DEPARTMENT OF INSURANCE

Office of the Commissioner

Statutory Authority: 18 Delaware Code, Sections 314, 2304(26) and 2741 and 21 Delaware Code, Section 2118 (18 Del.C. §§314, 2304(26) and 2741; 21 Del.C. §2118)

18 DE Admin. Code 606

FINAL

REGULATORY IMPLEMENTING ORDER

606 Proof of Automobile Insurance

I. SUMMARY OF THE EVIDENCE AND INFORMATION SUBMITTED

In the February 1, 2020 edition of the Register of Regulations at 23 DE Reg. 628, the Commissioner of the Delaware Department of Insurance (Commissioner), in coordination with the Delaware Division of Motor Vehicles (DMV), published a notice of intent to amend Regulation 606 Proof of Automobile Insurance to:

• Update and clarify requirements concerning insurer submission of notices of automobile insurance cancellation and termination; and

• Make grammatical and formatting edits throughout the regulation.

The Delaware Code authority for the regulation is 18 Del.C. §§311, 2304(26) and 2741; and 21 Del.C. §2118.

The Department solicited written comments from the public for thirty (30) days as mandated by the Administrative Procedures Act at 29 Del.C. §10118(a). The Department did not hold a public hearing on the proposal.

The Department received comments from two commenters that are on file with the Department.

Both commenters asked why the Department proposed to reduce the amount of time insurers have to provide coverage information to the DMV from 30 to 21 days. One commenter went on to opine that the DMV rarely, if ever, requires insurers to provide the information required in 18 DE Admin. Code §606-9.1, further stating that, depending on how recently the policy in question was issued, an insurer may not be able to provide that information within 21 days because it sometimes takes longer than that for an insurer to collect and process all relevant information.

This commenter also opined that the amendatory language at subsection 8.1 changes the existing requirement of insurers to report cancellations or terminations of policies only for those policies cancelled or terminated within six months of issuance to now require insurers to report that information within six months of issuance regardless of when the cancellation or termination occurs. The commenter pointed out that if a policy is cancelled or terminated two years after issuance, it is impossible for the insurer to report that information within six months of policy issuance. The requester opined that the Department intended to retain the original six-months-from-issuance limitation on the reporting and asked the Department to re-word the amendatory language to make that clear.

Subsections 8.2.2 and 9.1.1 and section 12.0 require insurers to provide verification of insurance coverage to the DMV on forms specified by the DMV. One of the two commenters expressed concern regarding lack of notice of changes to DMV forms, explaining that some state departments of motor vehicles make changes to these types of forms without providing insurers any notice or sufficient lead time to begin using new or amended forms. The commenter requested that the Department consider adding language that provides for at least six months’ notice before insurers can be required to begin using a new form.

II. FINDINGS OF FACTS

1. The proposed amendments to Regulation 606 Proof of Automobile Insurance update and clarify requirements concerning insurer submission of notices of automobile insurance cancellation and termination and make needed grammatical and formatting edits throughout the regulation.

2. The Department declines to amend the regulation on adoption in response to the comment concerning reducing the reporting timeframe set forth in 18 DE Admin. Code §606-9.1 from 30 to 21 days. Reducing the reporting timeframe from 30 to 21 days makes the Regulation consistent with the requirement at 18 Del.C. §2304(26) that insurers respond to Department inquiries within 21 days, and may help speed up the DMV’s processing time for audits.

In fact, on adoption, the Department is changing the reporting timeframe from 30 to 21 days at subsection 10.2 to make that provision consistent with the rest of this regulation and with 18 Del.C. §2304(26).

The Delaware Compulsory Insurance Law, 21 Del.C. §2118, prohibits an owner of a motor vehicle required to be registered in Delaware from operating or authorizing “any other person to operate such vehicle unless the owner has insurance on such motor vehicle” with specified minimum insurance coverage limits. The DMV audits Delaware motorists to ensure that they have had continuous coverage and are therefore in compliance with the Delaware Compulsory Insurance Law as of the date that DMV conducts the audit (see 21 Del.C. §2118(q) for the auditing requirement). If the driver cannot provide proof of insurance because, when audited, the driver’s vehicle was uninsured, then the DMV suspends the vehicle’s registration and the driver’s licenses of all listed owners.

