motorcycles under the hawaii no-fault law - Legislative Reference ...

MOTORCYCLES UNDER 

THE HAWAII 

NO-FAULT LAW 

SUSAN K. CLAVERIA 

Researcher 

March, 1984 

Legislative Reference Bureau 

State Capitol 

Honolulu, Hawaii

FOREWORD 

This report is submitted to the Legislature pursuant to House Resolution 

No. 391 which was adopted during the Regular Session of 1983. 

Insurance ratemaking is an intricate process and the cause of high 

motorcycle rates for personal injury protection is even more complex-- 

involving more than the fact that motorcycles are included in the no-fault 

law. This report does not purport to have the final answer to resolve the 

motorcycle insurance problem, but it is hoped that the findings and 

conclusions reported herein will enlighten all interested parties on the facts 

and set the direction for meaningful legislative deliberation. 

The data presented and the findings and conclusions reached in this 

report could not have been achieved without the assistance of those in the 

fields of motorcycle insurance and highway safety, and the motorcyclists 

themselves. Due to the highly technical nature of the application of the no- 

fault insurance law and the complexity of the motorcycle rates issue, the 

Bureau relied heavily on the expertise of the Insurance Division. The 

Bureau is indebted to the lnsurance Division for the many hours spent in 

discussing the problems surrounding the motorcycle issue and in providing 

necessary data. Special thanks are extended to Hit-am Tanaka and Shelley 

Santo for their valuable assistance, without which this report could not have 

been completed. 

The Department of Transportation provided the Bureau with access to 

the list of registered motorcycles from which the random sample for the 

motorcyclist survey was extracted and, through its Motor Vehicle Safety 

Office and Research and Statistics Unit of the Highways Division, contributed 

the data on traffic accidents. For this assistance, the Bureau is deeply 

gratef uI . 

The Bureau also extends its appreciation to the Hawaii Insurers Council, 

the Hawaii Independent lnsurance Agents Association, Criterion lnsurance 

Company, the Hawaii bledical Services Association, the Commander in Chief 

Pacific, Kuan Cot-poration dba Wheels Hawaii, Two Wheels, Montgomery 

Motors, Wheels Kaneohe, Street Bikers United, Kona Motorcyclist Association, 

Big Island Motorcycle Association, The American Motorcyclist Association, the 

motorcyclists who responded to our survey, and the lnsurance Departments of 

the no-fault states, all of whom submitted information and comments regarding 

the exclusion of motorcycles from the no-fault law. 

Special acknowledgment is made for the arduous work of the Bureau's 

clerical staff, especially Joyce Aramaki and blaizie Mukai, in processing this 

report under extremely tight time constraints and for assistance on the 

surveys by Dan Aono, Karl Motoyama, and Colleen Nakatsu. 

March 1983 

SAMUEL B. K. CHANG 

Director

TABLE OF CONTENTS 

... 

FOREWORD ........................................................... 111 

1 . INTRODUCTION ...................................................... 1 

Problems Prompting this Study .................................. 1 

Conduct of Study .............................................. 2 

2 . HAWAII'S NO-FAULT LAW ............................................ 4 

Enactment of the Law ............................................ 4 

How the Law Works .............................................. 5 

3 . THE MOTORCYCLE COMMUNITY ...................................... 9 

Driver Licensing Requirements .................................. 9 

Motorcycle Safety Equipment Requirements ...................... 9 

Special Laws for the Opei-ation of Motoi.cycles .................... 9 

Profile of Motorcyclists .......................................... 11 

Motorcycle Dealers .............................................. 12 

Motorcycle Insurers ............................................ 13 

4 . MOTORCYCLE INSURANCE RATES .................................... 15 

The Open Rating System ........................................ 15 

Regulation of Rates by the Insurance Division .................. 16 

How Rates Are Developed ........................................ 16 

Relativity to Automobile Rates .................................. 19 

Why blotorcycle Rates Are High .................................. 20 

Shopping for Low Insurance Rates .............................. 21 

Special Provisions for Motor-cycles to Reduce Rates .............. 24 

The Added Cost of Optional Insurance Coverage ................ 25 

Problems with Agents ............................................ 25 

5 . MOTORCYCLE ACCIDENTS .......................................... 27 

Accident Involvement Data ...................................... 27 

Motorcycle Accidents and Helmet Use ............................ 28 

6 . SURVEY OF NO-FAULT STATES ...................................... 38 

7 . CONCLUSIONS AND RECOMMENDATIONS ............................ 41 

The Consequences of Removal . . 

Recommendations ................ 

FOOTNOTES .......................................................... 47

Tables 

Number of Registered Motor Vehicles Insured by Vehicle Type 

Motorcycle Loss Ratio, 9/77 - 6/82 .................................. 

lnsurance Companies with Active Motorcycle lnsurance 

Pokicies as of 12/31/82 ............................... 

Type of Motor Vehicles Involved in All Accidents, State 

of Hawaii, 1973-1982 ................................... 

Vehicle Registration and lnvolvement in All Accidents, 

State of Hawaii, 1982 ................................................ 

Type of Motor Vehicles lnvolved in Fatal Accidents, State 

of Hawaii, 1973-1982 ..................................... 

Vehicle Registration and lnvolvement in Fatal Accidents, 

State of Hawaii, 1982 ................................... 

1982 National and State Motorcycle Statistics 

................. 

Motorcycle Accidents by Injury and Damage.. ........................ 

Type of Motorcycle Accidents.. ................... 

Fatal Motorcycle Accidents, Cause/Responsibility 

Military lnvolvement in Fatal Motorcycle Accidents 

Driver's License Type, Motorcycle Fatalities 

Appendices 

House Resolution No. 391, House of Representatives, Twelfth 

Legislature, 1983 Regular Session, State of Hawaii .......... 

Chapter 291, Motorcycle Vehicle Accident Reparations, 

Hawaii Revised Statutes ............................................ 

Survey of Registered Motorcycle Owners ........... 

No-Fault lnsurance Premium Guide 

Letters from Montgomery Motors, Ltd., to lnsurance Division, 

Department of Commerce and Consumer Affairs, State of Hawaii, 

and Response of the Insurance Division.. ............................ 

State No-Fault Laws ................................ 

PAGE 

. .

Chapter 1 

INTRODUCTION 

During the 1983 Legislative Session, the House of Representatives 

adopted House Resolution No. 391 (see Appendix A), requesting the 

Legislative Reference Bureau to study the probable consequences of removing 

motorcycles and other vehicles with less than four wheels from the mandatory 

personal injury requirement of the Hawaii no-fault law. The Resolution also 

requested that the study consider the removal of the coverage requirement in 

light of the following alternatives: 

(1) That motorcycle owners and operators and their passengers be 

precluded from receiving no-fault benefits as pedestrians and 

disqualified from receiving benefits under the assigned claims 

program of the Hawaii joint underwriting plan; or 


allowed to receive no-fault benefits as pedestrians, and to 

receive benefits under the assigned claims plans. 

The Resolution also directed the study to include information on the 

experience of states which have either removed or added requirements that 

motorcycles and vehicles with fewer than four wheels be covered for no-fault 

benefits for personal injury protection. 

Problems Prompting this Study 

Motorcyclists and motorcycle dealers in Hawaii have been opposed to the 

inclusion of motorcycles in the no-fault law ever since the law was being 

considered by the Legislature in the early seventies. A review of available 

1973 legislative committee records at the State Archives revealed testimony in 

opposition to the inclusion of motorcycles from the motorcycle associations, 

motorcycle dealers, and even an insurance association. Most of the 

testimonies cited the effects on the premium rates of motorcyclists as the 

justification for exclusion and maintained that since the other no-fault states 

excluded motorcycles, so should Hawaii. 

Despite the strong lobbying effort, the Legislature included motorcycles 

under th@ scope of the law. Because insurance rates for motorcycles have 

been subject to greater increases in recent years, the movement for the 

exclusion of motorcycles from the no-fault law has been revived. 

The Insurance Division of the State Department of Commerce and 

Consumer Affairs, has opposed the exclusion of motorcycles for the following 

reasons : 

(1) The medical costs of personal injury incurred by motorcyclists 

will still be present and exclusion from the no-fault law would 

mean that such costs will have to be taken care of by the

MOTORCYCLES UNDER THE HAWAII NO-FAULT LAW 

bodily injury liability insurance coverage of other motorists, or 

by medical insurance plans such as HMSA or Kaiser. This in 

turn would mean probable increases in insurance rates for the 

motoring public or the subscribers to health insurance plans. 

(2) Making an exception for motorcycles will open the door to 

other groups seeking exclusion such as the registered owners 

of subcompact cars who can make the same arguments about 

having to pay higher insurance even though they do not inflict 

as much damage on another vehicle and its occupants, or the 

senior citizens who can argue that they seldom drive their 

vehicles, so they should not be required to purchase the same 

coverage as others who drive their cars every day. 

In view of these concerns, the Insurance Division has suggested that if 

exclusion is granted to motorcycles, the no-fault law should also be amended 

to: 

(1) Exclude motorcyclists from receiving no-fault benefits in the 

same way as pedestrians and bicyclists are covered; 

(2) Subject motorcyclists to the same conditions as other motorists 

before the motorcyclist can sue; 

!3) Require motorcyclists to maintain bodily injury liability and 

property damage liability insurance coverage for the protection 

of anyone who is injured, or whose property is damaged by a 

motorcycle; and 

(4) Preclude a motorcycle owner/operator, or passenger from 

obtaining benefits under the assigned claims program of the 

Hawaii joint underwriting plan. 

Conduct of Study 

Nature and Scope - The scope of the study was limited to the treatment 

of motorcycles and other vehicles with less than four wheels under the no- 

fault insurance laws of Hawaii and other no-fault states. The study focuses 

on the issue of whether or not motorcycles should be excluded from the 

personal injury protection requirement of the no-fault law. Although the 

report focuses on motorcycles, the findings and conclusions are applicable to 

other vehicles with less than four wheels. 

Objectives - 

1 To ascertain the intent of the Legislature in adopting the 

Hawaii no-fault law which included motorcycles. 

(2) To review the experience of other no-fault states with respect 

to motorcycles and to apply relevant findings to Hawaii's 

situation.

INTRODUCTION 

13) To identify the possible consequences of removing motorcycles 

from the mandatory personal injury protection requirement. 

(4) To determine whether or not motorcycles should be excluded 

from the law and to recommend appropriate courses of action to 

the Legislature. 

Methodology - Following general research on automobile insurance and 

no-fault laws, research was conducted at the State Archives on old records of 

legislative committee hearings and on committee reports and floor debates on 

House Bill No. 637 (which became Act 203, Session Laws of Hawaii 1973) to 

obtain the history of Hawaii's law. Survey questionnaires were sent to no- 

fault states and to 800 registered motorcyclists. Letters seeking impact 

information were sent to insurance companies, motorcycle dealers, health 

insurance companies, motorcyclist associations, and the military. Data on 

traffic accidents were obtained through the State Department of 

Transportation's Motor Vehicle Safety Office and the Research and Statistics 

Unit of the Highways Division. Finally, most of the background information 

on the operation of the no-fault law and the data on motorcycle insurance 

claims and premiums were obtained through personal interviews with the staff 

of, and a review of records at, the insurance Division of the Department of 

Commerce and Consumer Affairs. 

In the course of this study, a significant problem was evident: many of 

the contentions made by those advocating as well as by those opposing the 

exclusion of motorcycles could not be substantiated by facts. Perhaps much 

of the frustration and anger experienced by motorcyclists, dealers, insurance 

companies, the insurance division, and even the Legislature could have been 

avoided if unfounded allegations were not allowed to be perpetuated year after 

year and if obvious misconceptions of the law were corrected. If there is any 

one purpose to be accomplished by this study, it is to clear the air, once and 

for all, and to distinguish truth from alleged fact on the motorcycle issue.

Enactment of the Law 

Chapter 2 

HAWAII'S NO-FAULT LAW 

In 1965, Professor Robert E. Keeton, Professor of Law at Harvard 

University, and Professor Jeffrey O'Connell, Professor of Law at the 

University of Illinois published a book entitled, Basic Protection for the 

Traffic Victim. The study contained a revolutionary proposal to change the 

handling of automobile insurance claims from a system of fault-based tort 

liability to one of no-fault basic protection insurance, similar in principle to 

workers' compensation. Following the publication of this study, there was 

serious and enthusiastic discussion at both the state and federal levels for 

the adoption of the no-fault concept proposed by Keeton and O'Connell. 

Massachusetts became the first state, in 1971, to enact a no-fault law. 

Today, there are 16 states with a no-fault system that limits tort actions.' 

Another 11 states provide for benefits without regard to fault, but have no 

restrictions on tort actions.' Legislation at the federal level, however, has 

never been successful. 

In 1971, 30 proposals for motor vehicle insurance reform were introduced 

in the Hawaii Legislature and extensive hearings were conducted on the no- 

fault concept. As a result of the public hearings, legislators found 

themselves without sufficient information to make a sound decision and called 

for a comprehensive study by the Office of the Legislative Auditor of Hawaii's 

existing motor vehicle insurance system. The consulting firm of Haldi 

Associates, Inc., was contracted to conduct the study and the completed 

report entitled, A Study of Hawaii's Motor Vehicle Insurance Program, was 

submitted to the Legislature in January, 1973. 

The Haldi report recommended the adoption of a pure no-fault system for 

Hawaii. At about the same time, the National Conference of Commissioners on 

Uniform State Laws completed its draft of the Uniform Motor Vehicle Accident 

Reparations Act (hereinafter UMVARA) which was a modified no-fault system 

since it permitted tort actions under certain conditions. The law enacted by 

the Hawaii Legislature as Act 203, Session Laws of Hawaii, 1973, was 

patterned after the UMVARA proposal. At the time Hawaii's law was being 

considered, only Massachusetts, Florida, Connecticut, New Jersey, and 

Michigan had no-fault laws already in effect. The states of New York, Utah, 

Kansas, Nevada, and Colorado enacted no-fault legislation in 1973. All the 

states adopted a modified no-fault system; pure no-fault has never been 

adopted by any state. 

In both the Haldi pure no-fault and the UMVARA proposals, motorcycles 

were included in the scope of the law. Hawaii is the only state that includes 

motorcycles on a mandatory basis while two states, Kansas and Kentucky, 

include motorcycles on an optional basis.

How the Law Works 


The components of the Hawaii law are as follows (see Appendix B for 

text of chapter 2941: 

(1) All registered motor vehicles are included; 

(2) All persons involved in a motor vehicle accident are entitled to 

benefits, except that no benefits will be paid to the owner of 

an uninsured motor vehicle or to the operator or user of a 

motor vehicle engaging in criminal conduct which causes any 

loss; 

(3) No-fault benefits are paid secondarily and net of any benefits 

the person receives from workers' compensation because of the 

accident but are paid primarily to any other insurance such as 

health insurance or social security; 

(4) No-fault benefits must be paid within thirty days after the 

claimant supplies proof of loss; 

(5) Pedestrians and bicyclists involved in an accident with a motor 

vehicle are entitled to no-fault benefits from the insurer of the 

vehicle that caused accidental harm to the pedestrian; 

(6) The right to sue is abolished except when (A) death occurs or 

there is significant permanent loss of use of a part or function 

of the body, or permanent disfigurement which subjects the 

injured person to mental or emotional suffering; (B) the 

medical-rehabilitative limit (presently $4,500)' is exceeded; or 

(C) the total aggregate limit of no-fault benefits payable to a 

person ($15,000) is exhausted; 

(7) Every registered motor vehicle is required to have insurance 

providing coverages of at least $15,000 for personal injury 

protection; $25,000 for residual bodily injury liability; and 

$10,000 for property damage liability; 

(81 lnsurers cannot refuse to insure an applicant unless the 

principal operator is not licensed or does not pay a I-easonable 

portion of the premium; 

(9) lnsurers are required to offer the following optional coverages: 

(A) Physical damage coverage with deductibles of $50, $100, 

and $250, for losses incurred by damage to the insured's 

vehicle. This includes "collision" coverage for damage to 

the insured's vehicle resulting from an accident and 

"comprehensive" coverage for losses other than collision 

damages resulting from such things as theft, vandalism, a 

tree falling on a car, fire, or flood; 

fB) Uninsured motorist coverage of $25,000 a person;


(C) lncreased personal injury coverage with limits of $30,000; 

$50,000; $75,000; and $100,000; 

1D) lncreased residual liab~lity coverage with limits of 

$50,000; $75,000; and $100,000; and 

(E) lncreased property damage liability coverage with limits of 

$15,000; 520,000; and 930,000;" 

(lo) Optional deductibles at appropriately reduced premium rates 

for no-fault benefits are allowed in the amounts of $100, $300, 

and $500 for motor vehicles and a $1,000 deductible is also 

allowed for vehicles with less than four wheels; 

(11) An equitable allocation of burdens system which requires 

vehicles to maintain a burden reasonably consistent with their 

propensity to affect probability and severity of injury so that 

in accidents involving a vehicle weighing more than 10,000 

pounds and a vehicle weighing less than 10,000 pounds, the 

heavier vehicle's insurer must reimburse 60 per cent5 of the 

no-fault benefits paid by the insurer of the lighter vehicle and 

in an accident involving a vehicle with less than four wheels 

and a vehicle with four or more wheels, the vehicle with four 

or more wheels must reimburse 75 per cent6 of the no-fault 

benefits paid by the vehicle with less than four wheels; and 

(12) A joint underwriting plan (hereinafter JUPf which pr-ovides no- 

fault coverage for certain eligible drivers and certain uses. 

This group includes drivers with bad driving records; drivers 

convicted of certain driving-related offenses within the 36 

months immediately preceding the date of application; first and 

second ciass commercial vehicles; vehicles with less than four 

wheels required to be registered under the highway safety 

law; and physicaily handicapped drivers. 

The JUP provides no-fault benefits, under the assigned 

claims program, to victims for whom no insurance policy is 

applicable such as the hit-and-run victim who does not have a 

no-fault policy. The JUP also provides no-fault policies and 

benefits to welfare recipients who do not pay premiums for 

their coverage. As a condition of licensure, each insurer is 

required to pay a minimum fee of $100 a year and the cost for 

the operation of the JUP program is equitably allocated among 

the JUP insurers. The cost for covering welfare recipients 

and assigned claims program is absorbed by the JUP members. 

Only a few insurers are designated as "servicing 

carriers" which process the assigned claims and welfare 

recipient claims. Any agent licensed to write motor vehicle 

insurance in Hawaii, however, can write a JUP policy. 

According to the rules governing the JUP, an agent must 

inform the appl~cant of the premium rates under both JUP and 

non-JUP covet-age. '


Under the no-fault law, a motor vehicle owner is required to purchase 

"personal injury protection" (PIP) insurance to cover injuries sustained by 

the owner or occupants of the owner's vehicle. The owner also is required to 

purchase: (1) "residual bodily injury liability" insurance to cover costs of up 

to $25,000 a person in the event the bodily injuries suffered by a person 

exceed the tort threshold and the owner, or an authorized driver of the 

owner's motor vehicle, is sued for being at fault; and (2) "property damage 

liability" to cover up to $10,000 for each occurrence of damage the owner of a 

vehicle or the driver of the owner's vehicle causes to someone else's 

property. ' 

When an accident occurs between two vehicles, the insurer of each 

vehicle pays, within thirty days of the filing of a valid claim, all benefits 

claimed by the occupants of that vehicle without regard to fault. If one 

vehicle happens to be a motorcycle, the insurer of the motorcycle files a 

claim, under the allocation of burdens provision, for reimbursement from the 

other vehicle's insurer for 75 per cent of the benefits paid to the occupant(s) 

of the motorcycle. If the injuries sustained by the occupant(s1 of the 

motorcycle meets the tort threshold, the motorcyclist may sue the other driver 

if the other driver is at fault and the motorcycle insurer is entitled to 

recover from the motorcyclist up to 50 per cent of its allocation of burdens 

amount if the motorcyclist is successful. 

If the motorcycle is uninsured, the motorcycle owner is not entitled to 

no-fault benefits; however, if the driver or passenger of the motorcycle is 

not the registered owner, that person is entitled to no-fault benefits as an 

assigned claim under the joint underwriting plan. The registered owner of 

the uninsured motorcycle, however, is subject to a fine of between 5100 to 

$1,000 for not having insurance and can be sued by the driver or passenger 

of the owner's motorcycle or by the insurance company that had to pay 

benefits because the motorcycle was not insured. 

The following hypothetical examples of how the no-fault law works were 

taken from the Insurance Division's consumer's primer on no-fault insurance: 

Example: Yhile driving, you hit a traffic lightpole and knock 

it down, causing darnage to your car. Sirice you were at fault, your 

property damage liability coverage pays for damage to the pole. 

Damage to your car can be taken care of under your collision 

coverage, if you had purcliased it. You pay the deductible amount 

and your company pays the rest. 

Example: In the same accident above, you were also injured and 

treated for minor cuts and bruises. You incur a $100 bill and 

remain at home from work for two days. Under your no-fault benefits 

coverage, your insurance company pays the doctor bill, including any 

x-ray or surgical costs, and for two days' loss of wages. 

Example: A car in front of you stops suddenly at a stop sign. 

Following too closely, you rear-end that car. The driver of that 

car endures minor cuts and bruises, four days of lost work and 

damage to his car. Your car was also damaged, and you and your 

spouse suffer minor cuts and bruises.


In this situation, the other driver will be reimbursed for his 

medical expenses and lost wages by his insurance company under his 

no-fault benefits coverage, even though you were clearly at fault. 

But your property damage liability coverage pays for his car damage. 

You and your spouse's medical bills will be paid from your no- 

fault benefits coverage. Your car damages will also be paid under 

your own collision coverage, with your company paying over the 

deductible you had selected. For instance, if the damage costs $400 

and you have a $100 deductible collision coverage, your company will 

pay $300 towards the repair after you put up the first $100. 

Example: While driving through an intersection, you are hit by 

a driver running the red light. You are taken to the hospital by 

ambulance, suffering a broken arm and a facial laceration which 

requires stitches that result in permanent scarring. 

