsections (b), (c) or (d) shall be convicted if such
17       person produces in court, within 10 days of the date of arrest or of issu-
18       ance of the citation, evidence of financial security for the motor vehicle
19       operated, which was valid at the time of arrest or of issuance of the ci-
20       tation. For the purpose of this subsection, evidence of financial security
21       shall be provided by a policy of motor vehicle liability insurance, an iden-
22       tification card or certificate of insurance issued to the policyholder by the
23       insurer which provides the name of the insurer, the policy number and
24       the effective and expiration dates of the policy, or a certificate of self-
25       insurance signed by the commissioner of insurance. Upon the production
26       in court of evidence of financial security, the court shall record the in-
27       formation displayed thereon on the insurance verification form prescribed
28       by the secretary of revenue, immediately forward such form to the de-
29       partment of revenue, and stay any further proceedings on the matter
30       pending a request from the prosecuting attorney that the matter be set
31       for trial. Upon receipt of such form the department shall mail the form
32       to the named insurance company for verification that insurance was in
33       force on the date indicated on the form. It shall be the duty of insurance
34       companies to notify the department within 30 calendar days of the receipt
35       of such forms of any insurance that was not in force on the date specified.
36       Upon return of any form to the department indicating that insurance was
37       not in force on such date, the department shall immediately forward a
38       copy of such form to the office of the prosecuting attorney or the city
39       clerk of the municipality in which such prosecution is pending when the
40       prosecuting attorney is not ascertainable. Receipt of any completed form
41       indicating that insurance was not in effect on the date specified shall be
42       prima facie evidence of failure to provide proof of financial security and
43       violation of this section. A request that the matter be set for trial shall be

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  1       made immediately following the receipt by the prosecuting attorney of a
  2       copy of the form from the department of revenue indicating that insur-
  3       ance was not in force. Any charge of violating subsection (b), (c) or (d)
  4       shall be dismissed if no request for a trial setting has been made within
  5       60 days of the date evidence of financial security was produced in court.
  6           (f) Any person in whose name more than 25 motor vehicles are reg-
  7       istered in Kansas may qualify as a self-insurer by obtaining a certificate
  8       of self-insurance from the commissioner of insurance. The certificate of
  9       self-insurance issued by the commissioner shall cover such owned vehi-
10       cles and those vehicles, registered in Kansas, leased to such person if the
11       lease agreement requires that motor vehicle liability insurance on the
12       vehicles be provided by the lessee. Upon application of any such person,
13       the commissioner of insurance may issue a certificate of self-insurance,
14       if the commissioner is satisfied that such person is possessed and will
15       continue to be possessed of ability to pay any liability imposed by law
16       against such person arising out of the ownership, operation, maintenance
17       or use of any motor vehicle described in this subsection. A self-insurer
18       shall provide liability coverage subject to the provisions of subsection (e)
19       of K.S.A. 40-3107, and amendments thereto, arising out of the ownership,
20       operation, maintenance or use of a self-insured motor vehicle in those
21       instances where the lessee or the rental driver, if not the lessee, does not
22       have a motor vehicle liability insurance policy or insurance coverage pur-
23       suant to a motor vehicle liability insurance policy or certificate of insur-
24       ance or such insurance policy for such leased or rented vehicle. Such
25       liability coverage shall be provided to any person operating a self-insured
26       motor vehicle with the expressed or implied consent of the self-insurer.
27           Upon notice and a hearing in accordance with the provisions of the
28       Kansas administrative procedure act, the commissioner of insurance may
29       cancel a certificate of self-insurance upon reasonable grounds. Failure to
30       provide liability coverage or personal injury protection benefits required
31       by K.S.A. 40-3107 and 40-3109, and amendments thereto, or pay any
32       liability imposed by law arising out of the ownership, operation, mainte-
33       nance or use of a motor vehicle registered in such self-insurer's name, or
34       to otherwise comply with the requirements of this subsection shall con-
35       stitute reasonable grounds for the cancellation of a certificate of self-
36       insurance. Reasonable grounds shall not exist unless such objectionable
37       activity occurs with such frequency as to indicate a general business prac-
38       tice.
39           Self-insureds shall investigate claims in a reasonably prompt manner,
40       handle such claims in a reasonable manner based on available information
41       and effectuate prompt, fair and equitable settlement of claims in which
42       liability has become reasonably clear.
43           As used in this subsection, ``liability imposed by law'' means the stated

