Bill Text: MI SB0514 | 2011-2012 | 96th Legislature | Introduced

---

Bill Title: Insurance; no-fault; low-cost automobile insurance pilot program; provide for. Amends secs. 3104, 3107, 3114 & 3115 of 1956 PA 218 (MCL 500.3104 et seq.) & adds ch. 32A.

Spectrum: Bipartisan Bill

Status: (Introduced - Dead) 2011-06-22 - Referred To Committee On Insurance [SB0514 Detail]

Download: Michigan-2011-SB0514-Introduced.html

---

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SENATE BILL No. 514

 

 

June 22, 2011, Introduced by Senators SMITH and HUNE and referred to the Committee on Insurance.

 

 

 

     A bill to amend 1956 PA 218, entitled

 

"The insurance code of 1956,"

 

by amending sections 3104, 3107, 3114, and 3115 (MCL 500.3104,

 

500.3107, 500.3114, and 500.3115), section 3104 as amended by 2002

 

PA 662, section 3107 as amended by 1991 PA 191, and section 3114 as

 

amended by 2002 PA 38, and by adding chapter 32A.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 3104. (1) An unincorporated, nonprofit association to be

 

known as the catastrophic claims association, hereinafter referred

 

to as the association, is created. Each insurer engaged in writing

 

insurance coverages that provide the security required by section

 

3101(1) within this state, as a condition of its authority to

 

transact insurance in this state, shall be a member of the

 

association and shall be is bound by the plan of operation of the

 

association. Each insurer engaged in writing insurance coverages

 

that provide the security required by section 3103(1) within this

 

state, as a condition of its authority to transact insurance in

 

this state, shall be considered a member of the association, but

 

only for purposes of premiums under subsection (7)(d). Except as

 

expressly provided in this section, the association is not subject

 

to any laws of this state with respect to insurers, but in all

 

other respects the association is subject to the laws of this state

 

to the extent that the association would be if it were an insurer

 

organized and subsisting under chapter 50.

 

     (2) The association shall provide and each member shall accept

 

indemnification for 100% of the amount of ultimate loss sustained

 

under personal protection insurance coverages in excess of the

 

following amounts in each loss occurrence:

 

     (a) For a motor vehicle accident policy issued or renewed

 

before July 1, 2002, $250,000.00.

 

     (b) For a motor vehicle accident policy issued or renewed

 

during the period July 1, 2002 to June 30, 2003, $300,000.00.

 

     (c) For a motor vehicle accident policy issued or renewed

 

during the period July 1, 2003 to June 30, 2004, $325,000.00.

 

     (d) For a motor vehicle accident policy issued or renewed

 

during the period July 1, 2004 to June 30, 2005, $350,000.00.

 

     (e) For a motor vehicle accident policy issued or renewed

 

during the period July 1, 2005 to June 30, 2006, $375,000.00.

 

     (f) For a motor vehicle accident policy issued or renewed

 

during the period July 1, 2006 to June 30, 2007, $400,000.00.

 

     (g) For a motor vehicle accident policy issued or renewed

 

during the period July 1, 2007 to June 30, 2008, $420,000.00.

 

     (h) For a motor vehicle accident policy issued or renewed

 

during the period July 1, 2008 to June 30, 2009, $440,000.00.

 

     (i) For a motor vehicle accident policy issued or renewed

 

during the period July 1, 2009 to June 30, 2010, $460,000.00.

 

     (j) For a motor vehicle accident policy issued or renewed

 

during the period July 1, 2010 to June 30, 2011, $480,000.00.

 

     (k) For a motor vehicle accident policy issued or renewed

 

during the period July 1, 2011 to June 30, 2013, $500,000.00.

 

Beginning July 1, 2013, this $500,000.00 amount shall be increased

 

biennially on July 1 of each odd-numbered year, for policies issued

 

or renewed before July 1 of the following odd-numbered year, by the

 

lesser of 6% or the consumer price index, and rounded to the

 

nearest $5,000.00. This biennial adjustment shall be calculated by

 

the association by January 1 of the year of its July 1 effective

 

date.