Your no-fault henefits coverage will cover your medical, 

surgical, hospital, nursing and ambulance bills, and up to $800 a 

month in lost wages for the time you are unable to work. Remember, 

your company will pay up to $15,000 for all the benefits provided 

under this basic coverage. 

You can also sue the other driver for your injuries, including 

pain and suffering due ro the permanent scar which caused your 

mental and emotional distress. And payment for your car damage will 

come from the other driver's insurance company under his property 

damage liability coverage. 

Example: You are hit by an oncoming car while crossing the 

street and sustain serious injuries. As a pedestrian, you are 

entitled to all no-fault benefits in each of the following 

situations. 

First, the insurance company of the car that struck you must 

pay for all no-fault benefits you claim. But if that car carried no 

insurance, then your company will pay you under your no-fault 

benefits coverage, providing you own a car and have a basic auto 

insurance policy. 

On the other hand, if you do not own a car, then you can get 

paid under a relative's no-fault benefits coverage, providing he 

owns a car and is a resident of your household. 

Finally, if none of the above situations apply and no benefits 

are readily available to you, you can file a claim with the Hawaii 

Joint Gnderwriting Plan Assigned Claims Program through the State 

?lotor Vehicle Insurance Division. Your claim will then be assigned 

to an auto insurance company and handled just as if you had a no- 

fault policy with that particular company.

Chapter 3 

THE MOTORCYCLE COMMUNITY 

As of July 1, 1983, there were 10,261 registered motorcyclists in Hawaii. 

Despite claims of a steadily decreasing motorcycle population, the registrations 

for 1978 through 1982 indicate a slight but increasing trend (see Table 1). 

The uninsured motorist statistics in Table 1 also show that there has 

been an increasing trend of uninsured registered motorcycles. Motorcyclists 

have claimed that the high cost of insurance is the primary reason for such a 

high percentage of uninsured motorcyclists. Despite the possibility of paying 

a fine between $100 and $1,000, many motorcyclists evidently feel it is worth 

the risk of driving without insurance. 

Driver Licensing Requirements 

In order to operate a motorcycle, the law requires a person to obtain a 

category 2 driver's license which is specifically for the operation of a 

motorcycle or motorscooter.' An applicant for a category 2 license must take 

a written, oral, or automated examination which includes questions on rules of 

the road, highway signs, and the operation of motorcycles. Upon satisfactory 

completion of the written examination and a vision test, the applicant is 

issued an instruction permit which is valid for ninety days. In order to 

obtain a permanent license, the applicant is required to take an off-street 

skill test which tests the applicant's abilities in steering, stopping, balancing, 

accelerating, and maneuvering a motorcycle. If the applicant demonstrates 

good coordination in the off-street test, an on-street test will be 

administered. 

Motorcycle Safety Equipment Requirements 

Since June 7, 1977, when the helmet law was partially repealed, 

motorcycle operators who are eighteen years of age or older have not been 

required to wear a safety helmet while operating or riding a motorcycle.' All 

motorcycle operators and their passengers are required to wear safety 

glasses, goggles, or a face shield, in the case of a motorcycle or motorscooter 

that is not equipped with windscreens or windshields.' 

Special Laws for the Operation of Motorcycles 

Motorcycles are subject to various special rules under the Hawaii Revised 

Statutes as follows: 

(1) Instruction permits for the operation of a motorcycle or 

motorscooter may not be renewed more than once and may be 

renewed only if the holder of the permit has taken the 

examination for a motorcycle or motorscooter license at least

1 

67,808 

hT?;NBER OF REGISTERED MOTOR VEHICLES ISSLJED 

BY VEKSCLE TYPE 

Note: The percentages displayed below for each vehicle typo are slightly 

distorted because of a difference in definition of commercial vehicle for 

insurance and registration purposes. For example, U-drive cars are 

classified as private passenger vehicles for regisrration purposes, but for 

iiisuiance purposes vould be considered commercial vehicles. 

m; 

-. 

b'EHICLE TYPE 

i i 

YEAR i ' HOW J>SLI'RED PASSENGER MOTORCYCX COMblERCSAL/--T~~- 

1982, Regular >22,969 

I 

' Joint Underwriting Plan 745 9,117 

Self-insured -0- -0- ' 8,437 i 

Total No. Insured ' 459,022 4,511 / 76,990 540,523 

, Total No. Regisrered 610,456 6 / 48,495 1 670,267 

b of Registered 1 

Vehicles Insured 1 75 40 1 159 

Regular 

Joint Underwriting Plan 

Self-insured 

Toral No. insured 

Totai No. Registered 

?, of Registered 

Vehicles Insured 

Regular 


Self-insured 

Total No. Insured 

Total No. Registered 

",f Registered 

Vehicles Insured 

Regular 


Self-insured 


Total No. Regisrered 

: of Regisisred 

Insured Vehicles 

Regular 


Self-insured 


ioial No. Regisrered 

P of Registered 

Insured Vehicles 

Source: Hawaii, Department of Cumserie and Cocscmer A ffsais, insurance Giuision, 

Insured Census Report. 

10


once before the expiration of the second temporary instruction 

permit - section 286-l10(f). 

(2) A driver with a temporary permit may not carry a passenger 

or drive at night - section 286-1101e). 

(3) A motorcycle must have a muffler meeting certain specifications 

to prevent excessive noise - section 291-24. 

(4) Head lamps for motorcycles must meet specified requirements as 

to power and placement - section 291-25. 

(5) Drivers and passengers must ride on a regular, permanently 

attached seat - section 291C-152. 

(6) A vehicle must not carry more passengers than the vellicle is 

designed and equipped to carry, i.e., a passenger must have 

foot pegs and hand hold straps - sections 291C-152 and 

291C-155. 

(7) The minimum age for a motorcycle passenger is seven years old 

- section 291 -1 1 . 

(8) The operator must have both hands on the handlebars when 

driving - section 291C-152. 

(9) A motorcycle is entitled to the use of the full width of a 

traffic lane and may not ride between lanes of traffic or 

between right lane traffic and the curb or shoulder of the 

roadway - section 291C-153. 

Profile of Motorcyclists 

To obtain information about the motorcycle population in Hawaii and its 

viewpoints about the no-fault issue, the Bureau utilized information from the 

motor vehicle registration records and sent a confidential questionnaire to 800 

randomly selected registered motorcyclists. (See Appendix C. ) 

Personal Data - The motorcycle population in Hawaii is a relatively young 

group with 80.5% in the age group between 18-40 years of age. According to 

the motor vehicle registration records as of July 1, 1983, of the 10,261 

registered motorcyclists, 3,182 (31%) were in the military and 7,079 (69%) 

were civilians. The Bureau's survey respondent population consisted of 32.70, 

military personnel and 66.7% civilians. 

Only 61 .l% of the respondents reported having a permanent Hawaii state 

motorcycle operator's license while 27.2% had permanent out-of-state 

motorcycle operator's licenses and 9.30, reported having a motorcycle learner's 

permit. Most of the respondents have been driving a motorcycle for over five 

years (66.6%) and slightly over one-quarter of the respondents reported 

accident involvement 128.50,). The survey found that only 35.500 of the 

respondents have taken a motorcycle safe driving course in Hawaii. Most of


the respondents (84.34) reported also owning a motor vetiicle with four or 

more wheels. 

Motorcycle Use - Most motorcyclists use their motorcycles for both 

pleasure and commuting (6300). The size of the motorcycles driven by the 

respondents tend to be in the medium to low range; only 1600 reported owning 

the "muscle" motorcycles of over 1,000 ccs. 

Insurance Coverage - Eighty-nine per cent of the respondents reported 

being insured. Since the Bureau is aware that only about 40% of the 

registered motorcyclists are insured, this could mean that those who had 

insurance were more willing to respond to the survey than those who were 

uninsured. The questions in the survey relating to the type of insurance 

coverage and the deductibles the motorcyclists purchased could not be used 

because the manner in which these questions were asked evidently caused 

confusion and misunderstanding. Consequently, although 55.90, of the 

respondents having insurance reported paying $450 or less in annual 

premiums, the Bureau does not know whether this is only for the required 

no-fault coverages or whether such persons also have the optional collision 

and comprehensive coverages. If the former is the case then the cost of full 

coverage to such motorcyclists would be almost doubled (or $900 a year), but 

if the latter is the case, then motorcycle insurance for many may not be as 

prohibitively high as some claim. 

The Motorcyclists* View on Exclusion from No-fault - On the question of 

whether motorcycles should be excluded from the no-fault law, 68.2% said 

yes, 28.700 said no, and 3.1% did not answer. Many commented that insurance 

for their motorcycles is too expensive. Of those who did not want exclusion, 

a few respondents who commented could not understand why the legislature 

was considering removal of the personal injury protection requirement. They 

maintained that since motorcyclists are more susceptible to injuries and seldom 

at fault in an accident, they need personal injury protection more than 

liability coverage. 

Motorcycle Dealers 

The Bureau attempted to obtain the views of the motorcycle dealers in 

Hawaii through the Hawaii Motorcycle Industry Council. The Council, 

however, is defunct but through the assistance of its former president, other 

dealers were informed of the Bureau's study and many dealers submitted 

individual statements on the issue of excluding motorcycles from the no-fault 

law. 

Motorcycle dealers are struggling with declining sales and they attribute 

their plight primarily to the inclusion of motorcycles under the no-fault law 

which they claim has caused motorcycle insurance rates to be out of reach for 

many potential buyers. Consequently, over the past several years, this 

group has been actively seeking a solution to the high motorcycle insurance 

rates. As a result of a successful lobbying effort by motorcycle dealers, in 

1980, the legislature enacted a law to allow an insurance company to deal 

exclusively in motorcycle insurance sales.5 While one dealer acknowledged 

past interest in establishing an insurance company in Hawaii to sell motorcycle


insurance exclusively as permitted by this law, the dealer later dropped the 

plans. Another dealer is actively working with an insurance agency in 

California to establish an insurance program in Hawaii exclusively for 

motorcycles. The insurance agency, however, has made this commitment 

conditioned upon amending the no-fault law to exclude motorcycles from 

personal injury protection benefits to motorcycle owners in accidents not 

involving a second vehicle. The insurance agency has also urged the dealers 

to seek other statutory changes to: 11) stiffen the penalties for not having 

insurance; 12) requiring the State to contribute a portion of the cost for 

welfare clients covered by the JUP; and (31 to streamline and simplify the 

insurer's reporting requirements and lessen the frequency of such reports. 

The dealers are concerned that if something is not done in the near 

future to lower the cost of motorcycle insurance, some dealers will be forced 

to close down their business. 

Motorcycle lnsurers 

Many property-casualty insurers do not want the motor vehicle insurance 

business. From the insurers' perspective, this line of insurance loses money 

because the number of personal injury claims and the amount of such claims 

are too high. 

The Bureau enlisted the assistance of the Hawaii Insurers Council to 

obtain data from, and the viewpoints of, insurance companies on the 

motorcycle problem. Of the fourteen insurers that had active motorcycle 

policies as of June 1983, the Hawaii lnsurers Council represents six: First 

Insurance, Hawaiian Insurance, Island lnsurance, Pacific Insurance, Allstate, 

State Farm, and USAA. In addition to the survey sent to the Hawaii 

Insurers Council, the Bureau also contacted Criterion lnsurance Company, 

which writes approximately 4000 of the motorcycle policies. 

When asked about the consequences that might occur if motorcycles were 

excluded from the no-fault law, the insurers noted the following: 

1. The cost of personal injuries from motorcycle accidents would 

still be present and the exclusion of motorcycles from the 

requirement of maintaining personal injury protection would 

shift the cost to others. 

2. Tort restrictions for motorcyclists might have to be removed if 

they are excluded from the law and this could cause an 

increase in tort actions. If there is an increase in tort 

actions, the current rates for automobile residual bodily injury 

liability may be increased. 

3. Excluding motorcycles might increase the number of people 

going to the assigned claims pool if motorcyclists are allowed to 

receive benefits under the assigned claims program. 

4. If motorcycles are excluded from the personal injury protection 

requirement of the no-fault faw but insurance compantes are

MOTORCYCLES UNDER THE HP,WAII NO-FAULT LAW 

required to offer personal injury coverage as an option to 

motorcyclists, such optional coverage would probably cost the 

same if not more than the present cost depending on the type 

of risks who elect the optional coverage.

Chapter 4 

MOTORCYCLE INSURANCE RATES 

Under the old tort liability system, a person purchased insurance to pay 

for damages the person caused to another vehicle's occupants; therefore, the 

insurance companies provided rating incentives based on the insured's 

propensity to cause an accident and impose injury to another vehicle and its 

occupants. The no-fault system, on the other hand, is essentially a first 

party insurance system under which the insured buys insurance to pay for 

the insured's own injuries as well as liabilities so the system must provide 

incentives to vehicles which minimize injuries to the insured vehicle's 

occupants. Consequently, those motorists who choose to drive vehicles that 

expose them and their passengers to serious injuries would be expected to 

pay a higher rate for personal injury insurance coverage. 

The Open Rating System 

Unlike other forms of property-casualty insurance in Hawaii which are 

regulated under chapter 431, Hawaii Revised Statutes, motor vehicle Insurance 

rates are set on an open competitive basis under chapter 294, Hawaii Revised 

Statutes. This means that each company sets its own rates for motor vehicle 

insurance coverages and such rates can become effective, once filed with the 

Insurance Commissioner, without prior approval by the lnsurance 

Commissioner. The Legislature, in allowing for open rating, believed that 

open competition would serve to keep motor vehicle rates at reasonable levels. 

There appears to be some misunderstanding about the motor vehicle 

insurance rating system as some motorcylists have accused the lnsurance 

Division of not holding public hearings on rate increases. After careful 

review of the chapter 294 and its legislative history, the Bureau believes that 

this problem is primarily attributable to some obvious drafting errors in the 

rating sections of the no-fault law. (See Appendix B for text of Chapter 

294. ) 

When the no-fault law was initially enacted, the Legislature provided for 

a temporary three-year period of open rating from September 1, 1975 to 

August 31, 1978 wherein each firm licensed to underwrite no-fault insurance 

in Hawaii would establish its own schedule of rates. After the three-year 

period, it was intended that the lnsurance Commissioner would be responsible 

for the setting and regulation of uniform rates. In 1977, the Legislature 

amended the law to extend the open rating period to August 31, 1983' and in 

1982, the Legislature, upon finding that Hawaii does have a competitive 

market and that open rating is effective in keeping insurance premiums at 

reasonable levels, provided for a permanent open rating system by deleting 

the expiration date. 

The deletion of the expiration date should have been accompanied by the 

repeal of the sections empowering the commissioner to set rates, since these 

sections were intended to implement the prior approval system that was


supposed to become effective upon the expiration of the temporary open 

rating period. These prior approval sections provide for public hearings 

before rate increases and such hearing requirement is not applicable to an 

open rating system. 

Regulation of Rates by the lnsurance Division 

Motor vehicle rates do not require the lnsurance Commissioner's approval 

before they become effective, but the Commissioner has the power to adjust 

rates that are found excessively high or unconscionably below the actual costs 

of providing the assured coverage. The lnsurance Division reported that, in 

practice, Hawaii has a modified prior approval system because most of the 

insurers file their rates about sixty days prior to the effective date and 

request the Division's approval. The reason for this is that it is too time 

consuming and costly for the insurer to make adjustments after new rates 

become effective. 

The absence of a public hearing requirement on rate filings does not 

mean there is no check on the insurers ratemaking process. The lnsurance 

Division conducts a thorough examination of each rate filing to ensure that 

the rates are justified. The examination consists of a review of the general 

information about the company including its rate history, loss experience, and 

expense experience. The Division then analyzes the data and methods 

presented in the filing to test its reasonableness. This analysis is highly 

technical and since the lnsurance Division has capable rating analysts, the 

insurers are unlikely to submit inadequate and unreasonable filings. 

In addition to the examination of rate filings, insurers are required to 

submit quarterly reports on: (1) a census of vehicles insured; (2) details of 

experience for motor vehicle insurance policies by class of vehicle and type of 

coverage; (3) data on applications, renewals, termination, and cancellation of 

policies; and (4) data on no-fault benefit claims.' Insurers also must submit 

an annual report containing the experience for each class of motor vehicle 

insurance and detailed explanations of the methods used to assign expenses 

and investment income to the Hawaii motor vehicle classes and used to develop 

reserves for losses and loss adjustment expenses.' 

Insurers are also required, under the allocation of burdens provision, to 

submit reports involving no-fault claims for accidents involving two or more 

vehicles of disproportionate size.' The law also requires insurers to submit 

all applications for JUP insurance coverage.6 Finally, tfie lnsurance 

Commissioner is empowered to request any other additional information of 

insurers under the jurisdiction of the Division and to conduct audits of the 

records of such companies. 

How Rates Are Developed 

Section 294-13(a)(1), Hawaii Revised Statutes, requires that motor 

vehicle insurance rates be approved on (1) past and prospective loss 

experience within this State; (2) reasonable margin for profit from and 

contingencies in the administration of motor vehicle insurance sold within the


State; and (3) past and prospective expenses in the sale and administration 

of motor vehicle insurance within the State. Loss experience outside the 

State can be used only if it serves to lower the rates. This section on rates 

also contains what appears to be a drafting error in that the paragraph is 

repetitious and does not make sense when read throughout. 

Most insurers in Hawaii belong to the Hawaii lnsurance Rating Bureau 

which is an advisory body that provides information and services to its 

member insurers. Through the Hawaii lnsurance Rating Bureau, companies 

have access to "loss cost" data and guidelines for the calculation of rates 

from the lnsurance Services Office which is a national organization that 

compiles and analyzes statistical information for insurance purposes. A "loss 

cost" means the amount of dollars the insurer must pay per unit of exposure 

in order to provide a particular coverage. A "loss cost" is based on the 

amount the insurer must pay on a claim and on allocated and unallocated 

expenses. Allocated expenses are expenses of a company in connection with 

claim settlements which can be directly allocated to a particular claim, e.g., 

attorney fees for ciaims in suit, cost of other specified items of expenses 

such as medical exams, expert medical or other testimony, laboratory and x- 

ray fees, autopsy expense, etc. Unallocated expenses are company overhead 

expenses allocated to the claim function plus fees paid to independent 

adjusters, e.g., claim expenses which cannot be directly allocated to a 

particular claim. 

Rates are usually set on the basis of an assumed loss ratio, e.g., that 

approximately 65 per cent of the premium will be used to pay for losses and 

allocated and unallocated expenses and 35 per cent will be used to pay for- 

operating expenses of the company. A "loss ratio" is the result achieved 

when comparing incurred losses and earned premiums. Rate changes occur 

when, after reviewing actual experience, the assumed loss ratio far exceeds 

or is too far below the actual loss ratio. 

According to data obtained from the lnsurance Division, the statewide 

loss ratios for each type of motorcycle coverage over a five-year period are 

reflected in Table 2 below. These loss ratios are computed by the lnsurance 

Division for internal purposes as part of its check of the loss experience of 

insurers.


Table 2 

?iOTORCYCLE LOSS RATIO 

9/77 - 6/82 

Premiums Earned;: Incurred Losses" Loss Ratio 

Personal Injury Protection 2,385,000 3,118,000 1.302 

Residual Bodily Injury 

Liability-Cninsured Elotorist 1, iii1,000 1,709,000 .9i7 

Property Damage Liability 1,175,000 289,000 .246 

Physical Damage 

Total 

"Rounded to the nearest thousand. 

Source: Hawaii, Department of Commerce and Consumer Affairs, 

Insurance Division. 

Assuming that these loss ratios were the actual loss ratios of a particular 

company, the rate level calculation would be as follows: If the overall loss 

ratio of 1.021 in Table 2 is divided by the expected loss and loss adjustment 

ratio of 65 per cent (the average expected loss and loss adjustment ratio), 

the indicated rate level change is 157.1%. If this is calculated separately for 

each coverage, the indicated statewide rate level changes for each coverage 

would be as follows: 

Personal injury protection 

Residual bodily injury liability 

Property damage liability 

Physical damage 

After the indicated rate level change is calculated, the effects of 

investment income are subtracted. The rate level change selected by the 

insurer, even after such adjustment, is usually lower than what is 

permissible. 

While the base "loss cost" amounts for each type of policy coverage for 

Hawaii established by the Insurance Services Office (hereinafter ISO) for the 

Hawaii Insurance Rating Bureau have been approved by the lnsurance 

Commissioner, the Commissioner has warned the companies that the data in 

the IS0 "loss cost" publication alone cannot justify a company's rates since 

the IS0 base amounts are "benchmarks" for statewide use. Each company 

that uses such data must review its own experience and factor such 

exuerience into the calculation of its rates.

Relativity to Automobile Rates 


The "law of large numbers", a statistical principle upon which the 

insurance business is based, holds that the "...greater the number of 

exposures, the more nearly will the actual results obtained approach the 

probable result expected with an infinite number of exposures.. . . To put it 

another way, events that seem to be the result of pure chance occur with 

surprising regularity as the number of instances observed becomes larger. 9 

Since insurance is a risk business, insurers must apply statistical methods 

that offer them the greatest probability in their forecasting. 

There are only 11,000 registered motorcycles in Hawaii compared to over 

560,000 automobiles. This small number of motorcycles poses a credibility 

problem for insurance purposes. The Insurance Division explained that to 

allow for reliable forecasting, the majority of companies determine motorcycle 

insurance rates in relation to automobile rates. Actuarially determined 

relativity factors measuring the loss experience by coverages between 

automobiles and motorcycles are developed and these factors are applied to 

the more credible rates for automobile coverages. This method has resulted 

in more stable motorcycle rates and lower rate increases than otherwise would 

have occurred. '* 

To illustrate how the relativity factors are applied, an insurance 

company's motorcycle rates might be calculated as follows for a 450 cc 

motorcycle: 

Personal injury 

protection 

Automobile Motorcycle ??otorcycle 

Base Premium Relativity Facror Rate 

Residual bodily injury 

liability 90 .40 36.00 

Property damage 

liability 

Uninsured motorist 25 1.00 25.00 

Collision ($250 deductible) 150 .60 90.00 

Comprehensive ($50 deductible) 140 2.00 280.00 

Under the Hawaii joint underwriting plan, the automobile base rates are 

higher because they are developed for the high risk group. For a 450 cc 

motorcycle the rate computation would be as follows:

Personal injury 

protection 


Automobile Motorcycle !lotorcycle 

Base Premium Relativity Factor Rate 

Residual bodily injury 

liability 606 .40 242 

Property damage 

liability 

Uninsured motorist 12 1.00 12 

Collision ($250 deductible) 25 2 .60 15 1 

Comprehensive ($50 deductible) 64 2.40 153 

Although motorcyclists have complained about motorcycle rates being 

based on automobile rates, the high incidence of accidents and the severity of 

motorcycle personal injury claims would cause motorcycle rates to be 

prohibitively high if rates were established solely on motorcycle experience. 