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  1       limits of liability as provided under subsection (e) of K.S.A. 40-3107, and
  2       amendments thereto.
  3           Nothing in this subsection shall preclude a self-insurer from pursuing
  4       all rights of subrogation against another person or persons.
  5           (g) (1) Any person violating any provision of this section shall be
  6       guilty of a class B misdemeanor and shall be subject to a fine of not less
  7       than $200 nor more than $1,000 or confinement in the county jail for a
  8       term of not more than six months, or both such fine and confinement.
  9           (2) Any person convicted of violating any provision of this section
10       within three years of any such prior conviction shall be guilty of a class A
11       misdemeanor.
12           (h) In addition to any other penalties provided by this act for failure
13       to have or maintain financial security in effect, the director, upon receipt
14       of a report required by K.S.A. 8-1607 or 8-1611, and amendments
15       thereto, or a denial of such insurance by the insurance company listed on
16       the form prescribed by the secretary of revenue pursuant to subsection
17       (d) of this section, shall, upon notice and hearing as provided by K.S.A.
18       40-3118, and amendments thereto:
19           (1) Suspend:
20           (A) The license of each driver in any manner involved in the accident;
21           (B) the license of the owner of each motor vehicle involved in such
22       accident, unless the vehicle was stolen at the time of the accident, proof
23       of which must be established by the owner of the motor vehicle. Theft
24       by a member of the vehicle owner's immediate family under the age of
25       18 years shall not constitute a stolen vehicle for the purposes of this
26       section;
27           (C) if the driver is a nonresident, the privilege of operating a motor
28       vehicle within this state; or
29           (D) if such owner is a nonresident, the privilege of such owner to
30       operate or permit the operation within this state of any motor vehicle
31       owned by such owner; and
32           (2) revoke the registration of all vehicles owned by the owner of each
33       motor vehicle involved in such accident.
34           (i) The suspension or revocation requirements in subsection (h) shall
35       not apply:
36           (1) To the driver or owner if the owner had in effect at the time of
37       the accident an automobile liability policy as required by K.S.A. 40-3107,
38       and amendments thereto, with respect to the vehicle involved in the ac-
39       cident;
40           (2) to the driver, if not the owner of the vehicle involved in the ac-
41       cident, if there was in effect at the time of the accident an automobile
42       liability policy with respect to such driver's driving of vehicles not owned
43       by such driver;

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  1           (3) to any self-insurer as defined by subsection (u) of K.S.A. 40-3103,
  2       and amendments thereto;
  3           (4) to the driver or owner of any vehicle involved in the accident
  4       which was exempt from the provisions of this act pursuant to K.S.A. 40-
  5       3105, and amendments thereto;
  6           (5) to the owner of a vehicle described in subsection (a)(2).
  7           (j) For the purposes of provisions (1) and (2) of subsection (i) of this
  8       section, the director may require verification by an owner's or driver's
  9       insurance company or agent thereof that there was in effect at the time
10       of the accident an automobile liability policy as required in this act.
11           Any suspension or revocation effected hereunder shall remain in effect
12       until satisfactory proof of financial security has been filed with the director
13       as required by subsection (d) of K.S.A. 40-3118, and amendments thereto,
14       and such person has been released from liability or is a party to an action
15       to determine liability pursuant to which the court temporarily stays such
16       suspension pending final disposition of such action, has entered into an
17       agreement for the payment of damages, or has been finally adjudicated
18       not to be liable in respect to such accident and evidence of any such fact
19       has been filed with the director and has paid the reinstatement fee herein
20       prescribed. Such reinstatement fee shall be $25, except that if the reg-
21       istration of a motor vehicle of any owner is revoked or the driving priv-
22       ileges of any owner of a vehicle is suspended within one year three years
23       following a prior revocation of the registration of a motor vehicle or prior
24       suspension of the driving privileges of such owner under the provisions
25       of this act, such fee shall be $75 $500.
26           (k) The provisions of this section shall not apply to motor carriers of
27       property or passengers regulated by the corporation commission of the
28       state of Kansas.
29           (l) The provisions of subsection (d) shall not apply to vehicle dealers,
30       as defined in K.S.A. 8-2401, and amendments thereto, for vehicles being
31       offered for sale by such dealers.
32           Sec. 2. K.S.A. 1997 Supp. 40-3118 is hereby amended to read as
33       follows: 40-3118. (a) No motor vehicle shall be registered or reregistered
34       in this state unless the owner, at the time of registration, has in effect a
35       policy of motor vehicle liability insurance covering such motor vehicle, as
36       provided in this act, or is a self-insurer thereof, or the motor vehicle is
37       used as a driver training motor vehicle, as defined in K.S.A. 72-5015, and
38       amendments thereto, in an approved driver training course by a school
39       district or an accredited nonpublic school under an agreement with a
40       motor vehicle dealer, and such policy of motor vehicle liability insurance
41       is provided by the school district or accredited nonpublic school. As used
42       in this section, the term ``financial security'' means such policy or self-
43       insurance. The director shall require that the owner certify that the owner