 

     (3) An insurer may withdraw from the association only upon

 

ceasing to write insurance that provides the security required by

 

section 3101(1) in this state.

 

     (4) An insurer whose membership in the association has been

 

terminated by withdrawal shall continue to be bound by the plan of

 

operation, and upon withdrawal, all unpaid premiums that have been

 

charged to the withdrawing member are payable as of the effective

 

date of the withdrawal.

 

     (5) An unsatisfied net liability to the association of an

 

insolvent member shall be assumed by and apportioned among the

 

remaining members of the association as provided in the plan of

 

operation. The association has all rights allowed by law on behalf

 

of the remaining members against the estate or funds of the

 

insolvent member for sums due the association.

 

     (6) If a member has been merged or consolidated into another

 

insurer or another insurer has reinsured a member's entire business

 

that provides the security required by section 3101(1) in this

 

state, the member and successors in interest of the member remain

 

liable for the member's obligations.

 

     (7) The association shall do all of the following on behalf of

 

the members of the association:

 

     (a) Assume 100% of all liability as provided in subsection

 

(2).

 

     (b) Establish procedures by which members shall promptly

 

report to the association each claim that, on the basis of the

 

injuries or damages sustained, may reasonably be anticipated to

 

involve the association if the member is ultimately held legally

 

liable for the injuries or damages. Solely for the purpose of

 

reporting claims, the member shall in all instances consider itself

 

legally liable for the injuries or damages. The member shall also

 

advise the association of subsequent developments likely to

 

materially affect the interest of the association in the claim.

 

     (c) Maintain relevant loss and expense data relative to all

 

liabilities of the association and require each member to furnish

 

statistics, in connection with liabilities of the association, at

 

the times and in the form and detail as may be required by the plan

 

of operation.

 

     (d) In a manner provided for in the plan of operation,

 

calculate and charge to members of the association a total premium

 

sufficient to cover the expected losses and expenses of the

 

association that the association will likely incur during the

 

period for which the premium is applicable. The premium shall

 

include an amount to cover incurred but not reported losses for the

 

period and may be adjusted for any excess or deficient premiums

 

from previous periods. Excesses or deficiencies from previous

 

periods may be fully adjusted in a single period or may be adjusted

 

over several periods in a manner provided for in the plan of

 

operation. Each member shall be charged an amount equal to that

 

member's total written car years of insurance providing the

 

security required by section 3101(1) or 3103(1), or both, written

 

in this state during the period to which the premium applies,

 

multiplied by the average premium per car. The average premium per

 

car shall be the total premium calculated divided by the total

 

written car years of insurance providing the security required by

 

section 3101(1) or 3103(1) written in this state of all members

 

during the period to which the premium applies. A member shall be

 

charged a premium for a historic vehicle that is insured with the

 

member of 20% of the premium charged for a car insured with the

 

member. A member shall not be charged a premium for a car insured

 

with a member under the low-cost insurance pilot program under

 

chapter 32A. As used in this subdivision:

 

     (i) "Car" includes a motorcycle but does not include a historic

 

vehicle.

 

     (ii) "Historic vehicle" means a vehicle that is a registered

 

historic vehicle under section 803a or 803p of the Michigan vehicle

 

code, 1949 PA 300, MCL 257.803a and 257.803p.

 

     (e) Require and accept the payment of premiums from members of

 

the association as provided for in the plan of operation. The

 

association shall do either of the following:

 

     (i) Require payment of the premium in full within 45 days after

 

the premium charge.

 

     (ii) Require payment of the premiums to be made periodically to

 

cover the actual cash obligations of the association.

 

     (f) Receive and distribute all sums required by the operation

 

of the association.

 

     (g) Establish procedures for reviewing claims procedures and

 

practices of members of the association. If the claims procedures

 

or practices of a member are considered inadequate to properly

 

service the liabilities of the association, the association may

 

undertake or may contract with another person, including another

 

member, to adjust or assist in the adjustment of claims for the

 

member on claims that create a potential liability to the

 

association and may charge the cost of the adjustment to the

 

member.

