Session of 1998
                   
HOUSE BILL No. 2884
         
By Representative Haley
         
2-11
            9             AN ACT concerning motor vehicle liability insurance; relating to proof
10             of financial responsibility; amending K.S.A. 1997 Supp. 40-3103 and
11             40-3104 and repealing the existing sections.
12            
13       Be it enacted by the Legislature of the State of Kansas:
14           Section 1. K.S.A. 1997 Supp. 40-3103 is hereby amended to read as
15       follows: 40-3103. As used in this act, the following words and phrases
16       shall have the meanings respectively ascribed to them herein:
17           (a) ``Commissioner'' means the state commissioner of insurance.
18           (b) ``Disability benefits'' means allowances for loss of monthly earn-
19       ings due to an injured person's inability to engage in available and appro-
20       priate gainful activity, subject to the following conditions and limitations:
21       (1) The injury sustained is the proximate cause of the injured person's
22       inability to engage in available and appropriate gainful activity; (2) subject
23       to the maximum benefits stated herein, allowances shall equal 100% of
24       any such loss per individual, unless such allowances are deemed not in-
25       cludable in gross income for federal income tax purposes, in which event
26       such allowances shall be limited to 85%; and (3) allowances shall be made
27       up to a maximum of not less than $900 per month for not to exceed one
28       year after the date the injured person becomes unable to engage in avail-
29       able and appropriate gainful activity.
30           (c) ``Director'' means the director of vehicles.
31           (d) ``Funeral benefits'' means allowances for funeral, burial or cre-
32       mation expenses in an amount not to exceed $2,000 per individual.
33           (e) ``Highway'' means the entire width between the boundary lines
34       of every way publicly maintained, when any part thereof is open to the
35       use of the public for purposes of vehicular travel.
36           (f) ``Implement of husbandry'' means every vehicle designed or
37       adapted and used exclusively for agricultural operations and only inci-
38       dentally operated or moved upon the highways.
39           (g) ``Insurer'' means any insurance company, as defined by K.S.A. 40-
40       201, and amendments thereto, authorized to transact business in this
41       state, which issues policies of motor vehicle liability insurance covering
42       liability arising out of the ownership, operation, maintenance or use of a
43       motor vehicle.

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  1           (h) ``Injured person'' means any person suffering injury.
  2           (i) ``Injury'' means bodily harm, sickness, disease or death resulting
  3       from an accident arising out of the ownership, maintenance or use of a
  4       motor vehicle.
  5           (j) ``Lienholder'' means a person holding a security interest in a ve-
  6       hicle.
  7           (k) ``Medical benefits'' means and includes allowances for all reason-
  8       able expenses, up to a limit of not less than $4,500, for necessary health
  9       care rendered by practitioners licensed by the board of healing arts or
10       licensed psychologists, surgical, x-ray and dental services, including pros-
11       thetic devices and necessary ambulance, hospital and nursing services;
12       and such term also includes allowances for services recognized and per-
13       mitted under the laws of this state for an injured person who relies upon
14       spiritual means through prayer alone for healing in accordance with such
15       person's religious beliefs.
16           (l) ``Monthly earnings'' means: (1) In the case of a regularly employed
17       person or a person regularly self-employed, 1/12 of the annual earnings at
18       the time of injury; or (2) in the case of a person not regularly employed
19       or self-employed, or of an unemployed person, 1/12 of the anticipated
20       annual earnings from the time such person would reasonably have been
21       expected to be regularly employed. In calculating the anticipated annual
22       earnings of an unemployed person who has previously been employed,
23       the insurer shall average the annual compensation of such person for not
24       to exceed five years preceding the year of injury or death, during which
25       such person was employed.
26           (m) ``Motor vehicle'' means every self-propelled vehicle of a kind re-
27       quired to be registered in this state, including any trailer, semitrailer or
28       pole trailer designed for use with such vehicle, but such term does not
29       include a motorized bicycle.
30           (n) ``Operator'' means any person who drives or is in actual physical
31       control of a motor vehicle upon a highway or who is exercising control
32       over or steering a vehicle being towed by a motor vehicle.
33           (o) ``Operator's insurance policy'' means a policy of motor vehicle
34       liability insurance which insures the person named as insured therein
35       against loss from the liability imposed by law for damages arising out of
36       use of any motor vehicle not owned subject to the same limits of liability
37       as are set forth in subsection (e) of K.S.A. 40-3107, and amendments
38       thereto.
39             (o) (p) ``Owner'' means a person, other than a lienholder, having
40       property in or title to a motor vehicle, including a person who is entitled
41       to the use and possession of a motor vehicle subject to a security interest
42       held by another person, but such term does not include a lessee under a
43       lease not intended as security.