Why Motorcycle Rates Are High 

Motorcyclists have alleged that Hawaii's rates are much higher than in 

other states because motorcycles are included under the no-fault law. That 

Hawaii's rates are higher than many other states is probably true, but 

attributing this only to the inclusion of motorcycles under no-fault is not 

appropriate because motorcycle rates depend on many other factors such as 

climatic conditions, total number of subscribers in the pool, and the extent of 

competitiveness among insurance companies. For insurance rating purposes, 

Hawaii does not score well. Hawaii's excellent climatic conditions accommodate 

motorcycle driving on a year-round basis which means more riding time and 

more exposure to accidents. Hawaii, being a small state has a small 

population of motorcyclists, and, according to the "law of large numbers", the 

smaller the pool of insureds, the higher the rates. Finally, the 

competitiveness among insurance companies for the motorcycle insurance 

business is almost non-existent. An obvious problem is that despite Hawaii's 

"take all comers" provision" in the no-fault law, insurers and agents who do 

not wish to write motorcycle policies have managed to avoid doing so. Only 

eleven companies actively write policies for the voluntary motorcycle insurance 

market, and five of the eleven companies are writing 9800 of the total number 

of motorcycle policies. If the insurers are not interested in the motorcycle 

business, there is no incentive for them to offer competitive rates. 

Motorcycle insurers commented that Hawaii motorcycle insurance rates are 

not always higher than the rates of other states and that the high rates for 

personal injury protection for motorcycles as compared to automobiles is 

reflective of the risk exposure. Depending on the size of the motorcycle, the


personal injury protection (hereinafter PIP) coverage for motorcycles is 

approximately 50% to 300% higher than PIP coverage for private passenger 

automobiles. 

One insurer noted that the relative higher cost of PIP coverage for 

motorcycles is to be expected since motorcycles lack much protection against 

personal bodily injury and there is greater likelihood of bodily injury in the 

event of an accident. Even though motorcycles tend not to be driven as 

much as automobiles, and are consequently involved in fewer accidents, the 

relative portion of accidents involving bodily injury, and the severity of 

injuries, are much higher. 

The Insurance Division reported in its 1982 annual report to the 

Legislature that "...The severity of motorcycle claims or average claim size 

for the required no-fault insurance coverages (personal injury protection, 

residual bodily injury liability and property damage liability) shows that the 

personal injury protection severity has been increasing at an annual rate of 

61.0% and the property damage severity has been increasing at an annual rate 

of 17.1%."'2 

Insurers have indicated that they rely on local statistical data on injury 

and fatality rates compiled by the Department of Transportation. The Bureau 

found that such statistical data does support the higher PIP rates assessed on 

motorcycles (see Chapter 5 for statistics on motorcycle accidents and injury 

rates). 

A major reason for the increase in rates is that there is an exceptionally 

high incidence of single vehicle accidents in motorcycle accidents. The 

UMVARA law discussed in Chapter 2 which is the basis of the Hawaii law 

contained an equitable allocation of burdens provision which required the 

allocation of losses to be reasonably consistent with the propensity of 

different vehicles to affect probability and severity of injury to persons or 

physical damage to vehicles. The Hawaii Legislature, cognizant that the 

inclusion of motorcycles under the no-fault law would result in higher 

premiums for motorcycle insurance, believed that this allocation of burdens 

provision, along with the allowance of up to $1,000 deductible for personal 

injury protection insurance, would resolve the problem of prohibitively high 

motorcycle insurance rates. In reality, however, these provisions have not 

prevented motorcycle insurance rates from steadily increasing. In claims 

arising from a single vehicle accident, there is no other motor vehicle 

insurance company to share the cost of motorcycle injuries with the motorcycle 

insurer. 

Shopping for Low Insurance Rates 

Pursuant to Act 5, Session Laws of Hawaii 1980, the Insurance Division 

annually publishes a no-fault insurance premium guide which lists current 

rates of all companies licensed to sell automobile insurance in the State. The 

Legislature intended to encourage consumers to shop comparatively for motor 

vehicle insurance by providing a convenient reference of representative 

rates. " In the guide that appeared in the Honolulu Star-Bulletin on 

January 28, 1983, there were 134 companies listed with rates for automobiles


and motorcycles (see Appendix D). Of the 134 companies, however, only 14 

actually had motorcycle policies in effect as of June 1983 and some of the 

companies that listed the lowest rates did not have any motorcycle 

policyholders (see Table 3). 

One of the arguments made before the Legislature in response to 

motorcyclists' complaints over high rates was that motorcyclists should use 

their initiative to shop around for better rates. Motorcyclists on the other 

hand, have argued that even if one shops around, most companies will either 

refer you to one of the few companies that actively write motorcycle policies 

or will tell you that they do not sell motorcycle insurance. 

To get to the truth of the matter, the Bureau conducted a telephone poll 

of the companies listed in the newspaper guide using the services of a law 

student who was a licensed motorcycle operator. The student was instructed 

to call as a prospective motorcycle owner who wanted to shop around for a 

good insurance rate before deciding to purchase a motorcycle. First, it was 

found that most of the companies listed in the guide are not listed in the 

Hawaii telephone directory. To get the phone number of the agent 

representing such companies, one must call the lnsurance Division or go down 

in person to the Division's office to look through a listing of agents 

representing licensed companies. After obtaining the phone numbers of 

several agents, the student began calling for rate quotations explaining that 

the guide was being used as a basis for trying to obtain the lowest possible 

rate for a 550 cc motorcycle the student was planning to purchase. 

The student found that it was almost impossible to get quotes for 

motorcycle insurance from most of the agents. The most frequent responses 

of the agents were that: (1) they did not represent the insurance company 

as listed by the lnsurance Division; (2) they did not quote rates over the 

telephone and would only provide a quote if the student went down to the 

agent's office with a copy of the student's traffic abstract; (3) they did not 

sell motorcycle insurance; (4) other insurance companies such as Criterion or 

State Farm could offer the student a better rate; or (5) they were only a 

countersigning agency in Hawaii for a mainland company and, as such, they 

did not know the actual rates and would have to write to the home office for 

such information. While the agents were courteous, it was evident that they 

were either very adept at avoiding having to write motorcycle insurance 

policies or were ignorant of their obligations under the no-fault law. The 

Bureau found that it was indeed frustrating for motorcyclists to shop around 

for insurance and even the most conscientious motorcyclist would probably not 

be able to get the lowest possible premium rate without expending much time 

and money. 

A similar survey on motorcycle insurance rates was conducted by a 

motorcycle dealer in an effort to verify customer complaints that many 

insurers have refused to provide motorcycle insurance. As a result of this 

survey which was conducted on a personal basis rather than by telephone, 

complaints were filed with the lnsurance Division and the lnsurance Division 

is currently investigating possible violations of the law. (See Appendix E.) 

The lnsurance Division is aware of the difficulty in obtaining rates over 

the phone and emphasized that insurance companies are not and should not be

Name of Company 

Allstate 

Criterion 

Table 3 

INSCRAXCE CO?iPANIES WITH ACTIVE ?IOTORCYCLE 

INSURAKCE POLICIES AS OF 12/31/82 

No. of Motorcycles 

- Insured 

Government Employees, Inc. 2 

Island Insurance Co 

Liberty Mutual Fire 

State Farm 

GSAA 

Commercial Uiiion Assoc. 9 

Carriers Insurance Co. 

Employers Insurance Kausau 

Universal Underxriter Iiisurance 

Servicing Carriers for Hawaii Joiiii U~ider~ritii~g Plan 

A. Certified Public Assistance Insured 

First Insurance 

B. Other than CPAI 

First Insurance 

Hawaiian Insurance 16 

Island Insurance 

Pacific Insurance 

- 

Source: Hawaii, Department of Coinnierce and Consumer Affairs, Insur,ince 

Division.


required to quote rates over the telephone. Because rates are calculated on 

various factors, it is to the benefit of both the applicant and the agent to 

have a rate quoted on a face-to-face basis where any misunderstanding can 

be minimized. 

As to the comments made by agents that their companies did not offer 

motorcycle insurance because they specialized in a particular line such as 

commercial insurance, or that they had to send the application to the mainland 

office for a quote, the lnsurance Division is seriously concerned that such 

responses appear to be blatant violations of the "take all comers" provision 

and the requirement that all companies licensed to do business as a motor 

vehicle insurer must maintain a complete sales and claims office in Hawaii.'" 

The Hawaii no-fault law is very consumer-oriented in that it contains 

many restrictions on the operations of insurers and it requires extensive 

reporting by the companies. The law, however, cannot account for 

everything. Consumers must be more aware of the requirements of the law 

and must take an active role in protecting their rights. Toward this end, 

the lnsurance Division publishes an excellent primer on the no-fault law which 

contains sound advice for the consumer. If consumers understand the law 

and are aware of their rights, they can file meaningful complaints with the 

lnsurance Division which can be appropriately investigated and violators can 

be caught and punished. 

Special Provisions for Motorcycles to Reduce Rates 

To ease the high cost of personal injury protection coverage for 

motorcyclists, the Legislature included the following provisions in the no-fault 

law: 

1. Safety Incentives - Insurers are required to provide a ten per cent 

premium reduction for any motorcyclist who completes an approved safe 

driving course and may provide similar reduction to a motorcyclist who 

submits an affidavit to the insurer that an approved safety helmet will be 

worn.15 It appears, however, that not many motorcyclists are taking 

advantage of such premium reductions. 

The Bureau's survey of motorcyclists showed that only 35.50, of the 

respondents had taken a safe driving course in Hawaii. With respect to the 

premium reduction for helmet use, the Bureau found that insurance companies 

generally will not offer this reduction because there is no way of monitoring 

helmet use. Motorcyclists can easily submit an affidavit just to obtain the 

premium reduction when they have no intention of using the helmet. This 

premium reduction incentive appears to be impractical. 

2. S1.000 Deductible - Insurance companies are required to offer 

optional deductibies on personal injury protection coverage of $100, $300, and 

$500 for motor vehicles with four or more wheels.16 For motor vehicles with 

less than four wheels, the companies must also offer an optional deductible of 

$1,000. Taking a $1,000 deductible will result in savings in insurance 

premiums ranging from 10 to 20 per cent, depending on the insurance 

company.


The Bureau's survey of motorcyclists included a question on such 

deductibles; however, the results are of limited use because 29.6°0 did not 

answer the question. The Bureau believes that there was confusion over the 

question due to an error in the question and also due to a general lack of 

public awareness about the use of deductibles for personal injury protection. 

Despite this problem, the Bureau believes that there is some credibility in the 

response since motorcyclists are likely to know if they have $1,000 deductible 

that means an out-of-pocket cost to them if they are injured in an accident. 

Of those who responded, only 4.90, reported taking the S1,000 deductible so 

there appears to be minimal use of this option. 

The Added Cost of Optional Insurance Coverage 

Motorcyclists complain that the cost of motorcycle insurance over a few 

years exceeds the actual cost or worth of the motorcycle. While this may be 

true, for rating purposes, the cost of personal injury protection insurance 

does not have any relationship to the value of the motorcycle. Moreover, it 

should be emphasized that where motorcyclists have full insurance coverage, 

half of the cost may be attributable to the optional coverages for collision and 

comprehensive (theft and other physical damage). The collision coverage for 

motorcycles is lower than for automobiles, but the comprehensive coverage is 

much higher than cars because motorcycle loss experience with respect to 

theft is unusually frequent and high. 

It should be noted that if a motorcyclist has to obtain a loan to purchase 

a motorcycle, the lending institution will require collision and comprehensive 

coverage to protect its investment. Thus, it can be stated that a 

prohibitively high premium cost for some motorcyclists may be attributable to 

the fact that they must obtain the optional coverages in addition to the 

required no-fault coverage and, for such persons, it is easier to seek removal 

of the mandatory personal injury protection requirement. 

Problems with Agents 

It has been alleged that motorcyclists can obtain insurance only under 

the JUP program which is intended to provide insurance for the following 

groups that are unable to obtain insurance in the marketplace: (1) "assigned 

risks" (those with bad driving records); (2) licensed physically handicapped 

persons; (3) commercial vehicles; and (4) vehicles with less than four wheels. 

The rules of the Department of Commerce and Consumer Affairs relating 

to the no-fault law specifically require insurance agents to inform the 

applicant whether or not the applicant is eligible for JUP coverage. If the 

applicant is eligible, the agent must provide the premium rates for both JUP 

and regular coverage. It is conceivable that an agent may quote only a JUP 

rate if that agent knows that the rates of all the other companies the agent 

represents are higher than the JUP rates. If, however, an agent withholds 

rate information for non-JUP coverage, the applicant should report such 

action to the lnsurance Division.


It should be noted that most of the companies are represented by 

underwriting agents who earn commissions on policies and who can write 

policies for several different companies. It is not inconceivable that an agent 

would encourage the sale of a policy from an insurance company that is easier 

to work with or that offers higher commissions. In making this observation, 

the Bureau does not intend to cast any aspersions on insurance agents. 

Rather, it is intended to emphasize that consumers have to be more aware of 

the various options available to them when shopping for insurance.

Chapter 5 

MOTORCYCLE ACCIDENTS 

Insurance companies and agents maintain that the primary reason for 

high rates in Hawaii is the motorcycle accident experience coupled with the 

fact that only a few companies in Hawaii are carrying the burden of losses 

attributable to motorcycle accidents. The Bureau was not able to conduct a 

detailed analysis on motorcycle accidents because only certain data from 

accident reports are computerized and there was insufficient time and staff on 

this study to review the more than 29,000 accident reports for one year. 

Accident Involvement Data 

From information provided by the Department of Transportation's 

Highway Safety Office and Research and Statistics Office, the Bureau found 

that motorcycles have a high accident involvement rate (see Tables 4 and 5) 

and a high fatality rate (see Tables 6 and 7). On a nationwide basis, 

Hawaii's accident and fatality rates per 10,000 registered motorcycles rank 

high (see Table 8). These high rates, however, are not the only factors 

insurers consider in their ratemaking. Of equal importance is the rate of 

injury incurred by motorcyclists and whether or not the accident involved 

another vehicle. On these points, the Bureau found that, in 1982, injury 

occurred in about 90% of the accidents (see Table 9) and 480, of the 

motorcycle accidents did not involve another vehicle (see Table 10). 

In support of their position to exclude motorcycles from the no-fault law, 

motorcyclists have contended that motorcycle accidents are not caused by 

motorcycles so they should not be required to carry the burden of their 

injuries. The Bureau was not able to obtain complete data on the cause of all 

accidents, but based on available information, this assertion cannot be 

upheld. In any given year, about one-half of the motorcycle accidents in 

Hawaii did not involve another motor vehicle, and an alarmingly high number 

of motorcycle accidents were attributable to collision with a fixed object (see 

Table 10). Moreover, an analysis of fatal motorcycle accidents by the Motor 

Vehicle Safety Office revealed that most such accidents were caused by the 

motorcyclist (see Table 11). 

It should be emphasized that the intent of the no-fault concept is to 

provide immediate insurance payment to those motorists who suffer injuries 

from an accident. Under Hawaii's law, the motorist must buy insurance to 

cover personal injury losses. With the allocation of burdens provision, the 

motorcycle insurer pays only 25% while the other vehicle's insurer pays 7500 

regardless of who is at fault. If those losses exceed the threshold and if the 

motorcyclist is not at fault, the motorcyclist can bring suit against the other 

vehicle's driver and the motorcyclist's insurer is entitled to recover up to 5E 

of its losses. The issue of who is at fault should not be a determining factor 

for inclusion or exclusion from the scope of the law, especially in view of the 

allocation of burdens provision. If motorcyclists insist on using a fault 

factor, it would have the opposite effect of supporting the inclusion of


motorcycles under the no-fault law since the allocation of burden provision 

provides for a subsidy even if the motorcyclist is at fault. 

It has been alleged by a motorcycle dealer that there is no evidence 

available showing that insurance companies of motorcycles are being 

reimbursed by automobile insurers and that the motorcycle insurers are 

carrying the full burden. In fact, the Insurance Division does have 

information submitted by insurance companies on multi-vehicle accidents which 

show the amounts incurred by the insurers of each vehicle involved in an 

accident and there is ample evidence that the allocation of burdens provision 

is being implemented. 

State Farm and Criterion which together write most of the motorcycle 

policies in this State, explained that in the calculation of rates, the losses 

that are recovered in motorcycle accidents from automobile insurers by the 

allocation of burdens provision are included, but the motorcycle losses are 

still high due to the large number of single vehicle accidents where no other 

vehicle shares in the cost. This information from the insurance companies is 

supported by statistics from the Motor Vehicle Safety Office which show that 

out of a total of 497 motor vehicle accidents involving a motorcycle in 1982, 

260 involved another vehicle and 237 were single vehicle accidents. The 

Bureau was not able to obtain a comparison of the dollar amounts of losses 

attributable to single vehicle and multi-vehicle accidents; however, it was 

found that of those accidents, 11 resulted in motorcycle fatalities of which 5.5 

of the accidents were at the fault of the motorcyclists and 4.5 were at the 

fault of the other vehicle. These statistics are important to insurance 

companies because the injuries resulting from single vehicle accidents have to 

be paid entirely by the motorcycle insurance company since there is no other 

company to pick up the 75% share. As for the fatal accidents, the insurance 

company automatically loses $15,000 for each fatality where the motorcyclist 

was at fault. 

It has been alleged that Hawaii's motorcycle population has a large 

military segment to which most of the accidents can be attributed since this 

group is unfamiliar with Hawaii's roads, traffic patterns, and driving habits. 

The total number of registered motorcyclists in Hawaii as of July 1, 1983 was 

10,261. Of that number, 3,182 or 31% were from the military. The Bureau 

could not obtain a breakdown of accident involvement by military and civilian 

drivers but the Bureau found that on fatal accidents involving motorcycles, 

military involvement in some years was rather high (see Table 12). A more 

revealing statistic is that of the fatalities every year, there is a high number 

of motorcyclists with out-of-state licenses or without any license (see Table 

13). 

Motorcycle Accidents and Helmet Use 

A study of motorcycle accidents by the Motor Vehicle Safety Office found 

that since the use of safety helmets became optional rather than mandatory, 

the extent of injuries incurred in motorcycle accidents and fatalities caused 

by head injuries have increased. The study which involved the compilation of 

data from January 1, 1964 through December 31, 1982, made the following 

findings:

Motorcycle Fatalities 


1. During the four years, 1964 through 1967, prior to any 

statutory helmet use requirement: 

Total Fatalities - 50; Annual Rate - 12.5. 

2. During 8.4 years, January 1, 1969 through June 7, 1977, the 

period when helmet use was required by statutes: 

Total Fatalities - 46; The Annual Rate DECREASED 56% to 

5.48. 

3. During the 5.6 years, June 7, 1977 through December 31, 

1982, following approval of Act 183 to reduce helmet use 

requirements: 

Total Fatalities - 89; The Annual Rate INCREASED 190% to 

15.89. 

Fatal Head Injuries 

1. During the 4.4 years, January 1, 1973 through June 7, 1977, 

seven (28.0%) of the fatally injured motorcyclists suffered fatal 

head injuries while wearing helmets. There were no fatally 

injured motorcyclists not wearing helmets; helmet use was 

virtually 100%. 


1982, eleven (12.4%) of the fatally injured motorcyclists 

suffered fatal head injuries while wearing helmets; but during 

the same period, thirty-six (40.4%) of the fatally injured 

motorcyclists suffered fatal head injuries while not wearing a 

helmet. 

Reported Motorcycle Accidents 

1. During the four years, 1964 through 1967, prior to the 

statutory helmet use requirement: 

Total Number - 2,158; Annual Rate - 540. 


when helmet use was required by statutes: 

Total Number - 3,595; The Annual Rate DECREASED 20.7% to 

428. 


1982, following the approval of reduced helmet requirements of 

Act 183: 

Total Number - 3,048; The Annual Rate INCREASED 27.10, to 

544. 

Registered Motorcycles 

1. The number of registered motorcycles in Hawaii has changed 

very little during the combined periods.


2. During the four years, 1964 through 1967, prior to the 

statutory helmet use requirement, average annual registrations 

were 9,918 motorcycles. 


when helmet use was required by statutes, average annual 

registrations were 9,758 motorcycles, 1.6% less than during the 

1964-1967 period. 


1982, following the approval of Act 183, average annual 

registrations were 10,146 motorcycles; 40% more than the 1969- 

1977 period. 

In 1979, the renowned Hurt Report1 noted, among other findings, that 

in its study of 899 motorcycle accidents and 3,622 motorcycle involved 

accidents reports in the city of Los Angeles 92 per cent of the motorcyclists 

had no professional or formal training on the operation of a motorcycle and 

that although a typical motorcycle crasher had almost three years of street 

riding experience the motorcyclist had less than five months of experience on 

the particular cycle involved in the crash. The Hurt Report also noted that 

the use of a safety helmet is the single critical factor in the prevention or 

reduction of head injury. 

Subsequently, in 1980, the U.S. Department of Transportation in a 

report to Congress on the effects of the motorcycle helmet use law repeal, 

concluded that unhelmeted riders are two times more likely to incur a head 

injury of any type and are at least three times more likely to incur a fatal 

head injury. The study also concluded that there is no evidence to suggest 

that helmet use causes neck injury or causes accidents and that where helmet 

use is only required by minors, or not required at all, the rate of use is 

low, on the order of 50-60 per cent.' 