 

     (8) In addition to other powers granted to it by this section,

 

the association may do all of the following:

 

     (a) Sue and be sued in the name of the association. A judgment

 

against the association shall not create any direct liability

 

against the individual members of the association. The association

 

may provide for the indemnification of its members, members of the

 

board of directors of the association, and officers, employees, and

 

other persons lawfully acting on behalf of the association.

 

     (b) Reinsure all or any portion of its potential liability

 

with reinsurers licensed to transact insurance in this state or

 

approved by the commissioner.

 

     (c) Provide for appropriate housing, equipment, and personnel

 

as may be necessary to assure the efficient operation of the

 

association.

 

     (d) Pursuant to the plan of operation, adopt reasonable rules

 

for the administration of the association, enforce those rules, and

 

delegate authority, as the board considers necessary to assure the

 

proper administration and operation of the association consistent

 

with the plan of operation.

 

     (e) Contract for goods and services, including independent

 

claims management, actuarial, investment, and legal services, from

 

others within or without this state to assure the efficient

 

operation of the association.

 

     (f) Hear and determine complaints of a company or other

 

interested party concerning the operation of the association.

 

     (g) Perform other acts not specifically enumerated in this

 

section that are necessary or proper to accomplish the purposes of

 

the association and that are not inconsistent with this section or

 

the plan of operation.

 

     (9) A board of directors is created, hereinafter referred to

 

as the board, which shall be is responsible for the operation of

 

the association consistent with the plan of operation and this

 

section.

 

     (10) The plan of operation shall provide for all of the

 

following:

 

     (a) The establishment of necessary facilities.

 

     (b) The management and operation of the association.

 

     (c) Procedures to be utilized in charging premiums, including

 

adjustments from excess or deficient premiums from prior periods.

 

     (d) Procedures governing the actual payment of premiums to the

 

association.

 

     (e) Reimbursement of each member of the board by the

 

association for actual and necessary expenses incurred on

 

association business.

 

     (f) The investment policy of the association.

 

     (g) Any other matters required by or necessary to effectively

 

implement this section.

 

     (11) Each board shall include members that would contribute a

 

total of not less than 40% of the total premium calculated pursuant

 

to subsection (7)(d). Each director shall be entitled to 1 vote.

 

The initial term of office of a director shall be 2 years.

 

     (12) As part of the plan of operation, the board shall adopt

 

rules providing for the composition and term of successor boards to

 

the initial board, consistent with the membership composition

 

requirements in subsections (11) and (13). Terms of the directors

 

shall be staggered so that the terms of all the directors do not

 

expire at the same time and so that a director does not serve a

 

term of more than 4 years.

 

     (13) The board shall consist of 5 directors, and the

 

commissioner shall be an ex officio member of the board without

 

vote.

 

     (14) Each director shall be appointed by the commissioner and

 

shall serve until that member's successor is selected and

 

qualified. The chairperson of the board shall be elected by the

 

board. A vacancy on the board shall be filled by the commissioner

 

consistent with the plan of operation.

 

     (15) After the board is appointed, the board shall meet as

 

often as the chairperson, the commissioner, or the plan of

 

operation shall require, or at the request of any 3 members of the

 

board. The chairperson shall retain the right to vote on all

 

issues. Four members of the board constitute a quorum.

 

     (16) An annual report of the operations of the association in

 

a form and detail as may be determined by the board shall be

 

furnished to each member.

 

     (17) Not more than 60 days after the initial organizational

 

meeting of the board, the board shall submit to the commissioner

 

for approval a proposed plan of operation consistent with the

 

objectives and provisions of this section, which shall provide for

 

the economical, fair, and nondiscriminatory administration of the

 

association and for the prompt and efficient provision of

 

indemnity. If a plan is not submitted within this 60-day period,

 

then the commissioner, after consultation with the board, shall

 

formulate and place into effect a plan consistent with this

 

section.