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  1       has such financial security, and the owner of each motor vehicle registered
  2       in this state shall maintain financial security continuously throughout the
  3       period of registration. When an owner certifies that such financial security
  4       is a motor vehicle liability insurance policy meeting the requirements of
  5       this act, the director may require that the owner or owner's insurance
  6       company produce records to prove the fact that such insurance was in
  7       effect at the time the vehicle was registered and has been maintained
  8       continuously from that date. Failure to produce such records shall be
  9       prima facie evidence that no financial security exists with regard to the
10       vehicle concerned. It shall be the duty of insurance companies, upon the
11       request of the director, to notify the director within 30 calendar days of
12       the date of the receipt of such request by the director of any insurance
13       that was not in effect on the date of registration and maintained contin-
14       uously from that date.
15           (b) Except as otherwise provided in K.S.A. 40-276, 40-276a and 40-
16       277, and amendments thereto, and except for termination of insurance
17       resulting from nonpayment of premium or upon the request for cancel-
18       lation by the insured, no motor vehicle liability insurance policy, or any
19       renewal thereof, shall be terminated by cancellation or failure to renew
20       by the insurer until at least 30 days after mailing a notice of termination,
21       by certified or registered mail or United States post office certificate of
22       mailing, to the named insured at the latest address filed with the insurer
23       by or on behalf of the insured. Time of the effective date and hour of
24       termination stated in the notice shall become the end of the policy period.
25       Every such notice of termination sent to the insured for any cause what-
26       soever shall include on the face of the notice a statement that financial
27       security for every motor vehicle covered by the policy is required to be
28       maintained continuously throughout the registration period, that the op-
29       eration of any such motor vehicle without maintaining continuous finan-
30       cial security therefor is a class B misdemeanor and that the registration
31       for any such motor vehicle for which continuous financial security is not
32       provided is subject to suspension and the driver's license of the owner
33       thereof is subject to suspension.
34           (c) The director of vehicles shall verify a sufficient number of insur-
35       ance certifications each calendar year as the director deems necessary to
36       insure compliance with the provisions of this act. The owner or owner's
37       insurance company shall verify the accuracy of any owner's certification
38       upon request, as provided in subsection (a).
39           (d) In addition to any other requirements of this act,:
40           (1) The director shall require a person to acquire insurance and for
41       such person's insurance company to maintain on file with the division
42       evidence of such insurance for a period of one year three years when a
43       person has been convicted in this or another state of any of the violations

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  1       enumerated in K.S.A. 8-285, and amendments thereto.
  2           The director shall also require any driver whose driving privileges have
  3       been suspended pursuant to this section to maintain such evidence of
  4       insurance as required above.
  5           The company of the insured shall immediately mail notice to the di-
  6       rector whenever any policy required by this subsection to be on file with
  7       the division is terminated by the insured or the insurer for any reason.
  8       The receipt by the director of such termination shall be prima facie evi-
  9       dence that no financial security exists with regard to the person con-
10       cerned.
11           No cancellation notice shall be sent to the director if the insured adds
12       or deletes a vehicle, adds or deletes a driver, renews a policy or is issued
13       a new policy by the same company. No cancellation notice shall be sent
14       to the director prior to the date the policy is terminated if the company
15       allows a grace period for payment until such grace period has expired and
16       the policy is actually terminated.;
17           (2) any person convicted of violating K.S.A. 40-3104, and amend-
18       ments thereto, or an ordinance of any city in this state, which is in sub-
19       stantial conformity with such statute, or any person whose driving priv-
20       ileges have been suspended pursuant to this section, shall also be required
21       by the director to acquire an insurance policy which:
22           (A) Is issued for a period of at least six months;
23           (B) meets the minimum coverages required by this act; and
24           (C) is not cancelable by the insured for any reason.
25           The insurer shall be subject to the provisions of K.S.A. 40-276 through
26       40-278, and amendments thereto.
27           For the purposes of this act, the term ``conviction'' includes pleading
28       guilty or nolo contendere, being convicted or being found guilty of any
29       violation enumerated in this subsection without regard to whether sen-
30       tence was suspended or probation granted. A forfeiture of bail, bond or
31       collateral deposited to secure a defendant's appearance in court, which
32       forfeiture has not been vacated, shall be equivalent to a conviction.
33           The requirements of this subsection shall apply whether or not such
34       person owns a motor vehicle.
35           (e) Whenever the director shall receive prima facie evidence, as pre-
36       scribed by this section, that continuous financial security covering any
37       motor vehicle registered in this state is not in effect, the director shall
38       notify the owner by registered or certified mail or United States post
39       office certificate of mailing that, at the end of 30 days after the notice is
40       mailed, the registration for such motor vehicle and the driving privileges
41       of the owner of the vehicle shall be suspended or revoked, pursuant to
42       such rules and regulations as the secretary of revenue shall adopt, unless
43       within 10 days after the notice is mailed: (1) Such owner shall demonstrate