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  1             (p) (q) ``Person'' means an individual, partnership, corporation or
  2       other association of persons.
  3             (q) (r) ``Personal injury protection benefits'' means the disability ben-
  4       efits, funeral benefits, medical benefits, rehabilitation benefits, substitu-
  5       tion benefits and survivors' benefits required to be provided in motor
  6       vehicle liability insurance policies pursuant to this act.
  7             (r) (s) ``Rehabilitation benefits'' means allowances for all reasonable
  8       expenses, up to a limit of not less than $4,500, for necessary psychiatric
  9       or psychological services, occupational therapy and such occupational
10       training and retraining as may be reasonably necessary to enable the in-
11       jured person to obtain suitable employment.
12             (s) (t) ``Relative residing in the same household'' means a relative of
13       any degree by blood, marriage or adoption, who usually makes such per-
14       son's home in the same family unit, whether or not temporarily living
15       elsewhere.
16             (t) (u) ``Security interest'' means an interest in a vehicle reserved or
17       created by agreement and which secures payment or performance of an
18       obligation. The term includes the interest of a lessor under a lease in-
19       tended as security.
20             (u) (v) ``Self-insurer'' means any person effecting self-insurance pur-
21       suant to subsection (f) of K.S.A. 40-3104, and amendments thereto, or
22       any nonresident self-insurer that has filed the form prescribed in subsec-
23       tion (b) of K.S.A. 40-3106, and amendments thereto.
24             (v) (w) ``Special mobile equipment'' means every vehicle not designed
25       or used primarily for the transportation of persons or property and only
26       incidentally operated or moved over a highway, including but not limited
27       to: Ditch-digging apparatus, well-boring apparatus and road construction
28       and maintenance machinery such as asphalt spreaders, bituminous mix-
29       ers, bucket loaders, tractors other than truck tractors, ditchers, leveling
30       graders, finishing machines, motor graders, road rollers, scarifiers, earth
31       moving carryalls and scrapers, power shovels and drag lines and self-
32       propelled cranes and earth moving equipment. The term does not include
33       house trailers, dump trucks, truck mounted transit mixers, cranes or shov-
34       els or other vehicles designed for the transportation of persons or property
35       to which machinery has been attached.
36             (w) (x) ``Substitution benefits'' means allowances for appropriate and
37       reasonable expenses incurred in obtaining other ordinary and necessary
38       services in lieu of those that, but for the injury, the injured person would
39       have performed for the benefit of such person or such person's family,
40       subject to a maximum of $25 per day for not longer than 365 days after
41       the date such expenses are incurred.
42             (x) (y) ``Survivor'' means a decedent's spouse, or child under the age
43       of 18 years, where death of the decedent resulted from an injury.