Since the Hawaii motorcycle accident data indicate high frequency and 

severity, it would appear that increased measures are required to improve the 

safety of motorcycle riding in order to realize meaningful premium reductions 

for personal injuries.

TYPE OF MOTOR VEHICLES INVOLVED IN ALL ACCIDENTS 

STATE OF HAWAII, 1973-1982 

Psssenger cars 31,793 23,117 31,172 22,783 211,704 28,022 28,376 26.U82 23,459 %3,170 

Trilcks 3.091 2,640 2,528 2,407 2,678 3.344 3,685 Is, 082 3,805 3,651 

Btrses 426 398 310 405 392 967 596 1122 390 39 1 

Motorcycles and 

Motorsconters 417 306 396 4 4 14 518 619 599 561 531 508 

Other Motor Vehicles 52 55 37 5Q [t 5 80 8 3 70 89 -1 4 

Not Stated - 3 1 524 3 70 4 % - 4112 506 679 7311 b> 7 622 

TOTALS 36,330 27,120 2,812 26,5147 28,779 33,038 34,078 31,351 28,739 28,473 

Source: Hawa i i , Oepa rtment of Transports t ion, WLL7_rEff_i~_A~cid

- N 

Z 

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Z - ii: 

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Accldenrz raraiiiiei Fatal vises 

Reported per 10,000 per 10,000 per in0 

~eq9siiit tots ~cccdenih RRL; sirat fans Fnra I I t.ies 

NaLionai Data: 1972 3,609,059 117.120 320.95 3,006 8.23 2.56 

1977 4.962.340 317.456 3U5.51 9,115 8.29 2.40 

-2 5 578,859 165.689 296.99 4.540 8.13 2 711 

State Data: 1982 

Alabama (1. 6. 15, 201 70,960 2.462 346.95 57 1.32 2.11 

Aiaska (2, 11, 15, 201 10.897 352 323.02 15 13.16 Q.26 

firiron. (12, 75. 201 84.116 3,807 4119.06 88 10.38 2.31 

Arklnsas (2. 10. 75, 201 25.938 1.796 499.65 24 9.25 1.85 

Cllirornia (12. 15. 201 645.000 22.658 352.28 68 1 10.55 3.00 

colorado (1. 12. 15. 201 119.019 3.196* 268.39 15 6.29 2.3u 

~onne~rlcut 112. 15. 201 79.932 3.614- 452.13 93 11.63 2.57 

miaware (10. 15. 201 8.216 315 456.92 18 21.90 U.80 

District of Columbia (1. 9. 13. 75. 201 5.896 425 720.82 3 5.08 0.70 

floradl (7, 15. 701 221,511 12.651' 510.96 259 11.68 2.0U 

Georgia (1. 2, 10. 15. 201 110.795 3.639% 328.44 l i l 10.01 3.05 

Hawaii (5. 11. 15. 20) 11.311 508 948.88 13 11.48 7.55 

idano (2, 10. 15. 20) 53.102 810" 163.22 22 11.12 2.52 

Illinois (1-5. 10. 15. 701 285.188 1.40U 259.61 1911 6.80 2.62 

iodiana (1. 9. 15. 201 160.071 4. 357 272.19 11b 7.12 2.61 

Iowa (1. 10. 15. 201 234,985 2.152 91.58 69 2.93 3.20 

Ksnsss (I, 11. 15. 201 106.566 1.856 1111.16 51 4.78 2.7U 

Kenttlcky (5. 9. 15, 701 60.958 1.731 284.95 50 8.20 2.87 

ioiiiriaoa 12. 13. 15, 201 109.312 3.828 350.19 124 11.3U 3.73 

nacne 13, 11. 15, 20) 38,872 1.160 298.41 30 1.71 2-58 

Haryian* (1-11. 13. 15, 201 18,829 3.159 40OlU 78 9.89 7.46 

Hassachusetrz 15, 12. 15, 20) 108.U10" 9,359* 40Z.08 55 5.07 1.26 

Hachigan (5. 9. 15. 201 230.194 5.939 257.32 119 5.15 2.00 

Minnesota (5, 12. IS. 201 159,345 2.518 158.02 75 4.70 2.97 

~is~~rriopi 14. 10. 15. 19) 79.068 62 1 213.63 42 iQ.44 6.76 

~(irlourl (1-5. 17. 15, 701 117.781 7.508 212.92 69 5.85 2.15 

Nontana, (2, 10. 15. 201 U5.702 547 119.68 18 3.93 3.29 

Nebrerks (10. 15. 20) 97,887 7,214 253.5; 27 5.63 2.22 

Yevada (1. 14. 15. 201 21.940 7.056 481.31 23 10.48 2.17 

New Haapsnlre (5, 14, 15. 701 99.196" 1,166* 237.01 21 4.26 1.80 

~eu Jersey 11-5, 10, 16, 20) 114,112* U, 779" U18.79 93* 8.15 1.94 

New t(ex8co (1. 75. 20) 58.581 1.989 339.49 49 8.36 2.46 

New York (3, 12. 18, 20) 157.792 7.822 495.71 190 12.04 7.U2 

North Carolina (5, 9, 15. 20) 110,000 2.691 2411.63 85 7.12 3.15 

North Dakota (12. 15, 20) 31.312 368 117.52 19 6.06 5.16 

onlo 18. 15, 201 217.143 7.219 262.64 198 7. 111 2.77 

Okiahoma (4. 11, 15. 701 

Oregon (9. 15. 201 

Pennsylvania (13. 15. 70) 

Rhode iaiand (1, 13. 15. 201 

Sa~th Caralina (9, 15, 20) 

South Dakota (2, 12. 15. 701 

Tennessee (1, 13. 15. 201 

Texar 11-4. 10. 15, 201

nccidenis rafai,tier ratan tines 

Reported Per 10,000 Per 10,000 per 100 

- ~eoirtrations liccidcnts ~eq~straiions Fata I i ties Reoisfrations _*ccidenii 

Utah 172. 15, 201 66,934' 1.384 206.77 3 i b.63 2.24 

vernont (1, 9. 15. 201 21,812 485' 222.35 13 5.96 2.68 

Virginls (14. i5, 201 80,515 2.65'4 329.62 54 6.70 2.03 

Washington (11. 15. 20) 131,667 3,376 256.40 109 8.27 3.22 

Vest Virginia (2-5, 10. 15. 201 37.680 283 75.10 25 6.63 8.83 

U~sconsin (1. 12, 15, 20) 188,863 3,728 191.28 115 6.08 3.08 

vyoning (1. 10. 15, 201 21.937 352 160.45 10 4.55 2.811 

RDgiS*i8t,O"r: 

1. lnctudee moped3 or notorired cycier 

2. lncliedes mopeds and "rim! iar vehl~ler'~ 

3. includes tricycles 

4. Includes mopedf, tricycles and scooters 

5. Other 

nccioenrn--0nmager ihreshold: 

6. $0-525-550 proDeriy damage fhreshoio 

7. 5100 prooeriy damage inreahold 

8, $150 property damage rnreshoid 

9. $100 property aanage ibresnoid 

10. 5250 Property danage threshold 

11. $300 property damage threshaid 

12. 5400-$500 property damage threshold 

13, NO properxy damage rigtire apeciried 

74. Other 

- KEY 

Accidents--DeSCrlprion: 

IS. Accident l8sted as "property daaage, ~erronal 

injirry or fatality" 

16. Accidentml lsted as "any reported motorcycle 

accident 

17. Only records acerdentr invertlgated by state 

Hignvay Palmi 

18. other 

ratairties: 

19. Number of fatal accidents in which a motor- 

cycie was ~nvoived 

20. Niimbei OF motorcycl6rrs and passengers 

faiai ly lnjuied ,n a aolorcycie accidenr 

source: notorcycle Safety foundstron, Cvcte Sacex ~nforsra$#on. ~(~forcycie Statistics-1982, Chador 

Ford, Pennryivanla.


BY INJURY AND DAMAGE 

NO. OF NO. OF NO. Of NO. Oi 

YEAR ACCIDENTS FATALITIES INJURIES PROPERTY DAMAGE 

1982 508 14 (3%) 458 (90%) 10 

1981 537 16 (3%) 474 (88%) 4 7 

1980 561 10 2 524 (93%) 27 

1979 599 19 (3%) 550 (92%) 30 

1978 619 23 4 % 564 (91%) 32 

Source: Hawai i, Department of Transportation, Highways 

Division. 

Table 10 

TYPE OF MOTORCYCLL ACCIDENTS 

. 

YEAR 

ACCIDENT TYPE 1982 1981 1980 1971 

With Another Vehicle 

in Transport 260 115 118 299 

With Bicyclist 4 1 3 3 

With Pedestrian 14 11 7 12 

With Parked Vehicle 10 7 9 16 

With Animal 4 6 3 5 

With Fixed Object 1L.5 123 154 159 

Other Non-Col I ision 60 . 2 7 78 96 

TOTAL 497 344 372 590 

Source: Hai/ai i. Department of Transportation, notor 

Vehicle safety Off ice.

YEAR 

1982 

1981 

1980 

1979 

1976 

1977 

1976 

1975 

1974 

1913 

NUMBER OF 

ACCIDENTS 

11 

15 

10 

18 

23 

11 

6 

9 

4 

3 

Table 11 

FATAL MOTORCYCLE ACCIDENTS 

CAUSE/RESPONSIBILITY 

CAUSE/RESPONSIBILITY 

OTHER VEHICLE 

MOTORCXCL I ST 

ORlVfR 

MULTI-VEHICLE SINGLE M/C 

4.5 

2.0 

2.0 

5.0 

5.5 

1.5 

- - 

3.0 

2.0 

-- 

Source: tlawa i i. Department of Transportat ion, Motor Vehicle 

Safety Off ice. 

Table 12 

MILITARY INVOLVEMENT IN 

FATAL MOTORCYCLE ACCIDENTS 

Al I 

Motorcycle 

Military 

Motorcycle 

u r Fatalities Fatalities 

1982 13 7 153.8%) 

1981 15 9 (60.0%) 

1980 10 3 (30.0%) 

1979 2 1 6 (28.6%) 

1978 23 9 139.1%) 

1977 11 7 (63.6%) 

1976 6 Ir (66.7%) 

1975 9 7 (77.8%) 

1974 4 1 (25.0%) 

1973 3 1 (33.3%) 

Sotirce: Hawaii, Department o f Transportation, Motor Vehicle 

Safety Off ice. 

1.5 

4.0 

1.0 

6.0 

6.5 

5.5 

1 .0 

-- 

2.0 

1 .O 

5 

9 

7 

7 

11 

4 

5 

6 

- - 

2

DRIVER'S LICENSE TYPE 

MOTORCYCLE FATALITIES 

NO. OF HAWA i I HAWA l I OUT-OF-STATE 

YEAR FATALITIES LICENSE PERMIT LICENSE UNLICENSED 

1982 13 1 0 4 8 

1981 15 1 3 3 8 

1980 10 4 0 1 5 

1979 20 7 0 7 6 

1978 23 4 2 5 12 

1977 11 2 3 0 6 

1976 6 3 0 2 1 

1975 9 5 0 1 3 

1974 4 2 0 2 0 

1973 3* 2 

*One accident report did not provide driver I i cense information. 

Source: Hawa i i, Department of Transportat ion, Motor Vehicle Safety Off ice

Chapter 6 

SURVEY OF NO-FAULT STATES 

To obtain information about the motorcycle experience of other no-fault 

states, the Bureau sent a survey to twenty-six states that have been 

mentioned in one list or another as having a no-fault law.' Of the states 

surveyed, the Bureau received responses from Arkansas, Connecticut, 

Florida, Georgia, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New 

Hampshire, New York, North Dakota, Oregon, Pennsylvania, South Carolina, 

South Dakota, Virginia, and Wisconsin. 

As a result of the responses, the Bureau has defined "no-fault" state 

for the purposes of this study to mean, a state that has provisions for: (1) 

mandatory insurance; (2) the payment of benefits without regard to fault; 

and (3) restrictions on tort actions. The states, besides Hawaii, that meet 

these criteria are: Colorado, Connecticut, Florida, Georgia, Kansas, 

Kentucky, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New 

York, North Dakota, Pennsylvania, and Utah. Some states such as Arkansas 

and Oregon consider themselves to be no-fault states, however, since they do 

not meet the third criterion, the Bureau will not consider them as such in 

this study. (See Appendix F.) 

In addition to the survey, the Bureau conducted a review of the statutes 

of the sixteen no-fault states. The Bureau found Hawaii to be the only state 

that has mandatory inclusion of motorcycles under the no-fault law. While 

some sources have listed Massachusetts as a state that includes motor-cycles, 

the Bureau found that Massachusetts, by regulation, excludes motorcycles 

from no-fault benefits and motorcyclists must recover benefits through the 

tort system. 

Kansas and Kentucky include motorcycles in their laws, but on an 

optional basis. Kentucky reported that such optional inclusion occurred two 

years after the initial enactment of the no-fault law because of the high cost 

of motorcycle insurance. 

As to the reason given for excluding motorcycles from the no-fault law, 

most states reported that the anticipated high cost of personal injury 

protection coverage for motorcyclists and fear that motorcyclists would risk 

being uninsured, even as to liability, rather than pay the high premium was 

the major reason. Massachusetts, which was the first state to enact a no- 

fault law. excluded motorcycles from the no-fault law by a regulation 

promulgated by the insurance commissioner on December 4, 1970. The 

following is the justification provided: 

I. To date, bodily injury coverage on motorcycles has 

compensated only pedestrians and occupants of other vehicles 

involved in che accident. It has not compensated motorcycle drivers 

or guests, and premium rates have taken this fact into account.

SURVEY OF NO-FAULT STATES 

2. Due to the nature of motorcycles, a very large proportion 

of motorcycle accidents result in serious bodily injury to the 

motorcycle driver and his guest, if any. 

3. Thus, if insurance companies were required to begin to 

provide Personal Injury Protection coverage in accordance with St. 

1970, c. 670, for motorcycles, they would experience substantial 

adverse financial consequences, since the rates would be decreased 

15"; at the same time that the risks covered were vastly expanded to 

include injury to the motorcycle drivers and their guests, if any. 

Specifically, the premium that the three companies which write the 

overwilelming majority of motorcycle insurance in the Commonwealth 

expect to earn in 1971 would be approximately $1,000,000, whereas 

they would expect the net payment of claims if they were required to 

write Personal Injury Protection to be about $3,000,000. 

4. To avoid incurring these serious potential losses in 1971, 

the insurance companies which write the bulk of motorcycle insurance 

in Classachusetts indicated that they would take the necessary steps 

to cease writing motorcycle insurance within the Commonwealth, 

leaving motorcyclists without any insurance other than through the 

so-called assigned risk plan. 

If mororcyclists were to obtain coverage through the so-called 

assigned risk plan, they would receive coverage at rates which 

unreasonably discriminate in their favor as compared to other 

motorists, withoiit ally actuarial support for such discrimination, 

since motorcycle rates would decrease at the same time that the 

risks covered were vastly expanded to include personal injury to 

motorcycle drivers and their guests. There is no justification for 

requiring other motorists to, in effect, subsidize motorcyclists. 

In addition, motorcyclists would be unable to obtain the same types 

of coverage as previoilsly available to them, and a burden would be 

placed upon the so-called assigned risk plan. 

It appears that most states based their decision to exclude motorcycles 

from their law on similar concerns. The constitutionality of such exceptional 

treatment for motorcycles under various state laws has been upheld on the 

basis that the legislative bodies had strong rational basis to conclude that 

motorcyclists required special treatment. 

The Michigan law specifically allows motorcycle operators and passengers 

to claim personal injury protection benefits from applicable no-fault policies in 

the following order: (1) from the owner or registrant of the no-fault vehicle 

involved in the accident; (2) from the no-fault vehicle's operator; (3) from 

the motorcycle operator if the motorcyclist owns a no-fault vehicle; and (4) 

from the motorcycle owner if the owner owns a no-fault vehicle.& 

In Kansas and Kentucky where personal injury protection is optional for 

motorcyclists, persons electing to reject such coverage are not entitled to any 

personal injury protection benefits but they have unrestricted tort rights. 

The laws of Minnesota, New York, and Pennsylvania specifically exclude 

motorcycle operators and passengers from no-fault benefits and require that


they resort to the tort system for damages incurred in accidents involving 

other vehicles. Massachusetts similarly disqualifies motorcyclists from benefits 

in its departmental regulation on motorcycles. 

Case law in New Jersey and Utah holds that a motorcyclist sustaining 

injuries resulting from accidents involving another vehicle is entitled to 

personal injury protection benefits if the motorcyclist possesses a no-fault 

policy on an automobile. In the case of a motorcycle accident not involving 

another vehicle, the motorcyclist is not entitled to personal injury protection 

benefits, even if the motorcyclist had a no-fault insurance policy for an 

automobile. in Colorado, it was held that a motorcyclist who only had 

liability, collision, and comprehensive coverage was not entitled to personal 

injury benefits when involved in an accident with a car.6 

Other states such as Connecticut, Florida, Georgia, and North Dakota 

subject motorcyclists to the tort system without restrictions by the exclusion 

of motorcyclists from personal injury protection benefits under the no-fault 

law. No state restricts tort action unless motorcyclists are entitled to claim 

benefits from a no-fault insurer as in Michigan. 

In the states of Georgia, Kansas, Kentucky, blassachusetts, Michigan, 

Minnesota, New Jersey, and New York, motorcycle owners are required to 

maintain residual bodily injury and property damage liability coverage. 

Colorado, Connecticut, Florida, North Dakota, Pennsylvania, and Utah only 

subject motorcycle owners to the financial responsibility law which requires 

proof of security after involvement in an accident. 

New York reported that from the effective date of its no-fault law, 

2/12/73 until 12/1/77, motorcycle riders involved in an accident with another 

motor vehicle received no-fault benefits from the insurance of the other motor 

vehicle involved in the accident. This "free" coverage did not affect 

motorcycle insurance rates. 

New York was the only state to report an attempt by other groups to 

obtain exclusion from no-fault like motorcycles. This reported attempt came 

from buses. New York reported several unsuccessful attempts during the 

past few years to include motorcycles in the no-fault law. Connecticut 

reported that all attempts to make motorcycles subject to no-fault have been 

strongly resisted. 

The resutts of the state survey are of limited value in trying to predict 

the consequences in Hawaii if motorcycles are excluded from no-fault because 

no other state has provided for mandatory inclusion of motorcycles in its no- 

fault law. Hawaii's law also is unique because it included an allocation of 

burdens provision to mitigate the anticipated high cost of motorcycle personal 

injury protection. Moreover, because motorcycles have been included in 

Hawaii's law for ten years, it is very likely that the effects of the shifting of 

the burden of motorcycle injuries to the motoring public and to health 

insurance plans will be felt whereas if motorcycles were excluded from the law 

at the very beginning, the effects would not be as noticeable.

Chapter 7 

CONCLUSIONS AND RECOMMENDATIONS 

This study was only able to touch upon the surface of the most obvious 

issues surrounding the exclusion of motorcycies from the no-fault law. A 

more thorough examination and analysis of the entire motorcycle insurance 

issue would require more time and technical staff expertise, both of which 

were not available at the Bureau. In view of the urgency of resolving the 

problem of high motorcycle insurance rates, the Bureau believes that the 

findings in this study are sufficient to draw certain conclusions and to 

discuss alternative policies and matters the Legislature must consider if any 

of the policies are to be adopted. 

The Bureau was unable to uncover any new or extraordinary 

consequences that would result from the exclusion of motorcycles from the no- 

fault law. A major problem encountered in this study was the paucity of 

readily accessible information on motorcyclists, motorcycle accidents, and 

motorcycle no-fault claims paid by insurance companies. Consequently, the 

Bureau is not able to estimate the magnitude of the financial impact on the 

no-fault insurance premiums of the rest of the motoring public and on other 

types of coverages such as health insurance or military medical if motorcycles 

were removed from the no-fault law because the total amount of losses 

attributable to benefits paid to motorcycle occupants was not available. At 

best, this study can only confirm or controvert the previously alleged 

consequences. 

The Consequences of Removal 

House Resolution No. 391 adopted by the House of Representatives 

during the Regular Session of 1983, requested the Bureau to study the 

probable consequences of removing motorcycles and other vehicles with less 

than four wheels from the mandatory personal injury protection requirements 

of the Hawaii no-fault law in light of the following alternatives: 


precluded from receiving no-fault benefits as pedestrians and 

disqualified from receiving benefits under the assigned claims 

program of the Hawaii joint underwriting plan; or 


allowed to receive no-fault benefits as pedestrians, and to 

receive benefits under the assigned claims plans. 

Based on the information compiled in this study, the Bureau finds that if 

motorcycles are excluded from the no-fault law the following will occur:


1. Coverage for Motorcycle Injuries 

A. If, in the case of multi-vehicle accidents, motorcycle operators and 

passengers are treated like pedestrians and are able to obtain no-fault 

benefits from the other vehicle's policy, they will have the same coverage 

they now pay for under their insurance policies, including medical, 

rehabilitation, wage loss, replacement services, survivor's benefits, and 

funeral benefits. All these benefits would be at the full expense of the rest 

of the motoring public and motor vehicle insurance rates will probably be 

increased to cover this new area of exposure. 

If there is no other vehicle involved, and motorcycle operators and 

passengers are allowed to receive benefits under the assigned claims program 

of the Hawaii joint underwriting plan (JUP), this would be tantamount to 

providing "free insurance" as is provided for welfare recipients. The 

operational cost of the Hawaii JUP would be greatly increased. 

B. If motorcycle operators and passengers are precluded from receiving 

no-fault benefits as pedestrians and from receiving benefits under the 

assigned claims program, the following are likely to occur: 

(1) If motorcycle operators and passengers are permitted to have 

unrestricted rights to tort action, they can sue the driver of 

the other vehicle in a multi-vehicle accident and recover their 

losses. This unrestricted tort right will probably cause the 

automobile residual bodily injury liability rates to increase if 

there are many suits. It is possible, however, that 

motorcyclists may choose not to sue in cases where injuries are 

not too serious. Coverage for medical benefits then would be 

provided by available medical plans and rates for such plans 

would be subject to increase. 