The DMV uses Form FR-19 to gather audit information. Form FR-19 is typically issued by the insurance carrier to the driver. However, the form’s instructions also indicate that the form may be submitted to the DMV by insurance agents and insurers on behalf of their customers, and the regulation at subsection 8.1 requires insurers to do so if the insurer has canceled the policy within 6 months of the date of initial issuance. Reducing the amount of time by which insurers are required to provide proof of coverage to DMV will help DMV timely audit Delaware drivers and may help ensure that those operating on the road are able to withstand the financial impact of any accidents that may occur.

3. The Department also declines to amend the regulation on adoption to require the DMV to give insurers some period of notice regarding changes to reporting forms. Such an amendment is substantive in nature and cannot be made without additional public notice and comment pursuant to the Administrative Procedures Act at 29 Del.C. Ch. 101.

4. On adoption, the Department has determined to amend 18 DE Admin. Code §606-8.1 as suggested by the commenter. The Department did not intend the regulation as amended to change the meaning of the code provision as that provision appears to have been interpreted by the commenter, but rather, to simply rewrite the code in active voice. The Administrative Procedures Act at 29 Del.C. §10118(c) allows non-substantive changes to a proposal as a result of public comments on adoption. Accordingly, on adoption, the Department will remove “, then” to restore the meaning of the original regulation. In its final, published form, the subsection will state, “When an insurer determines to cancel or terminate a personal lines insurance policy and that cancellation or termination is final under 18 Del.C. §3904(a) within 6 months of the original date of issuance, the insurer shall file a Notice of Cancellation with the Division of Motor Vehicles.”

5. The Department is also updating code cross references in subsection 1 and addressing typographical errors in the definition of “personal lines auto coverage” and in subsections 9.1.1 and 12.1, as permitted under the Administrative Procedures Act at 29 Del.C. §10113(4).

6. The Department met the public notice requirements of the Administrative Procedures Act.

7. The Commissioner finds that it is appropriate to adopt the amendments to 18 DE Admin. Code 606 as proposed in the February 1, 2020 Register of Regulations with further amendments in accordance with this Final Order, for the reasons set forth in this Final Order and in the proposal.

III. DECISION TO ADOPT THE PROPOSED AMENDMENTS TO REGULATION 606

For the foregoing reasons, the Commissioner concludes that it is appropriate to adopt the proposed amendments to 18 DE Admin. Code 606, as discussed in the above Findings of Fact for the reasons set forth above and in the proposal.

IV. EFFECTIVE DATE OF ORDER

The actions referred to hereinabove were taken by the Commissioner pursuant to 18 Del.C. §§311, 2304(26) and 2741 and 21 Del.C. §2118 on the date indicated below. The effective date of this Order shall be ten (10) days from the date this Order is published in the Delaware Register of Regulations. The effective date of the Regulation shall be as stated in the text of the Regulation.

IT IS SO ORDERED.

The 13th day of April, 2020. Trinidad Navarro

Commissioner, Delaware Department of Insurance

606 Proof of Automobile Insurance

1.0 Authority

This regulation is adopted under the authority of 18 Del.C. §§[314311], 2304(26) and 2741; 21 Del.C. §2118(o), and adopted in cooperation with the Division of Motor Vehicles. This regulation is promulgated under the provisions of the Administrative Procedures Act, 29 Del.C. Ch.101.

11 DE Reg. 800 (12/01/07)

19 DE Reg. 414 (11/01/15)

2.0 Purpose

2.1 The purpose of this regulation is to:

2.1.1 establish Establish requirements to govern the form of the standardized [insurance identification (ID) card Insurance Identification Card] for each insured vehicle pursuant to Delaware law;

2.1.2 establish Establish the procedure by which automobile insurers shall notify the Division of Motor Vehicles when automobile insurance coverage is terminated or when insurers pay claims for uninsured motorists; and

2.1.3 provide Provide procedures for the submission of insurance company data to the Division of Motor Vehicles for administrative efficiency.

