NO FAULT; INCARCERATION LAPSE S.B. 282 (S-2):
SUMMARY AS PASSED BY THE SENATE
Senate Bill 282 (Substitute S-2 as passed by the Senate)
Sponsor: Senator Sylvia Santana
Committee: Finance, Insurance, and Consumer Protection
Date Completed: 2-22-24
CONTENT
The bill would amend the Insurance Code to specify that an automobile insurer could
not refuse to insure or modify coverage and costs of insurance solely because of an
individual's failure to maintain insurance while incarcerated.
The bill is tie-barred to Senate Bills 708 and 709, which would specify that automobile
insurers' underwriting rules concerning an individual's failure to maintain insurance coverage
during the six-month period before application would not apply to an individual who had a
lapse in coverage due to incarceration.
Generally, unless otherwise specified, the owner or registrant of a registered motor vehicle
must maintain personal protection insurance and property protection insurance as required
under Chapter 31 (Motor Vehicle Personal and Property Protection), and residual liability
insurance.
The bill would prohibit an automobile insurer from refusing to insure, refusing to continue to
insure, limiting coverage available to, charging a reinstatement fee for, or increasing the
premiums for automobile insurance for an individual who was an eligible person solely because
the individual failed to maintain insurance for a vehicle owned by the individual during the
six-month period preceding the application if the individual provided the insurer a certified
statement. The individual applying for insurance would have to certify on a form provided by
the insurer that the individual was a prisoner in a correctional facility and was released from
imprisonment within six-months before the application for insurance, and that to the
individual's knowledge, the vehicle was not driven or moved during the six-months preceding
the application. "Correctional facility" would mean a facility or institution which is maintained
and operated by the Department of Corrections.
Proposed MCL 500.2116c
BRIEF RATIONALE
Generally, an owner of a registered motor vehicle must maintain insurance coverage on the
vehicle or face certain penalties for a lapse in coverage. According to testimony before the
Senate Committee on Finance, Insurance, and Consumer Protection, it is often not possible
for many individuals to maintain coverage while incarcerated, and once released, these
individuals need reliable methods of transportation to fulfill parole or release requirements
such as securing employment. It has been suggested that the penalization for not maintaining
coverage is a barrier to reentering society and should be eliminated for the recently
incarcerated.
Legislative Analyst: Nathan Leaman
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FISCAL IMPACT
The bill would have an indeterminate fiscal impact on State government and no fiscal impact
on local units of government. An insurer who violated the bill would be afforded a hearing
before the Director of the Department of Insurance and Financial Services. The cost of
hearings and associated administrative expenses likely would be sufficiently met by existing
appropriations. If the Director determined that a violation of the Act had occurred, the Director
could impose a civil fine of not more than $1,000 per violation, or of not more than $5,000 if
it were determined that the insurer should have reasonably known the insurer was in violation
of the Act. There is a $50,000 cap on civil fines ordered by the Director for these violations.
The revenue collected from civil fines is distributed to local libraries and county law libraries.
Fiscal Analyst: Joe Carrasco, Jr.
Elizabeth Raczkowski
SAS\S2324\s282sb
This analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations and does not constitute an official
statement of legislative intent.
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Statutes affected:
Substitute (S-1): 500.2118, 500.2120
Substitute (S-2): 500.100, 500.8302
Senate Introduced Bill: 500.2118, 500.2120
As Passed by the Senate: 500.100, 500.8302