 

     (18) The plan of operation, unless approved sooner in writing,

 

shall be considered to meet the requirements of this section if it

 

is not disapproved by written order of the commissioner within 30

 

days after the date of its submission. Before disapproval of all or

 

any part of the proposed plan of operation, the commissioner shall

 

notify the board in what respect the plan of operation fails to

 

meet the requirements and objectives of this section. If the board

 

fails to submit a revised plan of operation that meets the

 

requirements and objectives of this section within the 30-day

 

period, the commissioner shall enter an order accordingly and shall

 

immediately formulate and place into effect a plan consistent with

 

the requirements and objectives of this section.

 

     (19) The proposed plan of operation or amendments to the plan

 

of operation are subject to majority approval by the board,

 

ratified by a majority of the membership having a vote, with voting

 

rights being apportioned according to the premiums charged in

 

subsection (7)(d) and are subject to approval by the commissioner.

 

     (20) Upon approval by the commissioner and ratification by the

 

members of the plan submitted, or upon the promulgation of a plan

 

by the commissioner, each insurer authorized to write insurance

 

providing the security required by section 3101(1) in this state,

 

as provided in this section, is bound by and shall formally

 

subscribe to and participate in the plan approved as a condition of

 

maintaining its authority to transact insurance in this state.

 

     (21) The association is subject to all the reporting, loss

 

reserve, and investment requirements of the commissioner to the

 

same extent as would a member of the association.

 

     (22) Premiums charged members by the association shall be

 

recognized in the rate-making procedures for insurance rates in the

 

same manner that expenses and premium taxes are recognized.

 

     (23) The commissioner or an authorized representative of the

 

commissioner may visit the association at any time and examine any

 

and all the association's affairs.

 

     (24) The association does not have liability for losses

 

occurring before July 1, 1978.

 

     (25) As used in this section:

 

     (a) "Consumer price index" means the percentage of change in

 

the consumer price index for all urban consumers in the United

 

States city average for all items for the 24 months prior to

 

October 1 of the year prior to the July 1 effective date of the

 

biennial adjustment under subsection (2)(k) as reported by the

 

United States department of labor, bureau of labor statistics, and

 

as certified by the commissioner.

 

     (b) "Motor vehicle accident policy" means a policy providing

 

the coverages required under section 3101(1).

 

     (c) "Ultimate loss" means the actual loss amounts that a

 

member is obligated to pay and that are paid or payable by the

 

member, and do not include claim expenses. An ultimate loss is

 

incurred by the association on the date that the loss occurs.

 

     Sec. 3107. (1) Except as provided in subsection (2), personal

 

Personal protection insurance benefits are payable for the

 

following:

 

     (a) Allowable Except as provided in subsection (2), allowable

 

expenses consisting of all reasonable charges incurred for

 

reasonably necessary products, services, and accommodations for an

 

injured person's care, recovery, or rehabilitation. Allowable

 

expenses within personal protection insurance coverage shall not

 

include charges for a hospital room in excess of a reasonable and

 

customary charge for semiprivate accommodations except if the

 

injured person requires special or intensive care, or for funeral

 

and burial expenses in the amount set forth in the policy which

 

shall not be less than $1,750.00 or more than $5,000.00.

 

     (b) Work Except as provided in subsection (3), work loss

 

consisting of loss of income from work an injured person would have

 

performed during the first 3 years after the date of the accident

 

if he or she had not been injured. Work loss does not include any

 

loss after the date on which the injured person dies. Because the

 

benefits received from personal protection insurance for loss of

 

income are not taxable income, the benefits payable for such loss

 

of income shall be reduced 15% unless the claimant presents to the

 

insurer in support of his or her claim reasonable proof of a lower

 

value of the income tax advantage in his or her case, in which case

 

the lower value shall apply. Beginning March 30, 1973 for the

 

period beginning October 1, 2010 through September 30, 2011, the

 

benefits payable for work loss sustained in a single 30-day period

 

and the income earned by an injured person for work during the same

 

period together shall not exceed $1,000.00 $4,929.00, which maximum

 

shall apply pro rata to any lesser period of work loss. Beginning

 

October 1, 1974 2011, the maximum shall be adjusted annually to

 

reflect changes in the cost of living under rules prescribed by the

 

commissioner but any change in the maximum shall apply only to

 

benefits arising out of accidents occurring subsequent to the date

 

of change in the maximum.