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  1       proof of continuous financial security covering such vehicle to the satis-
  2       faction of the director; or (2) such owner shall mail a written request
  3       which is postmarked within 10 days after the notice is mailed requesting
  4       a hearing with the director. Upon receipt of a timely request for a hearing,
  5       the director shall afford such person an opportunity for hearing within
  6       the time and in the manner provided in K.S.A. 8-255 and amendments
  7       thereto. If, within the ten-day period or at the hearing, such owner is
  8       unable to demonstrate proof of continuous financial security covering the
  9       motor vehicle in question, the director shall revoke the registration of
10       such motor vehicle and suspend the driving privileges of the owner of
11       the vehicle.
12           (f) Whenever the registration of a motor vehicle or the driving priv-
13       ileges of the owner of the vehicle are suspended or revoked for failure of
14       the owner to maintain continuous financial security, such suspension or
15       revocation shall remain in effect until satisfactory proof of insurance has
16       been filed with the director as required by subsection (d) and a reinstate-
17       ment fee in the amount herein prescribed is paid to the division of ve-
18       hicles. Such reinstatement fee shall be in the amount of $25, except that
19       if the registration of a motor vehicle of any owner is revoked or the driving
20       privileges of any owner of a vehicle is suspended within one year three
21       years following a prior revocation of the registration of a motor vehicle
22       or prior suspension of the driving privileges of such owner under the
23       provisions of this act, such fee shall be in the amount of $75 $500. The
24       division of vehicles shall, at least monthly, deposit such fees with the state
25       treasurer, who shall credit such moneys to the state highway fund.
26           (g) In no case shall any motor vehicle, the registration of which has
27       been revoked for failure to have continuous financial security, be re-
28       registered in the name of the owner thereof, the owner's spouse, parent
29       or child or any member of the same household, until the owner complies
30       with subsection (f) subsections (d) and (f). In the event the registration
31       plate has expired, no new plate shall be issued until the motor vehicle
32       owner complies with the reinstatement requirements as required by this
33       act.
34           (h) Evidence that an owner of a motor vehicle, registered or required
35       to be registered in this state, has operated or permitted such motor ve-
36       hicle to be operated in this state without having in force and effect the
37       financial security required by this act for such vehicle, together with proof
38       of records of the division of vehicles indicating that the owner did not
39       have such financial security, shall be prima facie evidence that the owner
40       did at the time and place alleged, operate or permit such motor vehicle
41       to be operated without having in full force and effect financial security
42       required by the provisions of this act.
43           (i) Any owner of a motor vehicle registered or required to be regis-

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  1       tered in this state who shall make a false certification concerning financial
  2       security for the operation of such motor vehicle as required by this act,
  3       shall be guilty of a class A misdemeanor. Any person, firm or corporation
  4       giving false information to the director concerning another's financial se-
  5       curity for the operation of a motor vehicle registered or required to be
  6       registered in this state, knowing or having reason to believe that such
  7       information is false, shall be guilty of a class A misdemeanor.
  8           (j) The director shall administer and enforce the provisions of this act
  9       relating to the registration of motor vehicles, and the secretary of revenue
10       shall adopt such rules and regulations as may be necessary for its admin-
11       istration.
12           (k) Whenever any person has made application for insurance cover-
13       age and such applicant has submitted payment or partial payment with
14       such application, the insurance company, if payment accompanied the
15       application and if insurance coverage is denied, shall refund the unearned
16       portion of the payment to the applicant or agent with the notice of denial
17       of coverage. If payment did not accompany the application to the insur-
18       ance company but was made to the agent, the agent shall refund the
19       unearned portion of the payment to the applicant upon receipt of the
20       company's notice of denial.
21           (l) For the purpose of this act, ``declination of insurance coverage''
22       means a final denial, in whole or in part, by an insurance company or
23       agent of requested insurance coverage.
24           Sec. 3. K.S.A. 1997 Supp. 40-3104 and 40-3118 are hereby repealed.
25           Sec. 4. This act shall take effect and be in force from and after its
26       publication in the statute book.
27