(2) Motorcycle operators and passengers could be permitted, by 

law, to claim no-fault benefits (when injuries are sustained in 

an accident involving another vehicle) from a no-fault policy of 

an automobile owned by the registered owner or operator of 

the motorcycle or a relative in the same household. Under 

such a situation, a motorcyclist will receive full personal injury 

benefits from the motorcycle owner's automobile insurance 

policy. Personal injury protection rates for all motor vehicles 

are likely to increase to cover this new area of exposure. 

(3) In either of the above-mentioned situations, if the motorcycle 

accident is a single vehicle accident [and almost one-half are), 

the motorcycle operator, if the operator is also the registered 

owner, will not be able to recover full personal injury 

protection benefits. The operator would probably be able to 

have most medical bills covered through a health insurance 

plan, if covered by one, and health plan rates are expected to 

rise. A motorcyclist, however, will not be covered for 

rehabilitation, wage loss, survivors, and funeral benefits. 

The motorcycle owner and operator also will be personally 

liable for any injuries sustained by a passenger of the


motorcycle. Moreover, if the law does not clearly state that 

motorcycles shall not be considered uninsured vehicles, it is 

possible that passengers on a motorcycle would try to claim 

benefits through their uninsured motorist insurance, if they 

have such coverage, or through the assigned claims program. 

2. Effects on Medical lnsurance Rates 

It has been alleged that since most motorcyclists are covered by medical 

insurance their medical costs would be taken care of if they were excluded 

from no-fault. The problem with this assertion is that most owners of 

vehicles with four or more wheels also are covered by medical insurance 

because Hawaii has a prepaid health care law which requires employers to 

provide medical care coverage for their employees. Accordingly, if health 

insurance would be the primary source of benefits for motorcyclists' injuries, 

it also should be primary for all drivers. 

The Bureau attempted to ascertain the total annual medical costs for a 

five-year period arising from motorcycle accidents in order to estimate the 

dollar impact on the medical insurance carriers if motorcycle injuries were to 

be covered primarily under medical insurance. Unfortunately. it was 

discovered that such a task was impossible under the time constraints of this 

study. lnsurance companies are required to report a detailed breakdown of 

payouts made only on accidents involving more than one vehicle to the 

Insurance Division. This requirement was included in the no-fault law to 

enable the lnsurance Division to track the implementation of the allocation of 

burdens provision. Such information on payouts is not available for single 

vehicle accidents, e.g., a motorcycle crashes into a guardrail. Even if such 

information were available at the lnsurance Division for single vehicle 

accidents, the total medical payments for multi-vehicle accidents would not be 

complete because some companies either fail to report a claim or file incomplete 

or inaccurate reports. 

Consequently, while there is no doubt that excluding motorcyclists from 

the no-fault law and from claiming no-fault benefits under the law will have 

an impact on medical insurance plans, without the exact dollar amount of 

medical payment losses incurred by all insurance companies for accidents 

involving motorcycles, one can only venture an educated guess on the exact 

dollar impact. 

The Hawaii Medical Services Association which is the largest group health 

insurer in the State was willing to provide a financial impact assessment for 

the Bureau based on the loss experience of motorcycle injuries. Since we 

could not provide the loss experience data, it provided instead a general 

estimate of an initial overall dues increase of between $3 to $4 million a year 

to cover the added liability of motorcycle injuries. The Association also 

noted : l 

Ilost of our health plan rates are determined for employer groups, 

and a11 members in a group plan pay the same due rate. Therefore, 

the added liability which would increase the monthly dues rate will 

be shared by all of our members, not only the motorcyc?ists.


Due to the recent high rate of increases in medical care costs, 

there currently is a growing move in our community to resist further 

increases in medical care expenses. As a result, we believe that 

employers who w i l l be paying for all or a portion of the dues 

increases w i l l probably object to a proposal to shift coverage of 

motorcycle injuries from the motorcyclists' personal responsibility 

under their no-fault coverage to employers' responsibility under 

health plans. As an example, the estimated impact to the Hawaii 

Public Employees Health Fund xould be an additional $450,000 in dues 

during the first year that its members and the state and county 

governments would have to pay. We believe the Board of Trustees of 

the Hawaii Public Employees Health Fund would strongly object to 

such rate increases. 

If motorcyclists are not allowed to claim benefits like pedestrians, they 

will be making their claims with their medical insurance carriers and the 

health insurance subscribers, whether or not they are drivers, will be 

subsidizing the medical costs for motorcyclist injuries. 

3. Effects on Military Coverage 

Currently, when a motorcyclist who is in the military is injured in an 

accident and receives treatment through a military facility, the motorcyclist's 

insurance company is billed by the military facility for services rendered. 

According to the Commander in Chief Pacifi~,~ it is the consensus of the 

military community in Hawaii that military medical facilities and the U.S. 

taxpayer would carry an unfair additional burden if motorcyclists were 

excluded from or disallowed benefits under the no-fault law. 

the impact, however, is not known. 

The severity of 

4. Other Consequences 

A. If motorcyclists are permitted to purchase personal injury protection 

coverage on an optional basis such as is allowed in Kansas or Kentucky, it is 

expected that insurance rates will probably remain the same or may be 

increased. The rates would depend on who will utilize the option to obtain 

personal injury coverage. If those who utilize the option are the higher risk 

types. the rates would increase. 

8. The number of registered motorcycles and the miles driven by 

motorcyclists might increase, causing a concomitant increase in the incidence 

of motorcycle accidents. Consequently, the burden on the general motoring 

public or the health insurance subscribers of paying for motorcyclist injuries 

will be even greater. 

C. As far as the Bureau could ascertain, the problem of setting a 

precedent for other groups to seek exclusion may not be unmanageable since 

other states have not experienced difficulty in this area and there is case law 

which upholds the special treatment of motorcycles under no-fault laws.

Recommendations 


Given the concept of no-fault, the Bureau believes that the Legislature, 

in its wisdom, made the right decision by including motorcycles under the no- 

fault law. The decision was based not only on the belief that all motorists 

should be required to pay their own way for the privilege of driving the 

vehicle of their choice, but also on a paternalistic concern that the personal 

injury losses of motorcyclists, in the event of accidents not involving another 

vehicle, should be fully covered. While the Bureau empathizes with 

motorcyclists for having to pay high insurance premiums, it cannot 

wholeheartedly recommend exclusion; however, alternatives covering both 

inclusion and exclusion are outlined below. 

In weighing the merits of the alternatives below, the Bureau advises the 

Legislature to consider the following. There will definitely be an increase in 

premiums on the rates paid by motorists or the health subscribers if 

motorcycles are excluded from no-fault because there will be a new area of 

exposure that has to be paid for by someone. Although the amount per 

person initially may be small since it would be spread over a larger group of 

people, the cost per person should not be the deciding factor. However, if 

the Legislature believes, like the other states, that motorcycles comprise a 

special class of vehicles, motorcycles should not be included in the no-fault 

law. 

1. Maintaining the Inclusion of Motorcycles 

If the Legislature determines that inclusion of motorcyclists under the 

no-fault law is still warranted, the Bureau believes that the problem 

concerning motorcycle insurance can be addressed in other ways. Toward 

this end the following is recommended: 

A. A review of the entire no-fault motor vehicle insurance system 

sllould be made by a consultant knowledgeable in the field of insurance in 

order to identify each variable contributing to the high cost of motorcycle 

insurance and to recommend possible alternatives to control the level of 

increases. Such a review should include but not be limited to: (1) 

examination of the claims being filed, the extent of claimant abuse in making 

fraudulent claims, and suggestions to control such abuse; (2) assessment of 

the effectiveness of the requirements imposed on insurers; and (3) 

exploration of different approaches to handling motorcycle insurance, e.g., 

the establishment of a state insurance fund to sell the insurance coverages 

required by law. If such a review is ordered, funds should be appropriated 

to contract the services of a consultant. Such review should also include an 

examination of the effectiveness of the "take all comers" provision. If it is 

found that the provision is indeed stifling insurance companies to the 

disadvantage of the motor vehicle insurance consumer, perhaps the law should 

be amended. If it is found that the "take all comers" provision is a vital 

part of the entire no-fault law, steps should be taken to allow for sufficient 

control over insurance companies in complying with the provision, e.g., the 

Insurance Division should be provided with sufficient staff and funds to 

appropriately enforce the provision.


B. The Legislature should consider the effects of providing for higher 

deductibles, e.g., up to $5,000, for motorcycle personal injury protection. 

This is the only way motorcyclists will truly pay for their own personal 

injuries without the high premium cost, since they would pay lower premiums 

for personal injury protection on the condition that they be I-esponsible for 

the deductible amount. The problems involved with this proposal; however, 

are that (1) it appears that even with the present $1,000 deductible, 

motorcyclists seldom use this option and (2) oftentimes the ones who use the 

option for the highest deductible tend to be those who may not be able to pay 

the deductible amount in the event of an accident and such persons then 

would be without coverage or may be forced to rely on some kind of public 

assistance program. 

2. Exclusion of Motorcycles 

If the Legislature believes that it would be in the public interest to 

exclude motorcycles from the personal injury protection requirement of the 

no-fault law, the Bureau recommends disqualifying motorcycle operators and 

passengers from any personal injury protection benefits from any motor 

vehicle policy or the assigned claims program and permitting them to recover 

damages for injuries sustained in multi-vehicle accidents thr-ough the tort 

system without restrictions if the other vehicle is at fault. Although the 

Bureat1 could not determine the cost ramifications of the anticipated increase 

in suits, recovery through tort will be less complicated than allowing 

motorcyclists to claim on certain applicable automobile policies. It should be 

noted that under this proposal, a motorcycle owner could be subject to suits 

for injuries sustained by a passenger or by a person borrowing the owner's 

motorcycle or by a pedestrian. Accordingly, motorcycle owners should be 

required to maintain the current coverages for residual bodily injury and 

property damage liability. Additionally, to disqualify a motorcycle operator or 

passenger from claiming benefits under an uninsured motorist coverage, the 

law should clearly state that motorcyclists shall not be deemed uninsured 

motorists. 

The Bureau believes that exclusion from the no-fault law should be made 

on the condition that motorcyclists be required to wear safety helmets and to 

take a safe driving course approved by the Department of Transportation 

before being allowed to operate a motorcycle in Hawaii. The reason for such 

a condition is that if there are increased safety requirements for motorcycle 

operators, perhaps the incidence of accidents involving great injury could be 

lessened and the burden imposed on others might not be as great.

Chapter 2 

Tne 16 scares vi:h no-faulr sysiems rha: 

iimii rorr aciiiiiis are: Coiorado, 

Connrcricut, Florida, Georgia. Hacaii, 

Kansas, Kenruck?, lassachusercs, ?lichigai:, 

!linnesoia, euada, New Jersey, Se= York, 

I;orrll Dakota, Pennsylvania, and Utah. 

The 11 stares thai provide benefits wirho~r 

regard to fauii bur have no tort restricrioss 

arc: Arkansas, Dolacare, ?lazyland, Kex 

Hampiiilre, Oregon, South Carolina, South 

Dakora, Texas, Virginia, h'x'ashingron, ahd 

iiscoiiiin 

Hawaii, Department of Commerce end Consumgr 

Affairs, Adminiiirarire Rules. sec. 16-23-16. 

- Ibid, sec. 16-23-11 

A; rhe initial enactment of rhe law, the al- 

location of burdens vai 75:. The current 60*- 

%as esiablishcd by ruie effective 9jl,'S2. 

at the inlrla! enactment of rhe lac. rhr al- 

1aca:io:r of burdens was 80"s. The curienr 73: 

was esrablished by ruie effective 9:1/81. 

Hawaii, Deparrmrnc of Commerce and Coiasumbr 

Affairs, Adminiicratlve Rules, sec. 16-13-;:+. 

1nsura:icc benefic phymenrs ~iclioar regird iG 

fault on:? appiy to bodily injuries. AhT 

praperry damage incurred in an aciide:,r is 

subjecr ro serriemenl on rile basis of fault. 

Hence, if a driver erashes into a house, the 

owner of rhe hoaic c*,? rue fhc drii-er for ripe 

damages. The payment for rhe damages iiil he 

made bj- the property damage iiabiliry porrioo 

of the mocor uehicie; insurance. 

Chapter 3 

Hawsii Rev. Scar., sec. 286-102 

-- 

Haiaii, Depairmenr of Transporratioii. bioior 

\ehi:ie Safery Office, Adminisriari~~e Rules, 

sec~. 19-122-li ro i9-122-14. 

1977 Hai. Seas. Lads, Acr 183. 

Haiaii Rev. Srat.. sei. 285-81 

198: Hai. Sers. Laws, Air 56. 

1982 Haw. Sess. Laus, Act 173 

3. Hacaii Rev. Srat. sets. 29S-1OCb) and 29;-15; 

Haiaii, Departmen% of Commerce and Consumer 

Aifaiis Adminisrrative hies (herranaft,: 

CCCA Ralesj, secs. 16-23-03 and 16-23-65. 

FOOTNOTES 

L. DCCA Rules, sec. 16-23-66 

5. H3.iaLRev. Star., sec. 292-3:(b:; DCCA 

Ru:ea, sec. 16-23-b!. 

6. DCCA Rules, sec. 16-23-iS. 

7. Hakaii Rev. SraL., secs. 294-13(j) aiid 

294-15. 

8. The legislarive history of the 1973 bill oaa 

thoroughly traced and ii appears rhar the 

language in section 294-13(a)(l) L-as modeled 

after rhe language in the casualry rating 

)a,., secrioi? 431-693is)il) ~Mch iead: 

(1) Due consideration shail be given to past 

and prospecrive loss experience virhin 

and outside this Srare, io carastrcpht 

hazards, if any, to a reasonable margin 

for uiidei~ririn~ ?ref it and 

conringencies, to dividends, savings, or 

unabsorbed premium deposits alloued or 

rerarned by insurers ro chelr policy 

holders, members, or subscribers, ro 

pasc and prospective expenses borh cauntryi.ide 

and chose ~prcially tppiicabic 

to rttis Stare, and Lo ail other relevant 

fecrors cithin and ouriide rhli Jrsre. 

It appears that in modifying the !a:rguage to 

al:o~- for rhe conaideiatzor, of enper~ence and 

expecses on:)- L-iihin rh, Srazr and virii 

respec: ro the adminlsrraiion of moro: crhi- 

cie insurance, a drafting or r)-pzng error 

occurred. The Bureau believes the secrlon 

st80i:ld read: 

(1) Due consideration shaii be giver? ro past 

and prospecrive loss experience ilrt.irl 

jrh~s Stare. to catastrophe hazards. if 

any, to a reanonabin margin for prrfli 

and cor.:ingencies, ro drriderids . 

savings, or unabsorbed premium depasirs 

aiioued or recuined by insurers ro iheir 

poiicyholders. rnembqrs, or eubicr~brr5, 

to pasr and prospecrive loss experience 

ciihinj the Stare; reasonable cargin for 

prof>% from and contiiigeilcies i-. the administration 

of motor ve1ticle insoiarice 

sold virhin rhe State; pasr and pruspeirive 

expenses in Khe sale and adminlsiraiion 

of mocor vehicir insurance 

~irhin the Srate; and, opiionally. ro 

pasr or prospecrivi loss. sales and admicisrrative 

ccsrs experience in rhe 

narian or regional 13, ~her:erer ibch Carlsideration 

riii serve to reduce rares. 

9. Robert I. Hehr and Erneisoii Cammaci.. 

P~incipies of insurance

11. The "rake all comers" ~rovision refers to 

sec. 294-9(b), Uawaii ~ k v , Star,, which 

prohibirs an insurer from rejecring ail ap- 

plicarion for a no-fault poiicy unless the 

principle operalor of the vehicle is not 

licensed or rhe appliianr djes co: per a 

reasonable porrion of the premium. 

12. Annual Repoil, pp. 5-6 

13. House Standing Cornsirtee Reporr So. 8-EC on 

Senare Bill No. 1115, Teoih Legislarure, 

1980, Srate of Hacaii. 

1;. Hasaii Rsa. Stat., secs. 29;-9(b) and 

294-1&(a)(3). 

15. Havaii Rev. Stat., sec. 29i-13(m) and (n) 

16. Hawaii Rev. Star., sec. 2%-ii(a)(j). 

Chapter 5 

1. hsh H. Hurt, Jr., &ratus Report an Accideny 

Ini,esaation Dara, Cniuersity of Southern 

California, January 1979. 

2. C.S., Department of Transportation, Karional 

HighKay Traffic Safer? Administiarioii, A 

Report ru rhe Congres- the Effect o? 

~lororc).cie Helmet Lse Repeal--A Case for 

Heirnet bae, Aprii 1980. 

Chapter 6 

1. The t~eniy-six stares vere Arkansas. 

Colorado, Conriectiiui. Delaware, Florida. 

Georgia, i(ans;ls, Xearuc'~ii);, >larylaiid,. 

?lassachuzetrs, Plichigan. Hinnesora. iei-adz. 

New Hampshire. he^ Jersey, Yes; 'iork. Xorih 

Dakors, Oregon, Perms)-l\.an~a, Sourli Caroilria. 

Swrh Dakcra, Texas, Liah, Virginia. 

Washinginn, and Vieconsin. 

2. 3assachusrtts Insurance Department Regula- 

tions, For the Purpose of Enabling kners of 

!lo~orcyiles to Readii? Obrain Adequate 

Insurance Through Privare Enrerprise. 

December 4 . 1970. 

3. See Laskev V. Stare Farm Ins. Co.. 296 So.?d 

9 (Fla. i9:L); ?anranares h.. Bell, 214 han. 

589. 522 P.2d 1251 (19iA); Etgomv v. 

w, 38 N.Y .2d 41. 3i0 S.E. 2d 444, 376 

NY-S.2d 1 iCr. App. 1973); Sir,-v. 

w. 464 Pa. 387, 346 A.2d 89i (19-5;: 

Underhill v. Safeco Ins. Co, 407 5I;ct:. 173. 

28; K.h..Zd 463, on renand 9i Yich. Aou. 181. 

293 K.U.2d 799; sad Horgan v. Orcinoii. 163 

K.3. Super. 395, A43 A.2d llli (L. 1561). 

4. nich. Com~. Laws Ann., sec. 500.321&(5) 

5. See Gerber v. Allscare. 161 N.J. Super. 5&3. 

391A.2d 1285 (1978), Coares r. American 

Econmr Ins. Co., 627 P.2d 92 (Crah 1981). 

". 9~iar v. Dairvl_anr! Jns. to.. 616 P.Zd 736 

iCala. Cr. App. 1980:. 

. . 

7. in 1577 rhe srarote was amended to 

specifica!ly exclude oicopanis of notorcycles 

from entitlement to personal injar? prccec- 

rioii benefits. 1977 K.Y. Laus c. 892 

Chapter i 

1. Lerier from Eugene 1. Eujii, Adninistraror. 

Coniiacrs 6 Lega! LiaiBor., Hat-aii ?lcdicai 

Association, ro Samuel E. K. Chang. Direcror, 

Legislarive Reference Bureau, dated 

December 7 . 1983. 

2. Letier from tiilliam 3 Crove, Jr., Admiral, 

G.S. Navy, Commander in Chief Pacific, ro 

Samuel B. K. Chang, Direcror, Legzs;ari~,e 

Reference Bureau, dared Sep:ernbcr 7. 1953.

(To be made one and ten copies) 

HOUSE OF REPRESENTATIVES 

WELFTH LEGISLATURE, 19 83 

. * 

STATE OF HAWAII 

- - - - 

REQUESTING A STUDY TO DETERMINE THE CONSEQUENCES OF REMOVING THE 

REQUIREMENT THAT MOTORCYCLES AN;) OTHER VEEICLES WITH LESS 

THAN FOUR =EELS CARRY MOTOR VEHICLE INSURANCE UNDER THE 

HELWAII NO-FAULT LAW. 

WEREAS, the Hawaii no-fault law, chapter 294, Hawaii 

Revised Statutes, presently requires motor vehicle insurance 

coverage for all vehicles; and 

WHEREAS, msrorcycle owners have sought to ma~e the personal 

injury protection portion of no-fault coverage optiona: for the 

owzers of motorcycles and other vehicles having fewer than four 

wheels; and 

WHEREAS, mctorcycle owners seeking to eliminate the 

sanditory coverage have argued that exlsting health insurance 

plans are adequate to cover their needs for personal injury 

protect io:i; and 

WHEREAS, t3e insurance commissioner has argued against 

remova!. of the mandatory coverage on the grounds that: 

(1) A whole class of motor vehicle accidents could be 

lifted out of the tort liability limitations of the 

present law; and 

(2) The same argiiments used to exempt motorcycles could 

also be used by the owners of sub-compact or other 

cars; 

now, theref ore, 

EE IT RZS3LYE3 by the House of Representatives of the 

Twelfth Legisi8ture of +he State of Hawaii, Regular Session of 

1983, that the Legislative Reference Bureau is requested to study 

the probable consequences of removing motorcycles and other 

vehicles with less than four wheels from the mandatory personal 

injury protection requirements of the Hawaii no-fault law; and

Page 2 - 

EE IT FURTHER RESOLVED that the study additionally consider 

the removal of the coverage requirement in light of the followi~g 

alternatives: 

(1) That motorcycle owners and operators and their 

paEsengers: 

(a) Are precluded from receiving no-fault benefits as 

pedestrians; and 

(b) Are disqualified froin receiving benefits under the 

assigned claims progran of the Hawaii joint 

~nderwriting plan; or 

(2) That motorcycle owners and operGtors and their 

passengers are ~llowed to receive no-fault benefits as 

pedestrians, aad are not djsqualified from receiving 

benefits under the assigned claims plans; 

BE IT FURTEER RESOLVED that the Legislative iteference Bureau 

include informztion or: the experience of states, if any, which 

ha1.c either remcved GZ added requirements that motorcycles and 

vehicies wxth feh-er than four wheels be covered for no-fault 

benefits for perso~al injury protection; and 

i3'i IT FUR;%IEX ZESOLVED that input be obtained from the 

inocrancc comisrioner on ail aspects of +he study; and 

EE :T F'JT?TfiCX RESOLT7Z3 that the Legislative 3eference rjureau 

report its findings and recoin~r~endatlons to the Legislature not 

later thax t%er.ty days befcre rhe convening of the Regular 

Session of 1984; and 

52 I11 riiRmR RESOLVED that certified copies of this 

Raso?ution be transmitted to the Director of the Legislative 

ffeferenc6 Surealr &ad tire Insurance Commissioner.