11 DE Reg. 800 (12/01/07)

3.0 Definitions

To the extent necessary, the definitions contained in 21 Del.C. §101 shall apply to all terms not otherwise defined in Section 3.0 of this regulation. The following words and terms, when used in this regulation, shall have the following meaning unless the context in which they are used clearly indicates otherwise:

"Commercial auto coverage", "commercial vehicle coverage" or "commercial lines policy" is means any coverage provided to an insured, regardless of the number of vehicles or entities covered, under a commercial auto, garage, or truckers coverage form [and/or or] rated from either a commercial manual or rating rule as filed and approved by the Delaware Department of Insurance. Vehicle type and ownership are not necessarily the primary factors in either underwriting the coverage or rating the coverage. The rating may be subject to individual risk characteristics including but not limited to experience rating, schedule rating, loss rating or deductible rating.

"Fleet" shall mean means five or more vehicles under single ownership or lease used for commercial purposes.

"Personal lines auto coverage," personal lines vehicle coverage" or "personal lines policy" shall apply to "personal lines vehicle coverage" or "personal lines policy" means any [insured automobile insurance] or insurance policy that does not fall within commercial lines.

To the extent necessary, the definitions contained in 21 Del.C. §101 shall apply to all terms not otherwise defined herein.

11 DE Reg. 800 (12/01/07)

4.0 Insurance Identification Card

4.1 All companies licensed to write automobile insurance in the State of Delaware must furnish Insurance Identification Cards. Cards to their insureds in accordance with the following:

4.1.1 If the insured and insurance company both consent, the [insurance identification card Insurance Identification Card] may be produced in electronic format. format;

4.1.2 Acceptable electronic formats include display of electronic images on a cellular phone or any other type of portable electronic device. device;

4.1.3 At least one written [card Insurance Identification Card] or [card Insurance Identification Card] in electronic format must be issued for each vehicle for which liability insurance is in effect. effect; and

4.1.4 Delaware policyholders who are members of the military and are stationed outside of Delaware may be issued [a card an Insurance Identification Card] of that state provided their coverage meets Delaware requirements.

4.2 If an [insurance identification card Insurance Identification Card] is produced in written format, insurers may use uniform ACORD format or may prepare the ACORD format as described below:

4.2.1 The size, weight, and color of the [card Insurance Identification Card] shall be as below:

4.2.1.1 Size: Not smaller than 3‑1/2" x 2‑1/4" or larger than 3" x 5"

4.2.1.2 Weight: Optional

4.2.1.3 Color: White

19 DE Reg. 414 (11/01/15)

5.0 Insurance Identification Cards for Personal Lines Coverage

5.1 The Insurance Identification Card for privately owned or leased motor vehicles and/or vehicles, for vehicles that are used non-commercially but covered under commercial lines policies, or both shall contain the following information, whether the [card Insurance Identification Card] is provided in written or electronic format:

5.1.1 The statement "The [ID card Insurance Identification Card] must be carried in the vehicle at all times" shall be shown on the face of the [card Insurance Identification Card] if space is available; otherwise this statement may appear on the back of the card. [Insurance Identification] Card;

5.1.2 [The Insurance Identification] Card shall be identified as "[Insurance] Identification Card." Card";

5.1.3 The insurance company name shall be printed on the face of the [card Insurance Identification Card]. If the insurer is part of a group, the group name may be printed on the [card Insurance Identification Card] so long as the card clearly identifies the name of the insurer issuing the insurance. insurance;

5.1.4 Insurer's five digit five-digit National Association of Insurance Commissioners ("NAIC") company identification number. number;

5.1.5 Named Insured. This name The name of the named insured, which must be match the name of the named insured as carried in the insurer's records. records;

5.1.6 The insurer may, at its option, include the address of the insured. insured, to be included at the insurer's option;