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  1             (y) (z) ``Survivors' benefits'' means total allowances to all survivors
  2       for: (1) Loss of an injured person's monthly earnings after such person's
  3       death, up to a maximum of not less than $900 per month; and (2) sub-
  4       stitution benefits following the injured person's death. Expenses of the
  5       survivors which have been avoided by reason of the injured person's death
  6       shall be subtracted from the allowances to which survivors would other-
  7       wise be entitled, and survivors' benefits shall not be paid for more than
  8       one year after the injured person's death, less the number of months the
  9       injured person received disability benefits prior to such person's death.
10       For purposes of this subsection, monthly earnings shall include, in the
11       case of a person who was a social security recipient or a retirement or
12       pension benefit recipient, or both, at the time of such injured person's
13       death, 1/12 of the annual amount of the difference between the annual
14       amount of the social security benefits or the retirement benefits, or both,
15       that such injured person was receiving at the time of such injured person's
16       death and the annual amount of the social security benefits or the retire-
17       ment benefits, or both, that the survivor is receiving after the time of such
18       injured person's death.
19             (z) (aa) ``Uninsured motor vehicle'' means any motor vehicle which
20       is not included under an approved self-insurance plan of a self-insurer or
21       for which there is not in effect a motor vehicle liability insurance policy
22       meeting the requirements of this act.
23             (aa) (bb) ``Any workmen's compensation law'' means the workmen's
24       compensation act of Kansas, the United States longshoremen's and harbor
25       workers' compensation act, the federal employer liability acts, and any
26       similar state or federal law.
27           Sec. 2. K.S.A. 1997 Supp. 40-3104 is hereby amended to read as
28       follows: 40-3104. (a) Every owner shall provide motor vehicle liability
29       insurance coverage in accordance with the provisions of this act for every
30       motor vehicle owned by such person, unless such motor vehicle: (1) Is
31       included under an approved self-insurance plan as provided in subsection
32       (f); (2) is used as a driver training motor vehicle, as defined in K.S.A. 72-
33       5015, and amendments thereto, in an approved driver training course by
34       a school district or an accredited nonpublic school under an agreement
35       with a motor vehicle dealer, and such motor vehicle liability insurance
36       coverage is provided by the school district or accredited nonpublic school;
37       (3) is included under a qualified plan of self-insurance approved by an
38       agency of the state in which such motor vehicle is registered and the form
39       prescribed in subsection (b) of K.S.A. 40-3106, and amendments thereto,
40       has been filed; or (4) is expressly exempted from the provisions of this
41       act.
42           (b) An owner of an uninsured motor vehicle shall not permit the
43       operation thereof upon a highway or upon property open to use by the

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  1       public, unless such motor vehicle is expressly exempted from the provi-
  2       sions of this act.
  3           (c) No person shall knowingly drive an uninsured motor vehicle upon
  4       a highway or upon property open to use by the public, unless such motor
  5       vehicle is expressly exempted from the provisions of this act or such per-
  6       son has purchased an operator's insurance policy.
  7           (d) Any person operating a motor vehicle upon a highway or upon
  8       property open to use by the public shall display, upon demand, evidence
  9       of financial security to a law enforcement officer. The law enforcement
10       officer shall issue a citation to any person who fails to display evidence of
11       financial security upon such demand. The law enforcement officer shall
12       attach a copy of the insurance verification form prescribed by the secre-
13       tary of revenue to the copy of the citation forwarded to the court.
14           No citation shall be issued to any person for failure to provide proof of
15       financial security when evidence of financial security meeting the stan-
16       dards of subsection (e) is displayed upon demand of a law enforcement
17       officer. Whenever the authenticity of such evidence is questionable, the
18       law enforcement officer may initiate the preparation of the insurance
19       verification form prescribed by the secretary of revenue by recording
20       information from the evidence of financial security displayed. The officer
21       shall immediately forward the form to the department of revenue, and
22       the department shall proceed with verification in the manner prescribed
23       in the following paragraph. Upon return of a form indicating that insur-
24       ance was not in force on the date indicated on the form, the department
25       shall immediately forward a copy of the form to the law enforcement
26       officer initiating preparation of the form.
27           (e) Unless the insurance company subsequently submits an insurance
28       verification form indicating that insurance was not in force, no person
29       charged with violating subsections (b), (c) or (d) shall be convicted if such
30       person produces in court, within 10 days of the date of arrest or of issu-
31       ance of the citation, evidence of financial security for the motor vehicle
32       operated, which was valid at the time of arrest or of issuance of the ci-
33       tation. For the purpose of this subsection, evidence of financial security
34       shall be provided by a policy of motor vehicle liability insurance, an iden-
35       tification card or certificate of insurance issued to the policyholder by the
36       insurer which provides the name of the insurer, the policy number and
37       the effective and expiration dates of the policy, or a certificate of self-
38       insurance signed by the commissioner of insurance. Upon the production
39       in court of evidence of financial security, the court shall record the in-
40       formation displayed thereon on the insurance verification form prescribed
41       by the secretary of revenue, immediately forward such form to the de-
42       partment of revenue, and stay any further proceedings on the matter
43       pending a request from the prosecuting attorney that the matter be set