 

     (c) Expenses not exceeding $20.00 per day, reasonably incurred

 

in obtaining ordinary and necessary services in lieu of those that,

 

if he or she had not been injured, an injured person would have

 

performed during the first 3 years after the date of the accident,

 

not for income but for the benefit of himself or herself or of his

 

or her dependent.

 

     (2) An insured covered under a low-cost automobile insurance

 

policy under the pilot program under chapter 32A shall elect

 

coverage for allowable expenses consisting of all reasonable

 

charges incurred up to a maximum of $50,000.00 or $100,000.00 as

 

selected by the insured for reasonably necessary products,

 

services, and accommodations for an injured person's care,

 

recovery, or rehabilitation. All of the following apply to a low-

 

cost automobile insurance policy under the pilot program under

 

chapter 32A:

 

     (a) Coverage limits are provided on a per loss occurrence

 

basis.

 

     (b) Coverage applies to benefits payable as follows:

 

     (i) To the insured named in the policy, the insured's spouse,

 

and any relative of either domiciled in the same household.

 

     (ii) A person not described in subparagraph (i) who is an

 

occupant of the automobile. Section 3114(4) applies to coverage

 

under this subparagraph to an occupant of the automobile.

 

     (c) Regardless of the number of motor vehicles insured or

 

insurers providing security, or the provisions of any other law

 

providing for direct benefits without regard to fault for motor or

 

any other vehicle accidents, a person shall not recover duplicate

 

benefits for the same expense or loss incurred.

 

     (3) (2) A person who is 60 years of age or older and in the

 

event of an accidental bodily injury would not be eligible to

 

receive work loss benefits under subsection (1)(b) may waive

 

coverage for work loss benefits by signing a waiver on a form

 

provided by the insurer. An insurer shall offer a reduced premium

 

rate to a person who waives coverage under this subsection for work

 

loss benefits. Waiver of coverage for work loss benefits applies

 

only to work loss benefits payable to the person or persons who

 

have signed the waiver form.

 

     Sec. 3114. (1) Except as provided in subsections (2), (3), and

 

(5), a personal protection insurance policy described in section

 

3101(1) applies to accidental bodily injury to the person named in

 

the policy, the person's spouse, and a relative of either domiciled

 

in the same household, if the injury arises from a motor vehicle

 

accident. A personal injury insurance policy described in section

 

3103(2) applies to accidental bodily injury to the person named in

 

the policy, the person's spouse, and a relative of either domiciled

 

in the same household, if the injury arises from a motorcycle

 

accident. When personal protection insurance benefits described in

 

section 3107(1), or personal injury benefits described in section

 

3103(2), are payable to or for the benefit of an injured person

 

under his or her own policy and would also be payable under the

 

policy of his or her spouse, relative, or relative's spouse, the

 

injured person's insurer shall pay all of the benefits and is not

 

entitled to recoupment from the other insurer. The limit of

 

liability for 2 or more motor vehicles under 1 policy or for 2 or

 

more policies shall not be added together, combined, or stacked to

 

determine the limit of insurance coverage available for each

 

injured person covered under the policy.

 

     (2) A person suffering accidental bodily injury while an

 

operator or a passenger of a motor vehicle operated in the business

 

of transporting passengers shall receive the personal protection

 

insurance benefits to which the person is entitled from the insurer

 

of the motor vehicle. This subsection does not apply to a passenger

 

in the following, unless that passenger is not entitled to personal

 

protection insurance benefits under any other policy:

 

     (a) A school bus, as defined by the department of education,

 

providing transportation not prohibited by law.

 

     (b) A bus operated by a common carrier of passengers certified

 

by the department of transportation.

 

     (c) A bus operating under a government sponsored

 

transportation program.

 

     (d) A bus operated by or providing service to a nonprofit

 

organization.