5.1.7 Policy Number. Number;

5.1.8 Effective date of and the time period during which the policy shall be in effect. effect;

5.1.9 Expiration Date. The [insurance identification card Insurance Identification Card] shall be valid for no more than the term stated in the policy but not to exceed 6 months. Notwithstanding the foregoing limitation, an [insurance identification card Insurance Identification Card] may be issued for a period of 12 months if the premium has been written on an annual basis and the premium is being paid in installments of no more than for a 12 month 12-month period. The expiration date shall be stated in such manner that the exact date of expiration can be clearly identified. For purposes of this section subsection 5.1.9 of this regulation, a policy renewed in the same company with a lapse in coverage of 30 days or less shall be considered to have been continuously insured by a licensed insurance company during the preceding six months. months; and

5.1.10 Vehicle(s) Vehicle or Vehicles Insured. Information shall be completed by indicating any of the following, depending on the type of policy or vehicle involved:

5.1.10.1 Year, Make, and Vehicle Identification Number ("VIN") of the vehicle(s) vehicle or vehicles insured. Model of the vehicle may be shown as the Make. The Year, Year and Make of the vehicle may be abbreviated, but the complete VIN must be shown.

5.1.11 Items which are not obvious as to meaning shall be appropriately captioned.

5.2 The order of the information to be contained on the [ID card Insurance Identification Card] may be rearranged at the option of the company, provided there is no drastic change and the rearrangement is necessary to accommodate a fixed printout system already established by a company.

5.3 At least one [ID card Insurance Identification Card] shall be issued for each vehicle insured under the policy for which liability insurance is in effect.

5.4 If a vehicle is specifically described on the [ID card Insurance Identification Card], the company must issue a new [ID card Insurance Identification Card] upon either a change of vehicle or the acquisition of any additional one. If a different policy number is assigned upon renewal, a new [ID Insurance Identification] Card must also be issued. The expiration date requirement of section subsection 5.1.9 above of this regulation shall apply to an insured's replacement or additional insured vehicle in a manner similar to the previously owned or insured vehicle. The owner of the vehicle shall so inform the insurer of the additional or replacement vehicle. Only after the insurer is so informed, shall the insurer be obligated to issue an [ID card Insurance Identification Card] to the insured for the additional or replacement vehicle.

5.5 A letter or notification should accompany every [ID card Insurance Identification Card] advising the insured that the [card Insurance Identification Card] is required to register the vehicle, to obtain new tags, and to serve as evidence of insurance for the law enforcement authorities, e.g., in cases involving accidents, moving traffic violations or road spot checks. This notification may be printed on the back of the [ID card Insurance Identification Card]. Delaware law requires the [ID card Insurance Identification Card] to be in the vehicle when it is being operated.

5.6 The Division of Motor Vehicles will accept for registration purposes a copy of the application for insurance or the assignment notice or binder pending issuance of insurance or the assignment notice pending issuance of the [ID card Insurance Identification Card]. However, such evidence of insurance will be accepted for registration purposes only if it has been dated prior to the date and no later than the day preceding the date of application for registration. For Assigned Risk coverage, insurers shall instruct their agents to place an insurer identification code of "99999" on applications to indicate placement with the Assigned Risk Plan.

5.7 Insurance [ID cards Insurance Identification Cards] shall be issued in conformance with section subsection 5.1 above of this regulation. The Insurance Commissioner may exercise his statutory authority to investigate and examine the compliance of insurance carriers with this regulation. The Insurance Commissioner may, after notice and hearing, impose and enter an order as follows:

5.7.1 For each occasion where the Insurance Commissioner determines that an [ID card Insurance Identification Card] was issued inadvertently in non‑compliance with section subsection 5.1.9 above of this regulation, the insurer shall be fined $100. No fine, however, shall be imposed if the [ID card Insurance Identification Card] was validly issued.

5.7.2 For each occasion where the Insurance Commissioner determines an [ID card Insurance Identification Card] was issued with disregard of the requirements of Section subsection 5.1.9 above of this regulation, but with no pattern of conscious disregard, the insurer shall be fined $1,000.

5.7.3 For each occasion where the Insurance Commissioner determines an [ID card Insurance Identification Card] was issued as part of a pattern of conscious disregard of the requirements of section subsection 5.1.9 above of this regulation, the insurer shall be fined $2,000.