CHAPTER 294 

MOTOR YEIiICU ACCIDEkT REPARATIOKS 

Pert I . Ko-fault insurance 

Secrion 

294-1 Purpose 

294-2 Definirions 

294-3 Right to no-faulr benefits 

294-4 Obligarion io pey no-fault benefits 

294-5 Payment fian uhicb insurer 

294-5.2 Prioriry of insurance coversge 

294-6 Abolition of tori liability 

294-7 Righis of subragation 

294-8 Condiirons of operation and registration 

129L-8.51 Verificaiion of insurance 

(294-8.61 tinlai.fu1 use of no-feult insurhnce 

idenrificerion card 

294-9 Obligeiions upon ternination of insvrance 

294-10 Required policy coverage 

294-11 Required ap:zonal additional insurance 

294-12 Prohibitions, penalry 

1294-12.51 Vehicles wiih fewer than four viieels; 

specielry insurers not prohiblied 

294-13 tlocor vehicle insurance rarer 

1294-13-11 Increase in premiums prohibited; when 

294-14 Insurers' iequiiemenrr 

294-15 Inspection and eudir 

294-16 Pvbl~csiion of premium rares 

Pari 11, [Old] Repealed 

Part 11. Joinr Underwriting P:an 

294-20 Jo~nr underriiring plen, esiablishoient 

254-21 Board of governors 

29;-22 Joint undemiiiing plan risks, ei~gibiliiy 

294-23 join^ ui~drrvriiing pien assigned claims, 

eligibiiliy 

294-24 Joint undrrr-riring plan rares 

294-25 Regulelions, revieu. appeilare procedure 

Psrr Ill. Geneis1 Provirions 

294-30 Cle~mani's eiioineg'r fees 

294-31 Fieudulenr or frivolous claims 

294-31.5 Admznistrerii'e hearing on denla1 of claim 

294-32 Aibiiiarion 

294-33 Discizminaraiy Pracrices Piohlbitsd 

254-34 Equitable allocsrion of burdens among insure^ 

29i-35 Allocation of burdens 

294-35.5 Drivers' edocarion fnnd underwriters' lee 

294-36 Srarute of i~rnirer~ons 

254-37 Administration 

(294-37.51 Challenges ro no-fault law; 

inrerveniion by attorney general 

294-38 Jurisdiriion 

294-35 General penalry provision 

1294-39.31 Fee in lieu of fine; defense 

294-40 Short title 

294-41 Seveiebilify 

PART I. KO-FAULT INSLZASCE 

$254-1 (a) The purpose of rhir ehap- 

rer is to creare e syste. of reparations for arclden- 

tsl ham and loss arising from motor vehicle 

accidents, to tompensate these drunages virhout ragard 

to fault, and to limir tort liability for these 

accidents. 

(b) This sysien of no-fault insurance can only 

be truly effective, hwever, if all drivers partici- 

psre st Icerr to the extenr required by la.. The 

pubifc must realize, as the legislature dosr, that 

regardless of the txreaz ro whlch the driving of saioi 

vetl~lri is ail-ed 1% is a privilege, nor a righr. 

and that d:iv>rg cerrlcs virh ir a serious serial 

responstbiliry in the fona of an ability ro canpeilraie 

adequaitly rhose vho are injured as a rcrulr of mior 

51 

vehicle accidents. Those persons who cry to ahralo 

thir privilege b.irhour the concomicanr respunsibill- 

tier murr be dealr virh severely. and cheiefoie ibis 

chapiei rrearr uninsured drivers more severely rhan 

those who obtain the legally required no-fsuii ~ n - 

surance coverage. To the errenc rhai rhls dlfferen: 

treacmenr exists in che criminal or civil areas, ic is 

done wirh rhe specific legislative inrent of encaurag- 

ing parriciparion by all drivers in rhe no-fault in- 

surance system which thir chaprei establishes. For 

chore persons truly ecananically unable ro afford 

insurance, rhe legislacure har provided for chem under 

the public assistance provisions of thir cha2rer. 

Therefore, rbere is no valid resson for persons nor to 

have inrvrence under rhir chsprer. IL 1973. c 203, pr 

of $1; am L 1974, c 168, pi of 91; am L 1583, c 215; 

5'1 

5294-2 Definitions. As used in this chapiei: 

(1) "Accidental ham" meens bod11)- injury. 

dearh. sickness, or disease caused by a 

WLOI vehicle accident to B person. 

(2) "Commirsionei" means The insurance ioseis- 

sioner 8% defined in seciion C31-31la)~ 

(3) "Criminal conduct" means: the comr:ssior of 

an offense punirhsbis by imprisonmer;~ for 

more than one year; or the operailon or u%e 

of a mocoi vehicle virh the specific inten> 

of ceuszng injury or damage; or the opera- 

xion or use of s motor vehicle as a ccn- 

verier v~iiioui a pod falrh belief by the 

opriacor or user rhsi he is legally er:iiieci 

ro operate or use such vehicle. 

(4) "Injury" means aciidenral harm not resulrzilg 

in deaih. 

(5) "Insured motor vehicle" means B motor 

vehicle. 

(A) Which is insured vndri s no-fsQir 

policy, or; 

(B) The wnei of which is e self-insurer 

wirh respeci to such vehicle. 

(6) "Insurer" means every person licensed io cn- 

gage in the bvsinesr of makir.8 coniiarrs of 

moror vehicle insurance snd includes re

(8) ''tloror vehiclei' means any vehicle of a type 

required ro be reg~rreied unde; chapier 285, 

including a vehicle of a type with less than 

four wheels or a trailer acteched to such s 

vehicle. 

(9) ''Moror vehicle eccidenr" means an accident 

BriSing out of the operation. mainrenance, 

or use of a moror vehicle, including an ob- 

ject die'% or propelled by a motor vehicle. 

(10) "So-feulr benefirs" virh respecr ro any ec- 

cidentsl harc shall be subject to sn aggre- 

gare limit of S15,OOO per person or his +ui- 

vivoi and means: 

(A) All appropriate end reasonable expenses 

necessarily incurred for medical, 

hospital, surgical, professional 

nursing, dental, optmetric, mbulance, 

prorrheric services, prodvcrs and ec- 

comnadaiions furnished, x-iey and may 

include any non-medical remedial care 

and riearmenr rendered in accordance 

with =he reaching$, faith or belief of 

any group ~hich depends for healing 

upon spirituel means rhrough prayer; 

(8) All appropriate and reasonable expenses 

necessarily incurred for psychiatric, 

physzcal, and occupational therapy and 

iehabiiiiarion; 

(C) Monihiy earnlngs loss measured by an 

amount equel ro the lesser of: 

(i) 5800 per month, or 

lii) The monrhly earnings for the 

period during which rhe eiridenrai 

harm results in the inabiliiy ro 

engsge in available snd eppiopii- 

are gainfvl scriviry. 

(D) All appropriate end reasonable expenses 

necesrsiily incurred as s result of 

such eccidonral harm, including, but 

not limited ro, (i) expenses incurred 

in obraining services in svbsiilurion 

of rhose rhai the injured or deceased 

person would have performed not for in- 

cane but for the benefit of himself or 

his family up io $800 per month, (ii) 

funeral expenses nor ro exceed 51,500, 

and (iii) errorney's fees and costs to 

the extent provided in recrion 

294-30(e); 

provided rhat the tern, when spplied to a 

no-fault pclicy issued sr no cosr under the 

piovirions of secrion 294-2l(b)(Z), rhall 

noc include benefirs under rubparagrsphs 

(A). (3;. kld (C) for m y FISD. zeceivin* 

putlic srzistsnce banefirs. 

(If) "No-feuli policy" veanr m insurance policy 

vhich meets the reqvir-nrs of renrion 

294-10. 

(12) "q?eiaiion, maintenance, or use" when used 

xirh respect io s mror vehicle includes 

occupying. entering into and alighting from 

ii but doer not include condvcr in the 

covisc of loeding or wloading rhe vehicle 

unless ihe sccidenisl hats, occurs in rhc im- 

eedxare piaxirsiiy of the vehicle, and does 

no: include conduct within iha course of s 

business of repairing, servicing, or other- 

wise aainrainlng vehicles unless rhe condv~r 

occurs outside rhe premises of such 

business. 

(13) "ihner" means a person who holds the legal 

title to e soror vehicle; except that in the 

case of s motor vehtcle vhich is ihe rubJeci 

of a recurzry agieemenr a i lease wirh B term 

of nor less rhan one year sirh the debtor o; 

lessee having =he iighi to possession, such 

term means the debtor or lessee. Vheneie; 

transfer of rirle ro B motor vehicle occurs. 

rhe seller shall be considered the owner un- 

til deizvery of the executed riile ro the 

buyer, frw i-hich rlse ihe bu)-er ha:ding the 

equirebie rirle shall be considered the 

me*. 

(14) "Person" means, *hen appropriate to the 

context. not only individuals, bur 

CDipoiaTiOns, firms, associaiians, and 

societies 

(IS) "Reguletion" means any rule end regiilarion 

promulgaied by the commissioner pursuant to 

chapier 91 

(16) "Self-insurer", virh respect to any moroi 

vehicle, means a person who has ssrlsfied 

the iequiremenrs of section 294-Biai12). 

(17) '"Yirhaur regard to feuli" means tirespecrive 

of fault ss a cause of accidental harm, and 

vithoui application of the principle of lha- 

biiiiy based on negligence. 

(18) "Person receiving public assistance 

benefxts" mesnr en)- person receirzng benefirs 

consisiing of medical seisicei or 

direct cash payments through the depviimenr 

of sorial ser\,ices md hous~ng, or benefits 

from the Svpplemenrel Securiry Income 

program under the social security 

Adminisiration [Z 1973, c 203, pr of 51; em 

L 1934. c 168, p: of 51; em L 1975, c 113, 

51; em 1 1976. c 80. ($1 to 3; am L 197i. c 

166, $51, 2; sn, L 1979, c 68, $1; em L 1980, 

c 86, $1 and c 234, $1; em L 1983, c 

511 

261, 

5294-3 Qhr co no-fault beneflrs. (a) If the 

accident causing accidental harm occurs in this Siaie. 

every person, insured under rhia chapiei, and his 

survivors. suffering loss iron, accidenial harm arising 

out of rhe operarion, mainienance or use of e moroi 

vehicle has a righr to no-fault benefirs. 

(b) If the accident cavsing accidental herin oc- 

curs outside chis Srare, the following persons and 

their survivors suffering loss from accidental harm 

arising out of the operarion, meinrenence or use of a 

wior vehicle hare a righr to no-faulr benefirs: 

(1) No-feult insureds; and 

(2) fhe driver and other ociupanir of an insured 

vehicle, other rhan a vehicle which is regu- 

larly used in the course of the business of 

transporring persons or property and vhich 

is one of fire or more vehicles under coe*on 

mnership. 

(c) "nsxiiam limii". me %oral no-fault beae- 

fir* payable per person or on his deaih ta his sur- 

vivor on arcourt e* accidental harm sustained by him

in any one moior vehicle accidenr shall be $25,000, 

regardless of rhe number of moror vehicles involved or 

policies applicable. 

(d) "Ho-fault insured" means: 

(I) Person identified by neme as an insured in a 

no-fault policy complying with seciion 

29i-10; end 

(2) While residing in the same household with a 

named insured, the follwing persons nor 

identified by name as an insured in any 

other contract of no-fault policy complying 

with this chapter: e spouse or orhei rela- 

cive of a named insured; end a minor in the 

custody of a named insured or of a relative 

residing in the same household virh e named 

insured. A person resides in the same 

household if he urnally makes his home in 

rhe same family unit. even though he rem- 

parerily lives elsewhere. [L 1973, c 203. pt 

of $1; m L 2974, c 166. pr of 51; am L 

1975, c 113, 521 

529b-4 Obl~gatiii ti pax no-fau1.r benefit*. 

Every no-fauir and self-insurer rhali provide no-fault 

benefirs for accidental harm ss folloi-s: 

(A) in the case of injury arising our of a 

moior vehicle accident io any person, 

including the ovnei. opeiaioi. 

occupant, or usei of the inrurpd motor 

vehiiie, or any pedestrian (znciuding a 

bicyclisr), or any user or apeiaioi of 

e moped as defined in section 269-1 who 

svrieins sccidenrai harm as a result of 

the opeierion, meinienanie, or use of 

the vehicle, the insurer shell pay. 

virhoui regard ro fauir, to the perron 

an amount equal zo rhe no-feuli bene- 

firs payable to the person as e resuli 

of rhe injury: or 

(B) In The cele of dearh arising our of a 

mroi vehicie accident of any person. 

including the a.nei, opeisror. 

occupsni. o i user of rhe insured moror 

vehicle, or any pedestrian (inilud~ng e 

bicyclist), or any user or driver of e 

moped as defined in section 219-1 who 

sustains accidents1 her. as s result of 

rhe operarion, maintenance. or use of 

the vehicle, iha insurer shall pay, 

virhovt regard ro fault, to the legel 

repierentsrive of rhe person. for the 

benefit of the anrviving spouse and any 

dependent, ss defined in secrion 152 of 

rhe Inrernel Revenue Code of 195/r, i?f 

the person, rr uounz equal to the 

no-fsufr benefirr paysblo to the spouse 

and dependeni as a rcsulr of rhe dreth 

of rhe person, subjcci. however, to rhe 

provisions of section 294-2(10). 

(2) Payment of oo-faulr benefits shall he made 

as rhe benefic* sccivc except rhsr in the 

case of deach, papear of rhe benefirs may, 

at rhe option of the beneficiary, be rede 

imediaiely in s lump sum papenr. 

(3) Pepnt of na-faulr benefirs rhall be made 

virh~n ttrrry days afiei the insurer has 

received reasonable proof of the fact and 

B ~ O U ~ of L benefits accrued, and demand for 

payment thereof. If the znsuiei elects z0 

deny a claim for benefits In whale or in 

perf. the insurer shall wich~n thxrty days 

norlfy rhe claimenr in uriring of den281 and 

ihe reasons for ihe denial The denial 

notice %ha:] be prepared end malied by the 

insurer in tiiplicare copies and he in 

format approved by rhe com~ssionei. If the 

insurer cannot pa)- or den>- rhe clair fci 

benefirs because addirional information or 

loss documentation is need&, rhs lcsuisr 

shall, virhin the rhircy days, forraid the 

ciaimani an iremired lisr of all ihe 

required documents. 

(1) Amounrs of benefits which are unpa~d rhiiiy 

deyr afiei rhe insurer has received 

reasonable proof of the fair and amount of 

benef~ts accrued, and demand for payment 

ihereof. sfrei the expiiatzon of the thirty 

dngs, shall bear interest sr the rate of ane 

and one-half per cent per maorh. 

(5) No part of no-fsuli benefits paid shill be 

sppl~ed in any manner as arrorneg's fees in 

the case of injury or dearh for rhich the 

benefirs are paid. The insurer shall pay. 

rubject to secrion 291-30, in sddliion to 

the no-fsuli benefirs due, ell ariornry's 

fees and costs of serrlemenr or suit, nzces- 

$air ro effect rhe papent of say or all 

no-fauli benefirr found dup under rhe 

conrracr. Any contract in v~olsr~or, of ih~s 

provision shall be zllegal and 

unenforceablel and it shall coiisrirure an 

unleuful and unethical acr far ar: a~rorne) 

to zolicir, enter into, or knoi~ngiy azcrpr 

benefrrs under any such coniiac~ 

(6) Any insurer who vzolefea rhe prc~zs~ons of 

this section shell be rub~ect :o ihe piauisions 

of rub+ecrions 294-39Cb) and (ci. 11. 

1973, c 203, pr of 51; am L i97i. i 168, pi 

of 1 ; am L 1975. r 113, $ 3, am L 1978, i 

175, 517; am L 1983, c 261, 521 

5294-5 Peynent from which insurer; (a) A ila;m 

no-fsult benefirs for eccidenral harm of s person 

is nor an ocrunanr of anv moror vehicle ~nrnlced 

in an eccidenr may be made against the no-fa-It In- 

svrer of any involved vehicle. The no-fault inruiei 

sgeinsr whom rhe clsim is ssserred shall process end 

pay the claim as if vholly responsible, but the in- 

surer shell rheresfier be enrirled to recover fioa the 

no-faulr insurers of all ether involved vehicles 

proportionate conrribution for rhe beneflts paid end 

the cosrr of processing the claim. 

(b) All no-faulr benefits shall be pald iecan- 

darily and net of any benefirs a person is enrirled to 

receive bciruse of rbe accidtnrel hsrm from vaik.ers' 

compensation laws; provided rhsi chis seclron rhall k 

inapplicable to benefits payable to a survzving spouse 

and any surviving dependenr as provided under section 

294-4. If the person doer nor collecr such benefits 

under the workers' compenserion less by reason of rhe 

conresr of his right to so coIlecr by the peisan or 

organiretien responsible for payment thereof, the ia- 

jvird person, if othtmise eligible, shall. 

nevertheless, be cnrirled ro receive no-faulr benefirs 

and upon peymcnt rhereof che no-faulr insurer shail be 

tvbrogered ro the injured person's ixghrh to coiieii 

avch benefirs

(c) No papear of no.feuit benefits may be made 

to the occupants of a motor vehicle orher than the in- 

siried motor vehicle or ro the operator or user of e 

motor vehicle engaging in criminal conduct which 

causer an+ loss. 

(d) The no-faulr insurance epplicsble on a pii- 

mary basis la eccidenral harm to which this chapter 

applies is the insurance on the vehicle occupied by 

the injvred person ax the time of rhe accideni. or, if 

the injured perron ir e pedestrian (including a 

biryciisr), :he insurenee on the vehicle which caused 

eccidenral harm to the pedestrian (including a 

bicyclisrl. 

If there is no inzorance on the vehicle, any 

other no-fsuir insurance appiirsble to the injured 

person shall eppiy. 

No person shall recover no-fault benefits from 

more then one Insurer for accidence1 harm a+ a result 

of the same sicidenr. IL 1973, c 203, pt of 51; em L 

1914, c 168, pr of 51; am L 1975, c 41, 5;; m L 1476, 

c 80, $4; am L 1977, c 166, 53; em L 1918, r 33, 51; 

am L 1983, i 261, 531 

4294-5.2 rno,ll cf iiiiiiice. coverage. (8) 

If B iempurary substitute vehicle is made available ro 

a customer by an auro repair shop regzsrered vzrh the 

malor vehicle iegali industry hoard or s moroi vehicle 

dealer Iicenied by the motor vehicle industry liccns- 

ing board, while the shop c i dealer repairs or ser- 

vices rhe curroiner's insured motor vehicle, rhe 

no-fsulr poiicl- of rhe cusromer's insured moror vehi- 

cle shall he prlmaiy over the policy an the temporary 

subsrirure vehicle. 

(b) In rhe event that s ruirlwei's insvred moioi 

vehxcle is operared by e registered repsir shop in the 

CDUISP of service or repair, or to veilfs repsiir, the 

no-fault pn!;cy of ihe regiszered repair shop shell be 

primary over rhe policy on the rusiomer's >nsuied 

motor vehicle. ll 1977, c 73, 41; sro L 1978, c 87, 51; 

am L 1980, c 73. 521 

529L-6 A-ion of ioaiabiliiy. (a) Tort 

iiahiliry of she owner, operator, or user of an in- 

sured motor vehicle, or rhe opeieior or user of an 

uninsured motor vehicle who opereies or vres such 

vehicle ~irhoui reason to believe it ro be an unin- 

sured moror vehicle, with respect ro accidental harm 

arising from moroi vehicle accidenir occurring in this 

Siere. is abolished, excepr as to ihe follooing per- 

sons or their personal represenrarives, or legai 

guardians, and in the follwing circtimsrances: 

(11 Dearh occurs to ruch person in ruch e wlior 

vehicle srcidenr; or injury occurs ro such 

person vhich consists, in whole or in part, 

in a rignificani permanent loss of use of a 

parr or function of rhe body; or injury oc- 

curs to ruch person which corrrisrr of a 

peroanenr and serious disfiguresenr vhich 

results is svbjcciian of the injured person 

to menisi or wtiolai suffering; 

(2) injury oscvrr to such person in s moror 

vehicle accident in which the mhmonr peid or 

accrued exceeds the medical-rehebilitarivr 

lipit established in section 294-IO(b) for 

expenses provided in section 294-Z(10)iA) 

and (BI; 

(3) Injury occurs to such person in rvch an sc- 

cidenr sod as s resuii of such injury ihe 

aggregate limli of no-fault brdeflis 

ouriinrd in section 294-Z(10) ro 

such person are exhausted. 

lhis section shall apply whether or not the ilriured 

person i5 enZztIed io receive no-fault benefits. 

ib) No claim may be made for benefzis under rhe 

uninsured motorist coverege by an injured person 

egainsr an insvrer who has paid or in liable to pay 

no-fault benefits to such injured person unless such 

claim meers the requirements of the foregoing section 

(aI(1). (21 or (3). 

(c) No provision of rhis chapiei shail be can- 

strued to exonerare, or in any manner to iin;i, rhe 

liability of any person in ihe business of 

menufectuiing, retsiiing, repairing, servicing, or 

otherwise maintaining motor vehicles. arising from a 

defecr in a motor vehicle ceused, or nor c,oireired, by 

an air or anis+ion in the manufacturing, rerailing, 

repairing, servicing. or other maintenance of a vehi- 

cle in rhe course of his business. 