 

     (e) A taxicab insured as prescribed in section 3101 or 3102.

 

     (f) A bus operated by a canoe or other watercraft, bicycle, or

 

horse livery used only to transport passengers to or from a

 

destination point.

 

     (3) An employee, his or her spouse, or a relative of either

 

domiciled in the same household, who suffers accidental bodily

 

injury while an occupant of a motor vehicle owned or registered by

 

the employer, shall receive personal protection insurance benefits

 

to which the employee is entitled from the insurer of the furnished

 

vehicle.

 

     (4) Except as provided in subsections (1) to (3), a person

 

suffering accidental bodily injury arising from a motor vehicle

 

accident while an occupant of a motor vehicle shall claim personal

 

protection insurance benefits from insurers in the following order

 

of priority:

 

     (a) The insurer of the owner or registrant of the vehicle

 

occupied.

 

     (b) The insurer of the operator of the vehicle occupied.

 

     (5) A person suffering accidental bodily injury arising from a

 

motor vehicle accident which shows evidence of the involvement of a

 

motor vehicle while an operator or passenger of a motorcycle shall

 

claim personal protection insurance benefits from insurers in the

 

following order of priority:

 

     (a) The insurer of the owner or registrant of the motor

 

vehicle involved in the accident.

 

     (b) The insurer of the operator of the motor vehicle involved

 

in the accident.

 

     (c) The motor vehicle insurer of the operator of the

 

motorcycle involved in the accident.

 

     (d) The motor vehicle insurer of the owner or registrant of

 

the motorcycle involved in the accident.

 

     (6) If 2 or more insurers are in the same order of priority to

 

provide personal protection insurance benefits, under subsection

 

(5), an insurer paying benefits due is entitled to partial

 

recoupment from the other insurers in the same order of priority,

 

together with a reasonable amount of partial recoupment of the

 

expense of processing the claim, in order to accomplish equitable

 

distribution of the loss among all of the insurers.

 

     Sec. 3115. (1) Except as provided in subsection (1) of section

 

3114 3114(1), a person suffering accidental bodily injury while not

 

an occupant of a motor vehicle shall claim personal protection

 

insurance benefits from insurers in the following order of

 

priority:

 

     (a) Insurers of owners or registrants of motor vehicles

 

involved in the accident.

 

     (b) Insurers of operators of motor vehicles involved in the

 

accident.

 

     (2) When 2 or more insurers are in the same order of priority

 

to provide personal protection insurance benefits an insurer paying

 

benefits due is entitled to partial recoupment from the other

 

insurers in the same order of priority, together with a reasonable

 

amount of partial recoupment of the expense of processing the

 

claim, in order to accomplish equitable distribution of the loss

 

among such insurers.

 

     (3) A limit upon the amount of personal protection insurance

 

benefits available because of accidental bodily injury to 1 person

 

arising from 1 motor vehicle accident shall be determined without

 

regard to the number of policies applicable to the accident.

 

     (4) The limit of liability for 2 or more motor vehicles under

 

1 policy or for 2 or more policies shall not be added together,

 

combined, or stacked to determine the limit of insurance coverage

 

available for each injured person covered under the policy.

 

                             CHAPTER 32A

 

             LOW-COST AUTOMOBILE INSURANCE PILOT PROGRAM

 

     Sec. 3275. As used in this chapter:

 

     (a) "Automobile insurance" means that term as defined in

 

section 3303.

 

     (b) "Pilot program" means the low-cost automobile insurance

 

pilot program established under this chapter.

 

     (c) "Qualified applicant" means an individual who meets all of

 

the following requirements:

 

     (i) Resides in a household with a gross annual household income

 

that does not exceed 300% of the federal poverty level.

 

     (ii) Is 21 years of age or older and has been continuously

 

licensed to drive an automobile for a period of 3 years. It is not

 

necessary that the 3-year period immediately precede the

 

application for a policy under this chapter, unless the applicant

 

was not licensed for a period because of the revocation of the

 

license.