5.8 "Date of issuance" of an [insurance card Insurance Identification Card] shall be the effective date of that [card Insurance Identification Card].

11 DE Reg. 800 (12/01/07)

12 DE Reg. 346 (09/01/08)

19 DE Reg. 414 (11/01/15)

6.0 Insurance Identification Cards for Commercial Lines Coverage

6.1 Unless otherwise covered in Section 5.0 of this regulation, the [ID card Insurance Identification Card] for each vehicle insured under each commercial lines policy, which shall include any insurance issued for fleet vehicles, shall contain the following information, whether the [card Insurance Identification Card] is provided in written or electronic format:

6.1.1 the The information set forth in sections subsections 5.1.1 through 5.1.4, section subsection 5.1.6 and section subsection 5.1.11 of this regulation;

6.1.2 the The name of the commercial entity or registrant that owns or leases the fleet as carried in the insurer's records. The insurer, at its option, may include the name of any parent company involved or, in the case of vehicles not operated by the registrant, an indication that the vehicle is "owned or operated by_________";

6.1.3 the The policy number with any appropriate designations required by the insurer for commercial or fleet vehicles; and

6.1.4 the The effective and expiration dates of the policy.

6.2 The expiration date for [ID cards Insurance Identification Cards] shall be no more than twelve months from the effective date of the policy and the expiration date shall be stated by day, month and year or month, day and year, so long as the exact date of expiration can be clearly identified.

6.3 [ID cards Insurance Identification Cards] subject to the requirements of this section 6 Section 6.0 of this regulation shall also be subject to the requirements set forth in sections subsections 5.2 through 5.6 of this regulation.

6.4 Insurance [ID cards Identification Cards] shall be issued in conformance with section subsection 6.1 above of this regulation. The Insurance Commissioner may exercise his the Commissioner’s statutory authority to investigate and examine the compliance of insurance carriers with this regulation. The Insurance Commissioner may, after notice and hearing, impose and enter an order as follows:

6.4.1 For each occasion where the Insurance Commissioner determines that an [ID card Insurance Identification Card] was issued inadvertently in non-compliance with section subsection 6.2 above of this regulation, the insurer shall be fined $100. No fine, however, shall be imposed if the [ID card Insurance Identification Card] was validly issued.

6.4.2 For each occasion where the Insurance Commissioner determines an [ID card Insurance Identification Card] was issued with disregard of the requirements of section subsection 6.2 above of this regulation, but with no pattern of conscious disregard, the insurer shall be fined $1,000.

6.4.3 For each occasion where the Insurance Commissioner determines an [ID card Insurance Identification Card] was issued as part of a pattern of conscious disregard of the requirements of section subsection 6.2 above of this regulation, the insurer shall be fined $2,000.

6.5 "Date of issuance" of an [insurance card Insurance Identification Card] shall be the effective date of that [card Insurance Identification Card].

12 DE Reg. 346 (09/01/08)

19 DE Reg. 414 (11/01/15)

7.0 Violations and Penalties

7.1 If an insurer shall violate violates any of the provisions of this regulation, the Commissioner shall give written notice to the insurer of the violation and said the notice shall inform the insurer of the right to request a hearing pursuant to 18 Del.C. §323.

7.2 If the Commissioner determines that an insurer shall be determined to be is in violation by consent or after a hearing, the Commissioner may impose such penalties as permitted pursuant to the Insurance Code.

11 DE Reg. 800 (12/01/07)

12 DE Reg. 346 (09/01/08)

8.0 Notice of Cancellation or Termination

8.1 When an insurer determines to cancel or terminate a personal lines insurance policy is cancelled or terminated and that cancellation or termination is final under [18 Del.C. §3904 (a) (1) §3904(a), then 18 Del.C. §3904(a)] within 6 months of the original date of issuance, the insurer must shall file a Notice of Cancellation with the Division of Motor Vehicles.