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  1       for trial. Upon receipt of such form the department shall mail the form
  2       to the named insurance company for verification that insurance was in
  3       force on the date indicated on the form. It shall be the duty of insurance
  4       companies to notify the department within 30 calendar days of the receipt
  5       of such forms of any insurance that was not in force on the date specified.
  6       Upon return of any form to the department indicating that insurance was
  7       not in force on such date, the department shall immediately forward a
  8       copy of such form to the office of the prosecuting attorney or the city
  9       clerk of the municipality in which such prosecution is pending when the
10       prosecuting attorney is not ascertainable. Receipt of any completed form
11       indicating that insurance was not in effect on the date specified shall be
12       prima facie evidence of failure to provide proof of financial security and
13       violation of this section. A request that the matter be set for trial shall be
14       made immediately following the receipt by the prosecuting attorney of a
15       copy of the form from the department of revenue indicating that insur-
16       ance was not in force. Any charge of violating subsection (b), (c) or (d)
17       shall be dismissed if no request for a trial setting has been made within
18       60 days of the date evidence of financial security was produced in court.
19           (f) Any person in whose name more than 25 motor vehicles are reg-
20       istered in Kansas may qualify as a self-insurer by obtaining a certificate
21       of self-insurance from the commissioner of insurance. The certificate of
22       self-insurance issued by the commissioner shall cover such owned vehi-
23       cles and those vehicles, registered in Kansas, leased to such person if the
24       lease agreement requires that motor vehicle liability insurance on the
25       vehicles be provided by the lessee. Upon application of any such person,
26       the commissioner of insurance may issue a certificate of self-insurance,
27       if the commissioner is satisfied that such person is possessed and will
28       continue to be possessed of ability to pay any liability imposed by law
29       against such person arising out of the ownership, operation, maintenance
30       or use of any motor vehicle described in this subsection. A self-insurer
31       shall provide liability coverage subject to the provisions of subsection (e)
32       of K.S.A. 40-3107, and amendments thereto, arising out of the ownership,
33       operation, maintenance or use of a self-insured motor vehicle in those
34       instances where the lessee or the rental driver, if not the lessee, does not
35       have a motor vehicle liability insurance policy or insurance coverage pur-
36       suant to a motor vehicle liability insurance policy or certificate of insur-
37       ance or such insurance policy for such leased or rented vehicle. Such
38       liability coverage shall be provided to any person operating a self-insured
39       motor vehicle with the expressed or implied consent of the self-insurer.
40           Upon notice and a hearing in accordance with the provisions of the
41       Kansas administrative procedure act, the commissioner of insurance may
42       cancel a certificate of self-insurance upon reasonable grounds. Failure to
43       provide liability coverage or personal injury protection benefits required