 

     (iii) Has not had in the preceding 3 years more than 1 of

 

either, but not both, of the following:

 

     (A) A property-damage-only accident in which he or she was

 

substantially at-fault.

 

     (B) An insurance eligibility point for a moving violation, as

 

described in section 2103.

 

     (iv) Has not had, in the preceding 3 years, a substantially at-

 

fault accident involving bodily injury or death.

 

     (v) Has not had a conviction for driving under the influence.

 

     (vi) Has not had a conviction for a moving violation in a work

 

zone.

 

     (vii) Has not had on his or her motor vehicle record a felony

 

or misdemeanor conviction relating to the operation of a motor

 

vehicle.

 

     (viii) Is not a college student claimed as a dependent of

 

another person for federal or state income tax purposes.

 

     Sec. 3276. (1) The commissioner shall establish a low-cost

 

automobile insurance pilot program in 1 county in the state that

 

has a city located in the county with a population of 600,000 or

 

more.

 

     (2) All of the provisions of this act that apply to private

 

passenger nonfleet automobile insurance apply to this chapter

 

unless expressly provided otherwise or unless there is a conflict

 

with a provision in this chapter.

 

     (3) Notwithstanding any other provision of law, the

 

commissioner may employ legal, actuarial, accounting, or other

 

counsel as he or she considers necessary to assist in his or her

 

responsibilities under this chapter.

 

     (4) The commissioner shall promote and publicize the existence

 

of the pilot program in the regions where the pilot program is

 

offered.

 

     Sec. 3277. A low-cost automobile insurance policy under the

 

pilot program shall have all of the following attributes:

 

     (a) Provide residual liability coverage as required under

 

section 3131.

 

     (b) Have an initial term of 6 months, renewable for subsequent

 

6-month terms.

 

     (c) Cover the individual named in the policy and any other

 

individual using the covered automobile if the use is with the

 

named insured's permission, express or implied, and within the

 

scope of that permission. However, the policy shall not provide

 

automobile liability coverage when the automobile is operated by a

 

member of the named insured's household who does not satisfy the

 

requirements in section 3275(c).

 

     (d) Provide coverage described in this section for the

 

operation of an automobile with a value that does not exceed

 

$20,000.00. The value of the automobile is the value given to the

 

automobile by the secretary of state in assessing vehicle

 

registration fees.

 

     (e) Provide personal protection insurance coverage for

 

allowable expenses as required under section 3107(2).

 

     (f) Provide personal protection insurance coverage for work

 

loss as required under section 3107(1)(b).

 

     Sec. 3278. (1) An insured under a low-cost automobile

 

insurance policy under the pilot program may be offered a premium

 

installment option under which the insured may pay a specified

 

portion or portions of the premium for the low-cost automobile

 

insurance policy on a periodic basis. A premium for a low-cost

 

automobile insurance policy shall not be financed in any other

 

manner.

 

     (2) Commencing on April 1, 2012, and annually thereafter, the

 

automobile insurers who are participating in the pilot program

 

shall submit the loss and expense data from low-cost automobile

 

insurance policies and a proposed rate for the low-cost automobile

 

insurance policy for the pilot program, to the commissioner.

 

     Sec. 3279. A qualified applicant shall certify that

 

representations made in the application and in documents submitted

 

to demonstrate eligibility for the low-cost automobile insurance

 

policy are true and correct and contain no material

 

misrepresentations or omissions of fact to the best knowledge and

 

belief of the applicant.

 

     Sec. 3280. (1) An automobile insurer shall provide to a

 

qualified applicant for a low-cost automobile insurance policy

 

under this chapter a notice relating to coverage under the policy.

 

The notice shall be provided in a separate document at the time of

 

application and include the following statement in 14-point

 

boldfaced type or font:

 

                              "WARNING

 

     INSURANCE COVERAGE PROVIDED IN THE POLICY YOU ARE BUYING

 

CONTAINS MEDICAL PERSONAL PROTECTION COVERAGES WITH REDUCED

 

MAXIMUMS.