8.2 The insurer shall file the notice shall be filed of cancellation or termination with the Division of Motor Vehicles within 30 days following the effective date on which cancellation has become final. final, and in accordance with the following:

8.2.1 For purposes of subsection 8.2 of this regulation, "Final" means the date after which coverage cannot be reinstated except by the issuance of a new policy. policy; and

8.2.2 The insurer shall file the notice of cancellation or termination in accordance with instructions posted by the Division of Motor Vehicles on the Division's website.

8.3 The notice shall be a form with the size, content, and format consistent with the attached forms or as otherwise approved by the Division of Motor Vehicles.

11 DE Reg. 800 (12/01/07)

12 DE Reg. 346 (09/01/08)

9.0 Furnishing Motor Vehicle Liability Insurance Information to the Division of Motor Vehicles

9.1 An insurer shall furnish within 30 21 days of a request by the Division of Motor Vehicles prescribed information on each motor vehicle insured in the State of Delaware. Delaware in accordance with the following:

9.1.1 The information shall be provided in the form and manner approved by the Division of Motor Vehicles. Vehicles, as more fully set out in instructions posted by the [Department Division] of Motor Vehicles on the [Department's Division’s] website.

9.2.2 All information submitted by the insurer shall include the insurer's most current Delaware consumer complaint contact designee as submitted by the insurer to the National Association of Insurance Commissioners State Based Systems data base.

11 DE Reg. 800 (12/01/07)

12 DE Reg. 346 (09/01/08)

19 DE Reg. 414 (11/01/15)

10.0 Random Selection/Verification

10.1 Pursuant to 21 Del.C. §2118 the Division of Motor vehicles shall periodically randomly select on an annual basis at least 10 percent of the vehicle registrations and send them to the insurers of record for verification of liability insurance.

10.2 All responses from the insurers shall be delivered to the Delaware Division of Motor Vehicles within [30 21] days of the mailing date of the verification request.

10.3 The random selection/verification process shall be done no more than twelve times and no less than four times annually.

11 DE Reg. 800 (12/01/07)

12 DE Reg. 346 (09/01/08)

11.0 Notification of Uninsured Drivers

Each insurer licensed to write automobile liability insurance in Delaware shall notify the Division of Motor Vehicles on a form approved by the Division of Motor Vehicles the name of any person or persons involved in an accident or filing a claim who is alleged to have been operating a Delaware registered motor vehicle without the insurance required under Delaware law. The insurer shall provide the name, address, and description of the vehicle alleged to be uninsured.

11 DE Reg. 800 (12/01/07)

12 DE Reg. 346 (09/01/08)

19 DE Reg. 414 (11/01/15)

12.0 Additional Required Proofs of Insurance

Each When the [Department Division] of Motor Vehicles requests that an [insured insurer] provide verification of insurance coverage, an insurer licensed to write automobile liability insurance in this State shall furnish to their insureds verification of the insurance in force at the request of to the Division of Motor Vehicles by use of using a form and filing methods that are approved by the Division of Motor Vehicles. Each insurer is to utilize such measures as may be necessary to assure delivery of these forms to qualified insured drivers only.

11 DE Reg. 800 (12/01/07)

12 DE Reg. 346 (09/01/08)

19 DE Reg. 414 (11/01/15)

13.0 Severability

If any provision of this regulation or the application thereof to any person or situation is held invalid, such invalidity shall not affect any other provision or application of the regulation which can be given effect without the invalid provision or application and to this end the provisions of this regulation are declared to be severable.

11 DE Reg. 800 (12/01/07)

12 DE Reg. 346 (09/01/08)

19 DE Reg. 414 (11/01/15)

14.0 Effective Date

This Regulation shall become effective [10 days after being published as a final regulation May 11, 2020].

*Regulation No. 31 was entitled "Insurance Identification Card" under an effective date of July 1, 1979; amended July 1, 1982; amended effective January 1, 1991 and again on May 12, 1993 under present title except for the conditions specified under § 6 and § 4 of the regulation and April 12, 1993.

11 DE Reg. 800 (12/01/07)

12 DE Reg. 346 (09/01/08)

19 DE Reg. 414 (11/01/15)

23 DE Reg. 929 (05/01/20) (Final)