(dl No provision of this heirion shall be con- 

sirved ro exonerate, or in any manner ro limlr the 

criminal or civil lisbiiity, includzng special and 

general damages. of any person b.ho, in the 

maintenance, operazzon, or use of any motor vehicie; 

(1) Inteniionally causes injury or danagr io n 

person or picperil-; or 

(2: Engages in crirninel condiic~ iticli causes in- 

jury or damage ro person or property, or 

(3) Engages in conducr resulting in punitive or 

exemplery damages~ 

(el No provision of this secrlon shall be coii- 

rtrued ro abolish tort iiabiliiy with rerpeci to 

property dsmsge arising from motor vehzrle ariidenrs. 

IL 19i3, r 203. pr of 51; em L 1914. i 168, pi cf 51; 

am L 1975, c 113, 54; am L 1976, c 200, pr of 51, am L 

1917, c 166, 54; m L 1982, c 190, $2; ree arid am L 

1983, c 245, 5 jl 

5294-7 R&hzhzf subrogation. 'dhene\.er any per- 

son effecrs a roir llabziity recovery for scizdenral 

heim, whether by suit or serilemenr, rhxch dupiicsies 

no-fault benefits already peid under rhe provirions of 

this chapter, the ao-feulr insurer shall be svbiagaied 

to fifty per cent of the no-faulr henefiis, up to rhe 

meximum limit specified by seciian 291-3(c), paid ro 

loch person. JL 1973, c 203, pr of 51; am L 1974, c 

168, pt of $1; am L 1977, c 166, $5; em L 1978, c 53, 

011 

0294-8 Conditions of operation and regii~ratiix 

(*](I) No poison shall operate or use e mcior >-ehirle 

upon any public srreet, road, or highway of chis Irate 

sr any ti*= unless such -tor vehicle i5 insured at 

all i s 

under a no-fault policy. Erery aner of s 

-tor vehicle used or operered .r any rise vpon any 

public sireer, road, or hi8Ws)- of this Stare shall 

oblsin a oo-faulr policy upon such vehicle which 

provides the coverage required by rhis chepier end 

rhsll sainisin the no-faulr at all iimes far 

the enrire motor vehicle regisrisiicn period. 

(2) The requirements of this subsection mas be 

razisfied bs any anti of e Dcrcr vehic!e 

if:

(A) Such or-ner provides e surety bond, 

of qualifications as e 

relf-insure;, or arher securities afford~ng 

securiiy subsianrielly equivalenr 

to rhar sfforded under e no-fault 

policy, providing coverage at all times 

for the enrire moioi vehicle regisfrarian 

period, es deieimined and approved 

by the commissioner under regulations. 

and 

(8) The commi+sionei is sarisfied that in 

case of injury or death or properis 

damage, any cleimsnr would haw the 

same rights against such omer es rhe 

cleimanr would have had if e no-fault 

policy had been spplicable co svch 

vehicle. 

(b) Any person who violates rhe provisions of 

subsection ( a) shall be rvbject to the provisions of 

subsection 294-39(al. 

( The provisions of this chapter shall nor sp- 

ply to any vehicle ooned by or regxstered in ihe name 

of any agency of the federal government. jL 1913. c 

203, pr of 81; am L 1974, c 168, pi of $1; am L 1975, 

c 113, 55; am L 1978, c 91, $5) 

[§294-8.51 Verification of insurance (a) 

Every insurer shall issue io iis insureds a no-fauir 

insurance iden:lficarion card for each motor vehicle 

for which the basic no-fault coverage is vrxiten shm- 

ing the name and make end rhe facrory or rerial number 

of the motor vehicle, policy number, names of rhe in- 

sured and ihe insurer, and %he effective dazes of rov- 

eisge including the expiration daie; provided. 

however, ihai insurers of five or more motor vehicles 

which are under common regisrered omership and used 

in rhe regular course of business shall nor be 

~equired io indicaie ihe name of make and the factory 

or serial number of each maror vehzcle. The identifi- 

ceiion card rhall be in rhe insured mior vehicle st 

ell times and shall be exhibited to s leu enforcement 

officer upon demand. 

(b) The comirsionei of moror vehicle insurance 

shell issue 8 ceriifxrere of self insurance 

periodically, as necessary, foi use in each motor 

vehicle insured under reciion 294-8(a)(2). 

91, 821 

IL 1978. c 

15294-8.6) Unlewful use of no-feult insurance 

identificsrion card. It rhall be a violetion of this 

cha~ler for any person who makes, issues, or knfxingly 

~ ~ 

uses any ficritious, or fraudulently altered no-fault 

znsurance idenrificsrian card, or any person sho 

displays or causes or permirs to be displayed a 

no-fault insurance identification card knouing thar 

the no-fault policy was cancelled as provided in sec- 

tion 294-9. IL 1978, c 91, §lo] 

5294-9 Ohlig*rianr upon termination of 

insurance. (a) Iln O*?Ier of a moror vehicle regis- 

tered in this Srare who fails to oainrsin insurance sr 

reqvired by section 294-8, shall immediately surrender 

rhe regirtrerion certificate and license plstcs for 

rhe vehicle to the counry director of finance and 

shell not operaie or permit operation of the vehicle 

in this Stare until .insurance has again been obtamed. 

(b) Except as provided in subsection (d), an applicsrion 

for s no-fauii policy, including requiied 

opiional sddiriana: insurance ~cting provisions of 

seciion 294-11, covering a motor vehicle skali not be 

by an insurer authorized to issue a no-fault 

policy unless: 

(1) The principal operator of the vehicle daes 

nor have a license vhich permits rke opera- 

tor io operare rhe vehicle, or 

(2) The application is nor accompanied by a 

reasonable portion of rhe piemtun, as derer- 

mined under ivles of the comxssaonei. 

(c) A no-fauli policy, including required OF- 

rional eddiiional insurance meeting provxsicns of rec- 

tion 294-11, once issued shall nor be canceled or 

refused renewal by an insurer except for: 

(1) Suspension or revocarion of the license of 

the principal opereioi to operaie the rype 

of moror veh~cle insured, or 

(2) Failure to pay the premium for =he policy 

afcer reasonable demand rheiefoi. 

An insurer may refuse io renew optional addi- 

tional coverage in excess of char vhlch the insurer 1% 

required to make available to the insured under sec- 

rion 294-11 where the insured is a member of a class 

sex forth in section 294-2Z(b)(l)(A) or (Bj ar itre 

time of rhe refusal to renew. In any case of cancel- 

lation or refuse1 to renew, the insurer shall ionrxnur 

ell no-fault and oprional eddirlonal coverag~s in 

farce, ro the daie of expirarxon, or far rhirry days 

follouing notice, vhichevei dsre fxrst occurs. Kirhla 

fifteen deys of e cancellerion, the insurer shail 

refund the pro rare uneerned porrion, if any, of anj 

prepaid premiums. In any case of cancrllar~or or 

refusal to renew, vrirren notlie rhall be given ro tLe 

insured, nor less chan thirty days prior io ihe effec- 

rive dare of ihe rancellarlon or refusal ro ienev 

The rancrllsr~on or refusal ro renei shall nor be 

deemed valid unless suppaired by a ceitzficaie of 

mailing properly vaiidared by the United Sraies Portal 

service. 

If rhe insurer has manifesred in r-rirzng an offer 

to renew ra rhe named insured at least thiriy days 

prior to the end of the policy period and ihe offer 1% 

not acrepied before the expiration of the policr tern, 

the policy shall lapse upan rhai explreiion dare and 

this rvbsecrion shall nor apply. Noiciihsranding 

other valid methods of acceptance, an offer shall be 

deemed accepred as of the date of mailing of ihe 

acceptance. The dsre of mailing asy be evidenced by 

the pastmark or s certificare of mailing properly 

velidated by rhe Unired Srater Postal Service. 

(d) An insurer may reject or refuse ro acrep: 

sddltional applications for, or refuse ro rensi 

no-fault policies: 

(1) If rho com;nirsioner deieimines char ihe 

financial roundness of %he insurer souid be 

impaired by the wiring of sddiiional pall- 

ties of ~ ~JYI~cc; 

or 

(2) The insvrer ceases ro write any new policies 

of insurance of any kind in th~r Sreir. 

(e) Whoever knowingly violates, or consp~rel to 

violate, the provisions of subreciion (b) or (cj shell 

be assessed e civil penairy in an amount nor ra exceed 

11,000 for each reparare violar~on. Each vlolsriar. of 

subsection (b) virh respecr ro pol~~yholder or epplican? 

for insurance shell consritvie e separate 

violecion.

(f) The principles of law and equity regarding 

fraud and misrepresenraiion of materiel ferr shall ap- 

ply vifh respecr io oprzonal additional coverages 

xhiih ere in excess of chose which the insurer is 

required LO make available to inrvreds under section 

294-11. [L 1973, c 203, pt or 51; am L 19i4, c 168, pr 

of 51; am L 1975, c 113. 56; em L 1976, c 80, 55; ern L 

1978, i 91, $56 end 7; sm L 1982, c 178, 51; am L 

1983, c 144, $11 

$294-10 Regvired policy coverege. (a) In order 

ro be e no-fauir policy, en insurance policy covering 

s motor vehicle shall provide, in addition to the cov- 

erage specified in reciion 294-4, insurance ro pay on 

behslf of the omer or any operator of rhe insured 

maror vehicle using ihe moror vehicle virh the express 

or implied permission of the named insuied, sums which 

the wnei or opeiaror may legally be obligated to pap 

for injury, deaih, ar danage to properry of orhers, 

except property owned by, being transported by, or in 

the charge of the insured, shirh arise out of the 

ownership, opeistion, mainienance, or use of the moior 

vehicle: 

(I) L~abiliry coverage of not less rhan $25,000 

for dl1 damages sriszng out of occidental 

harm sustained by any anc person as a result 

of any one accident spplirsble to each per- 

son susiaining accidental harm eiising our 

of ownership, mainienance, use, loading, or 

unloadlng, of rhe insured vehicle; 

(2) Lisbiliry coverage of nor less rhan $10,000 

for all damages arlslng out of injury io or 

desrrucrion of proper%)- including motor 

vehicles and including the loss of use 

thereof, but nor including property wned 

by, being risnspoiied by. or in rhe charge 

of the insured, as s result of any one scci- 

dent ari3ing our of wership, mainiensnce. 

use. loadzng, or unloading. of ihe insured 

vehicle. 

lb) The commissioner shall accumvlate experience 

dais on e yeails barir for all mroi vehicle eccidenrs 

in the Sraie iesuliing in accidentel harm, and shsli 

rabvlere rhe emounts of benefits paid or reserved, 

hereinafier collecrively termed "rlaimr", for expenses 

specified in secrion 294-Z(10)iA) and (81 for each of 

rhese eccidenis. He shall perform such acruariei 

evaluations of this dere necessary ro determine, 

annually, rhar specific flgvre in dollar vslue, be)- 

vhich ninety per cent of ell "on-zero motor vehicle 

accident medical-rehabiIiterive claims sriling from 

noior vehicle scridents occurring dvring the next 

no-faulr policy t ew yesr are ~xpected to fell. This 

specific figure shall be utilized annually as rhe 

medical-rehabilitative lisir for all accidenrr occur- 

ring dciing the next no-fault policy tern year for the 

purpose of secrion 294-6(.3)(2). 

(c) For the pliposts of this section rho 

no-faulr policy term year rhall commence snnuslfg on 

September 1, ad rciminerc the follwing Avgusr 31. 

For each re- year rhr commissioner rhell make rhc 

rabuiarian of data necessary for rhe compvrsrion or 

the medicel-rehahiliration limii dvring the period 

April 1 to narch 31 preceding the Seprember 1 star= of 

the no-feulr policy term year. /L 1973, c 203, pc of 

I ; am L 1974, r 168, pi of 51; sm L 1975, c 113, $7; 

am L 1980, r 103. 91 and c 234, $21 

l29i-11 Required optionel additional inrurem 

(a) In sddilion i o the no-fault coverages deiciibed 

xx section 29&-10 every insurer issuing s no-feult 

policy shall make available to the insured rhe follow- 

ing optional insurance under the folioi-ing conditions: 

(1) At rhe option of the insured, every insurer 

shall offer provisions covering loss 

resulting from damage to rhe insured's motor 

vehicle with such deductibies including 

$250, as she commissioner, by regn!arion, 

shall provide. 

(2) At the option of the insured, every insurer 

shell offer Lo compensare for darnag~, not 

covered by no-fault benefiis, fa rhe 

inscred, his spouse, any dependents, or any 

occupanrs of the insuied's vehxcle. 

(3) Additional coverages end benefits i-lib 

respect to any injury, death, or any arher 

loss from moror vehicle accidents or loss 

from opererian of 8 moioi vehicle. Am in- 

sure: may provide for aggregate limits siih 

respect to such add~iional coverage so long 

85 the basic liabiliiy coverages proladed 

ore not less rhan ihose required by section 

29L-1Oia)lI) and (2). 

(i) Terms, conditions, exilusioni, end dedvrri- 

ble clauses consisieitt ulrh the requxred 

provisions of such ~oliiy and approved by 

the ronmirsioiirr who shall only approre 

rermi, condliions. erciiisiocs, dedccable 

clauses, coverages, end benefzis which are 

fair and equitable, and which iimii the 

variety of coverage aiaiiable so as ro give 

buyers of insurance reasonabie oppoiruniry 

lo compere the cost of insuring wlrh various 

insiiiers. 

(5) At appropris:ely reduced premlcn Tales, 

no-fault insurers rhall offer each of the 

folioving dedurriisics applicable only to 

claims of no-fault insureds and, in care of 

death of a no-faclt insured, of his 

SUrYiYUrS: 

(A) Deduciibies in the mounlr of 5130, 

5300, and $500 from all no-iauii bene- 

firs orheiwiEe payable, except rhat if 

ruo or mare no-fault insureds to whom 

ihe deductible is epplicable under the 

contract of insurance ere injured in 

the same sccidenr. rhe eggregace ernovnr 

of the deducrible spplicable ro all of 

them shell nor exceed rhe specified 

deductible. vhich smounr vherc neces- 

rery rhall be allocated equails among 

rhea; and 

Dedvctibles in the amounts of 5100. 

5300, 5500, end $1,000 per eccidenr 

fio~l all no-fauii benefiis oihewise 

payable for injury ro a person chi=h 

occurs while he is opereXing ox is s 

passtngrr on s mior vehicle virh less 

than four wheels. 

(b) Any policf of insurance described in this 

section rhall contain a provision in accordanis Qirh 

regvlerions of the commissioner specifying the periods 

within which claims may be filed and actions agslnsr 

the insurer mag be broughr. [L 1973, c 203. pr of $1; 

am L 1971. s 168. pr of 51; am L 1977, c 166. 561 

5294-12 Prohibiiions, enairv. (a) No insurer 

shell issue or ocfer io issu%palicy vhich he

eprerenrs is a no-fault policy unless such issurer 

meets the requiremenis of ihir pair. 

lb) Aoy insurer, sny general agent, agent, 

solicitor. or repieseniar~ve of an insurer who ui- 

olares subrecrion la) shall be subjecr ro the provi- 

sions of subsection 29L-39(1). 11933, c 203, pt o: $1; 

am 11974, c 168, pi of i ll 

no-faulr insurance ~olicies for onlv maror 

~~-~ 

vehicles 

wirh fewer lhan four wheels. [L 1981. c 56, PI] 

- ~~ 

5294-13 %chicle insurance raies. (a) 

Excepr as oiherribr provided in rhis chaprer, all pre- 

mium ieres for motor vehicle insurance shall comply 

uirh The provisions of the cesvalty rating lei cori- 

teined in chapter 431. 

lb) All piemlum races for wtoi vehicle in- 

surence shall be made in accordance with the following 

provision5: 

11) Due consldersiian shall be given ro past and 

prospecrive loss expeiience within itli 

S:aif, LO cezas~rophe hazards, if any, ro a 

ressonable margin for piofli and 

conilngencies, to dividends, ravings, or un- 

absorbed premium deposirs slio~ed or 

returned by Insurers to rheir policytioldeis, 

members, or rubrri~beis, io pas1 and 

prospecilve loss experience wiihln the 

Sisie, reasonable margin fcr profii from and 

ranringrncles in rhe edminisiiarion of motor 

vehicle insurance sold wiihin ihe stair; 

pasr and prospecrive expenses in ihe sale 

end adm~nisrrarion of notor vehicle ~ n - 

surance wirhin che Stere; and, oprionslli, 

co pasr or prospecrive loss, ssle+ and ad- 

minisirdrive costs experience in rhe naiioii 

or regionally, whenever such considersilri; 

*ill serve ro reduce rates. 

12) Due coiisideiaiion shall be given ro ihe in- 

VeSTmeni income from reserves end unearned 

insurance premiums and orher unearned 

proceeds received on accouni of moroi vehi- 

cle insurance sold in =his Scare, end ail 

orher fs:corz rhar may be deemed relevan:, 

such ar bur no* limited to rypes of 

vehicles, occupeiions, and invalvemeni in 

P85Z &ccidenrs, provided the). ere 

csiabllshed io hsve s probable effecr upon 

lasses ox expense, or rates. 

13) Tne systems of expense provisions included 

In rhe rares for use by any insurer or group 

of insurers may differ from rhore of other 

insviers or groups of insurers ro refiecr 

rho iequiremenrr of the operaring meihods rf 

any such insurer or grovp wirh respeci to 

any class of insururce, or virh respect to 

any rnbdivision or ccmbinsiion thereof for 

vhich subdivision or combinaiion separate 

expenre provisions are applicable. 

14) Risks may be grouped b3- classificacians for 

rhe establishing of rates and minimum 

piemxums. Clesrification rates may be mod>- 

fled io prodace razes for individual risks 

in accordance with raring plans vhich 

esratl~rh sraodards for measuring variations 

In hazerdr or expense provisions. cr brh. 

Such sraadaids may measure any differences 

among risks char can be demonsriared io have 

e probable efferi upon losses or expenses. 

15) Rates rhall not be excessive. inadequate, or 

unfairly discrinioa:ory. 

16) Rare meking and regularloc of raies far all 

insurance subject io ihis chap~er shail be 

governed by chapter 431; ~ub)~cr, however, 

to the follouing: 

(A) To assure rhe proper impiemenrarion znd 

evaiuarton of ihe chaprer ihe ccmrnis- 

sioner shall fully comply ci~h the 

provlslons of section 431-1331; 

1E) Except as provided in subsection lj) 

the commxssionei shall esiabilsh races 

end shall conrider w ~th orhe: relevant 

facL015 loss experience in rhir Srsre 

and rhe inresrmenr income of the 

insurers, end insofar as section 

431-694 and section 431-691 are in canfliii 

ulzh rhis proi,~sion, rectiai-i 

431-694 anid 431-695 shall nor be applacetie 

herein; 

1C) To afford all mieiesred persons an op- 

portufizr). io be heard the com.n~ss~oi~cr 

shall, after notice is pnbllshed pur- 

suant ro chapter 91, hold a publlc 

hearing vhrnevei rates ere to be 

increased; 

1D) The zniiial rarea shsll be reviexed 

prior ro Sepiembei I, 1975, and 

thereafter shall be reviewed at leair 

two nie corm:slloizr 

ahell issue a publlr sraieren; or a: 

order approving the raies for ihe brnr- 

fit of ihe public; 

1 The rommirsiooei rhall order Lnsuiris 

to rebate ro policyholders any exc~i- 

rive profli reellled by 1nsviers fro" 

rheir operations. 

Ic) Except to rhe exrenr necessary to merr ihr 

provisions of paiagreph (4) of subseci~on (b) of chis 

section, uniformity snong xnsureir in any mazirrs 

virhin rhe scope of this secilon is neiihei requlred 

nor prohibited. 

ld) No manual of ciesrifirer~on, rule, rare, 

rating plan, designation of raring territories, or 

srsndard for waror vehicle insurance rhall be effecrive 

unless sppioved by the commissioner. The conmlrsioner 

may accept from an advisor). oiganizarlcn Oaslc 

standards, manuals of clsas~f~carion, ieriircriei, 

endorrenienrr, fninr, and other maierials, nor dealing 

wirh reies, for reference filings bs insurers. The 

commisrianer shell hsve the pwei ro set rates under 

rhir chapter, pvrsvanr to and folla-ing the procedure 

under chapter 91, except as specifirslly provided 

herein. The c-isszonei shsll not set any racer 

withour a public hearing ei vhich a11 sffscied and interested 

parries have a full opportuniry to examine. 

to c-enz, md TO present evidence on the impaii end 

spplicerion of the proposed eriablishmenr, or revisxao 

of rates. The comzssionei shall publish a noiice of 

the date. time, and place of the public hearing ar 

least ~nce in each of rhree ruccsrsive weeks in a 

nesspapei of general czrculerxon. 

lr) Any person aggrieved by rhe spp1:iai:cn as 

:c him of ar.y clasrifirsf:or. rule, standard, rsie, a;

ating plan made, follcmed, or adopted by an insurer 

may make vrirten request to the conanissioner ro review 

ruch application end grant the relief requested. If 

rhe conmissioner finds that probable cause for the 

c~npleint cxirts or chat rhe complsint charger a vi- 

olaiion of this chaprei or any applicable piovisionz 

of the casualty rering is&, he shall conduct e hesiing 

on the cwnplainr. me heering shall be subject io the 

procedure provided in section 431-JOS(a). 

(f) If the commissioner hes good cause to 

believe rhet a classification, rule. standard, rate. 

raring territory, or rating plan made, failooed, or 

adopted by an insurei does nor comply vith any of the 

requiremenrs of this chsprei or any sppiiceble piovi- 

sionr of rhe casualty rating law, he shall, unless he 

has good cause to believe thar such nonceqiisnce is 

uilful, give norice, in writing, ro eech insurer star- 

ing rherein in vhsr manner and to what extent such 

noncomplieoce is alleged to exist end specifying 

rheiein a reasonable rime, noi less then ten days 

rheieafrer, within which ruch noncmpl~ence may be 

corrected. Notices under rhis subsection shall be 

confidential sr berveen the commissioner end the par- 

ties unless e heering is held as provided in rubsec- 

tion ig). 