 

     THE MAXIMUMS APPLY TO ANY ONE OCCURRENCE REGARDLESS OF HOW

 

MANY PEOPLE MAY BE INJURED.

 

     ALSO, ALL LIABILITY COVERAGE IS VOID - NO ONE IS INSURED AND

 

OWNERS OF THE INSURED AUTOMOBILE AND OTHERS LEGALLY RESPONSIBLE FOR

 

THE ACTS OF THE DRIVER OF THE INSURED AUTOMOBILE REMAIN FULLY

 

PERSONALLY LIABLE IF THE INSURED AUTOMOBILE IS OPERATED BY ANY

 

OTHER DRIVER IN YOUR HOUSEHOLD WHO:

 

     (A) IS UNDER 21 YEARS OF AGE.

 

     (B) HAS LESS THAN 3 YEARS OF CONTINUOUSLY LICENSED DRIVING

 

EXPERIENCE.

 

     (C) HAS HAD IN THE PREVIOUS 3 YEARS MORE THAN ONE OF EITHER,

 

OR BOTH, OF THE FOLLOWING:

 

     (I) A PROPERTY-DAMAGE-ONLY ACCIDENT IN WHICH THE DRIVER WAS

 

SUBSTANTIALLY AT-FAULT.

 

     (II) AN INSURANCE ELIGIBILITY POINT FOR A MOVING VIOLATION.

 

     (D) HAS HAD IN THE PREVIOUS 3 YEARS A SUBSTANTIALLY AT-FAULT

 

ACCIDENT INVOLVING BODILY INJURY OR DEATH.

 

     (E) HAS HAD A CONVICTION FOR DRIVING UNDER THE INFLUENCE.

 

     (F) HAS HAD A CONVICTION FOR A MOVING VIOLATION IN A WORK

 

ZONE.

 

     (G) HAS HAD A FELONY OR MISDEMEANOR CONVICTION FROM A

 

VIOLATION OF THE VEHICLE CODE ON HIS OR HER MOTOR VEHICLE RECORD.".

 

     (2) The signature of the applicant and insured on the

 

disclosure form provided under subsection (1) creates a conclusive

 

presumption that the insurer has complied with the disclosure

 

requirements of this section.

 

     Sec. 3281. The sale of a low-cost automobile insurance policy

 

under this chapter shall not be conditioned on the purchase of any

 

other product or service.

 

     Sec. 3282. (1) A low-cost automobile insurance policy issued

 

under the pilot program may be canceled only for nonpayment of

 

premium.

 

     (2) A low-cost automobile insurance policy issued under the

 

pilot program may be rescinded only for fraud or material

 

misrepresentation affecting the policy or the insured.

 

     (3) A low-cost automobile insurance policy is subject to

 

nonrenewal only for the following reasons:

 

     (a) A substantial increase in the hazard insured against.

 

     (b) The insured is no longer a qualified applicant.

 

     Sec. 3283. (1) An insurer that issues a low-cost automobile

 

insurance policy under the pilot program may offer the insured any

 

other additional type of automobile insurance coverage such as

 

uninsured motorists coverage or collision coverage that is not

 

available under the low-cost automobile insurance policy.

 

     (2) An insured under a low-cost automobile insurance policy

 

under the pilot program shall not purchase or maintain any

 

automobile personal protection insurance coverage other than under

 

a low-cost automobile insurance policy for any additional vehicles

 

in the insured's household.

 

     Sec. 3284. (1) The pilot program may commence operations on

 

January 1, 2012, and shall be fully operational by August 1, 2012.

 

     (2) The commissioner may issue an order or promulgate rules

 

under the administrative procedures act of 1969, 1969 PA 306, MCL

 

24.201 to 24.328, to implement the provisions of this chapter.

 

     Sec. 3285. A low-cost automobile insurance policy issued under

 

the pilot program shall satisfy all financial responsibility

 

requirements imposed under this act.

 

     Sec. 3286. Beginning August 1, 2014, the commissioner shall

 

report annually to the legislature on the status of the pilot

 

program.

 

     Sec. 3287. This chapter does not apply on and after August 1,

 

2017.