Bill Text
This bill is based on Oregon HB 2043, passed in July 2003. If your
state would like to require that state licensed insurance companies
provide customers an option between time-based and mile-based rating
systems, there is a model federal bill proposed by the National
Organization for Women which could easily be adapted for state legislation.
The Mile-Based Auto Insurance Incentive Act
An Act relating to tax incentives for automobile
insurers offering mile-based and/or time-based rating plans.
Summary: An Act to provide tax incentives
for automobile insurers offering mile-based rating plans and/or
time-based rating plans, establishing the amount of such tax incentives,
and prescribing an effective date.
Be it enacted by the People of the State of <insert
your state here>:
<Note: If this Act requires an amendment to
the state Insurance Code, state the chapter and subchapter of the
Insurance Code to be amended here.>
Section 1. Short Title.
This Act shall be known and may be cited as the “Mile-Based
Auto Insurance Incentive Act.”
Section 2. Findings and Intent.
Prior to the passage of this Act, state law required an insurer
of motor vehicle insurance coverage to offer traditional rating
plans to its customers. However, the state finds that low-mileage
customers and others could benefit from a mile-based or time-based
rating plan for motor vehicle insurance coverage in savings from
insurance premiums. This Act intends to authorize an insurer of
motor vehicle insurance coverage to offer a choice between traditional
rating plans and a mile-based or time-based rating plan, and in
the interest of low-mileage consumers, creates incentives for insurance
companies to offer such a choice.
Section 3. Definitions.
As used in this Act:
(A) “Insurer” means an insurance company, interinsurance
exchange, mutual, capital stock company, fraternal benefit society,
local mutual aid association, county mutual, reciprocal, association,
Lloyd’s plan, or other entity writing motor vehicle insurance
in this state.
(B) “Mile-based rating plan” means a rating plan for
which a unit of exposure is one mile traveled by the insured motor
vehicle.
(C) “Time-based rating plan” means a rating plan for
which a unit of exposure is one minute or one hour.
(D) “Traditional rating plan” means the current standard
rating plan offered by insurers, whereby rates are calculated irrelevant
of mileage or time and usually charged on a six-month or one-year
basis.
(E) “Unit of exposure” means a unit that measures the
loss exposure assumed by an insurer, the total of such units of
which is multiplied by the policy rate, or rates, to produce the
policy premium.
Section 4. Incentives for Insurers Which Offer Mile-Based Rating
Plans.
(A) An insurer shall be allowed a credit against <insert
the type of taxes your state levies against insurance companies
– these are usually corporate excise taxes or corporate income
taxes> that are otherwise due under state law for providing
motor vehicle insurance policies in this state that are at least
70 percent based on a mile-based rating plan or a time-based rating
plan.
(B) The amount of the credit shall equal $100 for each vehicle
insured under a policy described in subsection (A) of this section
that is issued in this state during the tax year, not to exceed
$300 for each policy.
(C) The total amount of credit allowed under this section in a
tax year may not exceed the tax liability of the insurer and may
not be carried forward to another tax year.
(D) The insurer may require a person purchasing coverage to use
the same rating plan for all vehicles covered under the person’s
motor vehicle insurance policy.
(E) The credit shall be a one-time credit only and may not be claimed
with respect to a vehicle or policy for which a credit was allowed
in a previous tax year.
Section 5. Limit of Tax Credit.
Notwithstanding Section 4 of this Act, if a credit claimed under
Section 4 of this Act, when added to all previous credits allowed
under Section 4 of this Act by all taxpayers for all tax years,
exceeds <insert specified dollar amount
for your state here; for example, Oregon sets a $1 million threshold,
whereas your state may want a higher or lower threshold depending
on population and market interest in PAYD insurance options>,
the credit shall cease to exist.
Section 6. Severability.
If any provision of this Act, or the application thereof to any
person or circumstance, is held invalid, the invalidity shall not
affect other provisions or applications of this Act, which can be
given effect without regard to the invalid provision or application
and, to this end, the provisions of this Act are severable.
Section 7. Effective Date.
(A) This Act shall be effective immediately upon enactment.
(B) The tax credit allowed under Section 4 of this Act may be given
for motor vehicle insurance policies issues in <insert
your state here> beginning on, or after, Jan. 1 of the
year this Act becomes effective.
Section 8. Sunset Date.
Notwithstanding Section 5 of this Act, the tax credit allowed under
this Act shall be repealed no later than five years from the enactment
of this Act. |