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  1       by K.S.A. 40-3107 and 40-3109, and amendments thereto, or pay any
  2       liability imposed by law arising out of the ownership, operation, mainte-
  3       nance or use of a motor vehicle registered in such self-insurer's name, or
  4       to otherwise comply with the requirements of this subsection shall con-
  5       stitute reasonable grounds for the cancellation of a certificate of self-
  6       insurance. Reasonable grounds shall not exist unless such objectionable
  7       activity occurs with such frequency as to indicate a general business prac-
  8       tice.
  9           Self-insureds shall investigate claims in a reasonably prompt manner,
10       handle such claims in a reasonable manner based on available information
11       and effectuate prompt, fair and equitable settlement of claims in which
12       liability has become reasonably clear.
13           As used in this subsection, ``liability imposed by law'' means the stated
14       limits of liability as provided under subsection (e) of K.S.A. 40-3107, and
15       amendments thereto.
16           Nothing in this subsection shall preclude a self-insurer from pursuing
17       all rights of subrogation against another person or persons.
18           (g) (1) Any person violating any provision of this section shall be
19       guilty of a class B misdemeanor and shall be subject to a fine of not less
20       than $200 nor more than $1,000 or confinement in the county jail for a
21       term of not more than six months, or both such fine and confinement.
22           (2) Any person convicted of violating any provision of this section
23       within three years of any such prior conviction shall be guilty of a class A
24       misdemeanor.
25           (h) In addition to any other penalties provided by this act for failure
26       to have or maintain financial security in effect, the director, upon receipt
27       of a report required by K.S.A. 8-1607 or 8-1611, and amendments
28       thereto, or a denial of such insurance by the insurance company listed on
29       the form prescribed by the secretary of revenue pursuant to subsection
30       (d) of this section, shall, upon notice and hearing as provided by K.S.A.
31       40-3118, and amendments thereto:
32           (1) Suspend:
33           (A) The license of each driver in any manner involved in the accident;
34           (B) the license of the owner of each motor vehicle involved in such
35       accident, unless the vehicle was stolen at the time of the accident, proof
36       of which must be established by the owner of the motor vehicle. Theft
37       by a member of the vehicle owner's immediate family under the age of
38       18 years shall not constitute a stolen vehicle for the purposes of this
39       section;
40           (C) if the driver is a nonresident, the privilege of operating a motor
41       vehicle within this state; or
42           (D) if such owner is a nonresident, the privilege of such owner to
43       operate or permit the operation within this state of any motor vehicle

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  1       owned by such owner; and
  2           (2) revoke the registration of all vehicles owned by the owner of each
  3       motor vehicle involved in such accident.
  4           (i) The suspension or revocation requirements in subsection (h) shall
  5       not apply:
  6           (1) To the driver or owner if the owner had in effect at the time of
  7       the accident an automobile liability policy as required by K.S.A. 40-3107,
  8       and amendments thereto, with respect to the vehicle involved in the ac-
  9       cident;
10           (2) to the driver, if not the owner of the vehicle involved in the ac-
11       cident, if there was in effect at the time of the accident an automobile
12       liability policy with respect to such driver's driving of vehicles not owned
13       by such driver or if the driver had in effect at the time an operator's
14       insurance policy;
15           (3) to any self-insurer as defined by subsection (u) of K.S.A. 40-3103,
16       and amendments thereto;
17           (4) to the driver or owner of any vehicle involved in the accident
18       which was exempt from the provisions of this act pursuant to K.S.A. 40-
19       3105, and amendments thereto;
20           (5) to the owner of a vehicle described in subsection (a)(2).
21           (j) For the purposes of provisions (1) and (2) of subsection (i) of this
22       section, the director may require verification by an owner's or driver's
23       insurance company or agent thereof that there was in effect at the time
24       of the accident an automobile liability policy as required in this act.
25           Any suspension or revocation effected hereunder shall remain in effect
26       until satisfactory proof of financial security has been filed with the director
27       as required by subsection (d) of K.S.A. 40-3118, and amendments thereto,
28       and such person has been released from liability or is a party to an action
29       to determine liability pursuant to which the court temporarily stays such
30       suspension pending final disposition of such action, has entered into an
31       agreement for the payment of damages, or has been finally adjudicated
32       not to be liable in respect to such accident and evidence of any such fact
33       has been filed with the director and has paid the reinstatement fee herein
34       prescribed. Such reinstatement fee shall be $25 except that if the regis-
35       tration of a motor vehicle of any owner is revoked within one year follow-
36       ing a prior revocation of the registration of a motor vehicle of such owner
37       under the provisions of this act such fee shall be $75.
38           (k) The provisions of this section shall not apply to motor carriers of
39       property or passengers regulated by the corporation commission of the
40       state of Kansas.
41           (l) The provisions of subsection (d) shall not apply to vehicle dealers,
42       as defined in K.S.A. 8-2401, and amendments thereto, for vehicles being
43       offered for sale by such dealers.

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  1           Sec. 3. K.S.A. 1997 Supp. 40-3103 and 40-3104 are hereby repealed.
  2           Sec. 4. This act shall take effect and be in force from and after its
  3       publication in the statute book.
  4      
  5