(8) If the commiss>oner has good cause ro 

believe such noncomplience to be vil:ul, or if, r-irhin 

the period prescribed by the commissioner in the 

notice, the insurer does nor make such changes as may 

be necessary to correir rhe noncompliance specified by 

the commissioner or esrabllrhed to rhe satisfaction of 

the commissioner rhei such ~pecif~~d noncompliance 

doer nor exist, then ihe cmissioner may proceed ~ arh 

e hearing which rhall be subject to the heering procedure 

provided in section 431-705(a). 

(h) If, sfrer s hearing conducted pursuant to 

subsection (b) or (el, the commissioner finds char the 

complaznant is enritled lo relief or that any 

clsssificerion, rule, standard, rare. reting 

territory, or reting plan viole~er rhia chaprer or any 

applicable provirions of rhe casualry raring leu, he 

shell issue en order granting ihe complainant's claim 

for relief or pr~hibiring the insurer from "sing such 

clarsifirarion, rule, rranderd, rate, raring 

ierriroq-, or reting plan. The order shall conrein 

the comissioner's findings of fecr and conclusions of 

)ex, including, as appropriate, a specificaxion of the 

respecrs in vhich e violsrion of this chaprer or any 

applicable provision of the cesuelry rating law exists 

and shall specify a reasonable iime period within 

rhiih the insvrer shall comply virh rhe rews of rhe 

order. b y ruch order shall be subject to judicial 

revi~w in accordance with tho provisions of section 

431-705(b). 

(i) The cammissioner shall periodically revie*. 

and evaluate the moror vehicle insurance program 

described in this chaprer, including an annuel revier. 

of the preniv~l rstes, benefit psymenrs, and insurers' 

lorr experirncc. 

(1) The c-isrimer shall be prohibited fra. 

setting, mioraining, or in any way fixing rhc rates 

charged by oro or vehicle ulavrers for =or vehicle 

insurance isstled in canformiry wirh rhis chsprer ss 

tither no-faulr inrirrance or as oprional additional 

inrvrancc ucspt sr provided under section 294-23. 

Esch firs licensed to underwrite no-fauli insursnce in 

the $rate rhsll esrablirh it* o~ rere schedule. The 

c-irrionei rhs?], hwever, monitor and rvrvey =he 

several coPpanies rate making snrhods and sysrems. 

The c-issioncr shell rtgvire of each insurer and of 

each Self-insuirr any and all infomation, dare, in- 

tarnal uepoianda, srudies, and audits, he deems 

desirable for the purpose of evaluation, conparison, 

and study of the methods and schedules. 

Norwirhrtanding this piohibiiion, the camis- 

sianei shall, in his discretion, intervene ar any rime 

to adjust ieres, for the no-fauli, mandatory, or 

optionel-additional coverages, being assessed by an:- 

or ell insurers, upon a finding rhat all or any raies 

are excessively high or unconscionably below the ac- 

rual costs of provision of rlle coveisge being assured. 

In the estshiishmenr of their individuai rare 

schedules, each insurer shell conform fully to subsec- 

tion (b)ll), (2). and (4). 

lk) Korwithstanding any orhei law to the 

ranriary, no insurer shall agree, combine, or conspire 

with any other private insurer or enrer inro. become a 

member of, or psrticipare in any undersranding, pool. 

or rrusi, to fix, control, or mainrain, direcily or 

indirectly, moror vehicle insurance rates. Any violation 

of this section shall iubjeci the insurer and 

each of irr officers and employees invol~,ed to the 

penalties of chapter LBO vlrhoui benefit of any exemption 

otherwise permiired by section 480-11. This subsection 

rhall nor apply to advisory oiganirar:ans 

referred to in seclion 431-700 shlch ere nor involved 

in rare making ond~i this 

(1) hbrvirhstandlng subsection (j), commencing 

viih Sepieaber 1, 19i4, the commissioner shell enforce 

B mandatory reducrion of nor less than ftfreen per 

cent by each insurer. calculated as a perceniagr of 

the insurer's piemiwn Tor s comparable romblnatlon of 

inruience coverage in erfecr on January I, 9 3 

all moroi veh~cle rouereges, as piorlded in chis 

chapter, inclirdlng rhe basic no-fault policy. There 

$!>all be no exception to the requlrcmenrs of this 

provision, unless the commissioner shall find rhat the 

use of ihe rates required herein by an irlurer be 

inadequate to th? extent that such rates jeopardize 

the solvency of the inrurer required ro us* such 

races. No rete £07 the insurance required by this 

chapter shall be increased prior ro September I, 19iS. 

unless rhe insurer proposing such raze increase shall 

show that the rarer heroin ere inadequate es stared 

above 

fm) Noti-ithsrsnding subsection (j) all insurers 

of any ootarcycle. aoioi scooter, or vehicle xith less 

then four wheels shall provide e ten per cent ieduc- 

iion off the regulsr premium eech insvier essesses for 

ruch policy, to the operator pvrchssing s no-fauli 

policy who has successfully completed e safe driving 

course approved by che direrror of rranspoireiion. 

in) Norl;ithrtanding subrecrion (j) ar rhe oprion 

of each insurer all piemium rates on a no-fault ~oliiy 

for any motorcycle, motor scooier, or vehicle virh 

less than four whesis may provide s discount of nor 

more than ten per cent ro ihe operaror purchasing a 

no-faulr policy when the operator submits an sffldarir 

to the insurer that he vill veer a safety heimei ihai 

is approved by rhc direcror of transpoiretion during 

the operation of the insured vehicle; provided thar if 

the insurer provides for a discount rhe insurer mas 

provide for a surcharge of an mount eqvsl ro rhe 

discount for those operazors r-ho do nor svbmir sn af- 

fidavit rhat they will an safer7 belmer 

during rhe oprstion of the insured vehicle. 

No insured shall opeisre a vehicle insured under 

s no-fauli policy under rhir aPcrion vhich provides 

for a discounr for rhe use of a helmei, unless 

rhe insvred is rearing en approved rsfery helmet. IL 

1973, c 203, pr of 51; c%@ L 19JL, c 168, pr of $1; m 

L 1975, c 113, $8; sm L 1976, c 80. 56 and c 114, $1; 

on

em L 1977, c 166, $7 and c 175. $1; am L 1919, c 146, 

$1; am L 1980, c 271. $1; ern L 1982, c 173. $11 

[§294-13.11 M e in premiums rohibiied. 

Ho premium on any no-fault policy sh:l be in: 

creased as a result of any accident if the insured is 

no% ar fault in rhe accident. An accidenr in which 

the insured war not at faulr ahall nor be used in sny 

cay ro affeci any svbseqvenr increases ~n insurance 

premiums. /L 1983, E 16. PI] 

5291-14 Insurers' requiiemenrs. (a) Prior to 

licensing an insurer ro transact no-faulr or the op- 

tional sddirionsl Dotor vehicle insurance business in 

ibis Sraie, the c-issionei: 

(1) She11 effect e rhorough examinarion of the 

insurer's business experience, financial 

soundness and general reputaiion es an in- 

surer in this and other rrarez. In the 

discretion of rhe coounissioner, rhis exami- 

narion mey include en examination of any or 

ail the business records of rhe insurer, and 

an avdit of ell or any part of rhe insurer's 

moror vehicle insurance business, each ra be 

performed by the rommxarionei's staff or by 

independent consulranrs. So license shall 

be issued until the cornmissloner is saris- 

fied er to the busmess experience, flnan- 

cia1 solvency, and the econorl:c soundness of 

the insurer; and 

(21 Shall require of eaih insurer, and determine 

rhei sai~sfaciory aiiangeresrs heve been 

made for. ihe provision of e cornpiere sales 

md clelms service offlie in the Stare. 

(3) Sotiiithsiandiag any other requirements of 

this section or of chapter 431, may require 

a bond in e reasonable amount andrirh 

deposirs or sureties determined in his 

discretion of any applicant for a license 

hereunder. The conmissioner may. ar any 

iime, make and enforce such a requiremeni of 

any licensed insurer or self-insurer. 

(bl The cmissiooer may, prior to issuing s 

certificate of relf-insurance ro any person, require 

rhe applicant to provide for e cornpiere cleimr reri.ice 

office and an officer for the purpose of service of 

process in rhis State. 

(c) The c-issioner shall promulgaie reguls- 

Zions to permir any licensed healrh insnrer ro secure 

a license co engage in the business of moror vehicle 

insurance io provide only Chore no-faulf benefirs 

described in section 294-2(10l(h) and iE) and oprional 

major medical coverages. IL 1473, c 203, pt of §I; am 

L 1974, r 168, pt of $11 

/294-15 Inspection and sldir. Esch insurer 

licensed i a rranracr mcor vehicle no-faulr or op- 

tional addiiional insurance businesses in this Scsre 

ahall provide the cmirrioner virh periodic reporrs 

On every aspect of rhe no-fault and the options1 addi- 

time1 insurance business she insurer transacts in she 

State, including, bur not limited to, reporrs on the 

insesimcnr, reserve, reinsurance, loss and profit 

rxperirncr, rate rak~ng md schedules, clsiss received 

and paid. 

Tha cammissioner shall have rhe right and the 

dnt? of visiraiion, iaspecrion. and andir of all busi- 

ness records, including irireinsl memoranda, avdiis and 

correspondence iela:ed in any way ro rhe insurer'$ 

~OCOI 

vehicle in~urance business in rhis Stare. 

Eech insurer shall, not less frequently than 

quarferly, report io the comlssianei the derail of 

eeih claim received, claim paid, sppiicarion for and 

sale of a moror vehicle insurance policy, eaih ierai- 

nsrion end ienewa: refusal notice posied and of each 

cancellarion and refusal io renew effected on boih 

no-fault and optional additional insurance policy 

trm+BLCionS. 

The cmissioner shall, in his discretion, cause 

an audlr ro be made of ell or any segmea: of *he rroinr 

vehicle insviance books end bvainess records of any 

insurer by the staff of the division or by an indepen- 

dent auditor. A copy of every audit, inrernal or 

exrernel, performed by any insurer of any aspect of 

its motor vehicle books and business records shsll be 

submitred immediarely upon completion ro the 

c-isrioner. 

The commissioner shall assess and colleci from 

each inrurei, self-insurer, and from every applicant 

for B certificate of self-insurance or e license to 

rranssct che moror vehicle no-fault and opaonal addi- 

tional insurance business in rhls Stare such portion 

of rhe full costs of every sud:r, inspection. 

exeminstion, visirsiion, and orher senice related ro 

aro~or vehicle insurance required by ih:i or any orher 

chapter, or performed by rhe iornm~ssioner in his 

discieiion unde; rhis chapter or chapter 631, st he 

deems equitable in rhe rendering of such sein~cr. The 

charges shall be collecred end paid inio rhr genera! 

fund of this Srate. 

Any insurer falling to iepoii informarion in the 

manner and within the time required bp the 

com~ssionei, or failing fully to cooperace c lrh ihp 

commissioner end his rraff in the fulf>llmezir of their 

duiies under rhis chapter and chaixei 431 shall he 

subject to the penalty provided in sectiaii ~31-707 /L 

1973, c 203, pi of 51; am L 197i. i 108, pr of 51) 

52%-16 &biice~ion of premium racer The cam- 

missioner shall publish emually in s newspaper of 

general circulation in the Srarr a 1~s: of all motor 

vehicle insurers uiih representative annual prernlums 

for maror vehicle insurance. /L 1973, c 203, pi of 51; 

sm 11974, c 168, pi of 51; m, L 1980, c 5. 51: am L 

1983, c 2, 51; 

PART 11. JOIM DhUiRL'RITlKi PUS 

$291-20 Joinr undervriting plan, esz8blxshmenc. 

(a) A joint undesriiing plan is esrsblirhed consrsr- 

ing of all inrurcis aurhorired to =rite and engage in 

%=icing automobile insurance in rhis Slste. Each in- 

surer shall be a member of rhe plan and shall mainrain 

menrberrhip as s condxiion of irs licensuir zo transaci 

such insUx'mce in rhis State. 

The cmisrioner shsll establish and maintain a 

joint underwriting plan bureau in the dirisxon of 

motor vehicle insurance to receive, assign, and super- 

vise the servicing of all assigned claims and s!l ap- 

plications for joint undewriring plan coverage. The 

commissioner shall sdapr regulations for rhe opeieixon 

of the bureau, the arsignmeni of applicarions for 

joint unde=riiing plan coverage and esrigne3 claims. 

and the inspeerion, rupervisiaa, and mainrenencs of 

this service OD a fair m d equitable basis in accord- 

ance virh this chaprer.

All costs incurred in the operation of the joint 

underr-riting plan bureau and the operation of rhis 

plan including adminisr:a:ive, staff, end conrultaiive 

cosrs as provided in seilian 294-18, end claims paid. 

excepting essigned claims as provided in section 

294-23(d), shall, under regjlerions to be established 

by the commirsioner, be s;locared fairly and equitably 

among the no-fauli insurers. 

(b) n e bureau shell promptly assign each claim 

and application and notify the claimant or appliienl 

of the identity and address of the essignee of the 

claim or epplicarion. Claims and sppliceiicns shall 

be assigned so as to minimize inconvenience to 

ciaimantr end applicants. The ersignee rhereafrer has 

righis and obligarions as if it had issued no-fault, 

mandatory public liabi1i:y and property damage poli- 

tier ccmpiging viih this chaprer egplicsbJe to rhe ec- 

cidenral h em or oiher damage, or. in case of finan- 

cial inability of a no-fauir insurer or self-insurer 

to perform its ablzgarions, as if rhe assignee had 

vrirten the eppliiabie no-faulr insurance, undertaken 

the self-insurance, or lsrfully obligated itself ro 

pay no-faulr benefits fL !97L, r 168, pi of §I] 

529i-21 Board of govc:nnns. (a) A board of 

governors, heiexnafrei referred ro 8s rhe board, shall 

be esiablishrd by the com,issioner eithin the bureau 

for ihe purpose of pioi.id:ng expertise end consulia- 

ilon an all matters perrszning ro the operetion of the 

bureau and ihe p:rr underiiiriny. plan. The board 

shall be composed of rxo persons from, and menbcrs or 

represenracivrs of, each of the folloxing 

Bssoiiations. groups, or organizations, eppoxnred by 

ihe Eommlssionei far terns of rio years each: 

(1) Two members of, and nominated by, the 

Aneizcan Insurenip Assac>ar~on; 

(zj Tua members of, and nominated by, ?be 

American Xilruel Insurance Alliance; 

(3) Two members of, end nominated by. rhe 

National Association of independent 

Ins*i~is; 

(A) Two members, not affiliated rilh the foregoing 

organirar>ans, nominated by such 

non-sff~lisred insurers; 

(5) Two members, csch a self-insurer under rhis 

cheptai, and nomlnsred by all the ceriified 

self-insurers in the Srare; 

(6) Two members each, to be selected by the corn- 

missioner or nominared by each of the clas- 

sifications provided for in serrion 

294-22(b). 

(b) The commisrionei shali provide, after ron- 

sultarion wiih the board, in the budget of the bureau. 

fvndr sufficient lo reimburse rsrh wmber of rhe board 

for tbr scrual cosrs of rranrporretion, ovcrrright 

bouriq, forf, snd oxhex incidenial costs of errendins 

to the business and =*rings of zhe board. Orhewise, 

the members shall serve without cwpcnsarion. 

(c) Tbe board rhali elect its rhairmsn and 

vict-chairman annilally. The first etiing of the 

board shall be convened by rhe coarnissioner siihin 

sixrgdays of the effective dsrr of this cheptor~ 

Theresfier. the bosrd stall meez ai its discrerion. 

but nor less frequently ihen guaiierly. IL 1974, c 

168. pr of $I; sm L 1976, c 80. 511 

6294-22 Jainr under*iiringgian risks, 

eli~:ibiIiix. (el The cornmissloner shall establish 

clarsifiiaiions of eligible persons and uses fur which 

the joinr underwiring plan shall provide bozh the 

required no-fault policies end any optlarial add;rional 

insurance an eligible person or user appizes fo;. The 

commissioner mav further refine the defiil>txnns of rhe ~~ - 

clsssificationr oiavided far in subsection (bi. . . The 

commissioner rhall, by regulation. establish, 

implement, and superrise the joint undewriting plan. 

through the bureau, assuring that insurance for naiar 

vehicles rill be conveniently end expedirio~si~ 

afforded, subjecr only to paymeni or provision for 

payment of the premium, to ell applicants for in- 

surance required by rhis chapter to provide iiisurance 

for payment of na-faulr end tori liabxliiy insurance, 

or options! additional benefits, end who cannot 

reasonably obtain insurance at rarea nor in excess of 

those applicable to applicants under the plan. 

(b) The plan shall provide all no-faulr bene!its 

and services, end tort liability coverage, ro the 

limits and coverages specified in part 1 for aii 

classes of persons. motor vehicles, and motor veh,rle 

uses specified in rhis section upon rhc payment cf 

premiums as provided in sectlon 294-24, er folloi: 

(1) The plan shall piov,de na-faulr beneflrr and 

policies for each of the folloving ciasses. 

end each class shall be able ro secure a 

no-fault and torr liab~liry po:>iy through 

ihe plan: 

(A) All moro: vehicles owned by 1xici:srd 

assigned risk drivers as the 

commissioner, by rules, shall define 

The commissioner shall regulate the 

class in accordance ~ i i rhr h genera: 

prectice of the indusiry, the spyl>rsbie 

results, if eny, of his exaelnaiion 

of the inaxor vehicle insurers' buslnesc 

records end experience, and any zpplxcable 

snd scieniif~cally credible go\ernmenial 

or acedemic srudiei of the 

mulri-aciidenr or high-risk aurnmobije 

driver 

(B) All mioi vehicles owned by licensed 

dilveis ronvicred cithin rhe thiiry-sxx 

months imediarely preceding the dare 

of epplicarion, in any jvrisdict~on of 

sny one or more of ihe offenses of. or 

of rhe offenses cognate to: 

(if Heedless and careless driving 

fii) Driving uhile license svspended or 

revoked, 

(iii) Leaving the scene of an sccideni, 

(iv) nanslaughter. if resulting from 

the operation of a -tor vehicle. 

(v) Driving under rhc influence of an 

inloxicaring liquor el prorided in 

section 291-4 or any drug. except 

marijuana, as provided in seczion 

291-?. 

(C) All cmeirial uses, fiisr class. 

defined as any c-ercxal use ensaged 

in the rrnnspnir of passengers fox hire 

or grscuiiously. 

(D) All cmercial uses. second class, 

defined as sny c-erriel, business. or

(2) 

insrirutional use orher than rhe transpori 

of passenger^ .I described in subperagraph 

(C) or the exclusive use of a 

vehicle for damesric-household-familial 

purposes 

(E) All ~rorcycler, moroi scooiers, and 

vehicles vlih less ihan four wheels 

required to be regisrered vnder chapiei 

266. 

The p1.n shall provide no-fault benefirs and 

policies for all classes of persons, motor 

vehicles, and motor vehicle uses, sr the 

premiums specified vnder recrion 294-24, sr 

the options of the w?iers, for the folloving 

classes, which the E-irsianei, by ruler 

shall fuirhei define and regulere: 

(A) All licensed drivers receiving public 

assistance benefits conslsring of medical 

services or direct cash pailnents 

through rhe deperioenr of social services 

and housing, or benefits from rhe 

supplemenial security income program 

under the Social Securiry 

Adt~znistiai~on; ~ror~ded the licensed 

drivers ere tho role regisrered anerr 

of the moror vehicles to be insured; 

provided further that not more rhan onc 

vehicle per public sssisrence unit 

shsll be insured vndei his rhaprer unless 

extie vehlcler ere approved bi- the 

deparrment of social services and 

h~us~ng as being necessary for medical 

or employmeni purposes. 

(Bj Any licensed physically handicapped 

driver, lni1"dlng drivers viih any au- 

dilory linliaiion. 

Each ceregoiy of driver-wnei under 

rubparegraph (A) or (8) may secure no-fault 

coverage through rhs plan ar the 

individual's option, provided any pievlous 

no-faulr policy has explied or. has been 

canceled Any person becoming eligibie for 

plan coverage under subparagraph (A) shall 

first exhauli ell pa~d coverage under ens 

no-faulr policy then in force before becom- 

ing el~gible for plan coverage. 

b y person eligible or becoming 

aligible, under ruler adopted by rhe 

commissioner, under subparagraph ( B), say ar 

sny rime elect coveiege under the plan and 

terminare any piior prlvare insurer's 

coverage 

A certificate rhall be issued by rhe 

depairmenr of social services and housing 

iodicaciog that the person zs s bone fide 

public srsisiance recipienr as defined in 

subpsrsgiaph (A). The cercificsrt st~ll be 

delmed a policy for the purposes of chapter 

431 upon the irsoance of s valid no-fsulr 

insurance idenrifirsrjon cerd pursuant ro 

section 291-8.5. 

(3) Under the joint underwriting plan, all basic 

no-feulr coverages, inc1ud:np the basic 

no-fault palicy, rhe mandatory $25.000 pu- 

blic liabiliry snd rhe $10.000 properry 

damage policies ahdl be offered by every 

icsurer io rech eligible applicant ssripled 

by the burcau. lo addition, oprional addi- 

iional rouerages rhail be offered by every 

insurer in conformance with section 29b-11, 

for each class except thar defined in para- 

graph (Z)fA), as the commissioner. by rules, 

shall provide. [L 1974. c 168, pr of 51; am 

L 1975, c 113, $9; am I. 19?6, r 60, 58: am L 

1980, c 11, 01 and r 113, 51; em L 1932, r 

56. $11 

525L-23 JoinL underuriiine pian assigned cliimmm 

eligibility. (a) Each person rusraining 

accidental harm, or his legal 

represenrarive, may, except as proelded iii 

subsection (b) of this section. obtain rhe 

no-fsulr benefit6 through the plan =henever: 

(I) No insurance benefirs under no-fauli poli- 

cies are applicable io rhe ercidenral harm; 

or 

(2) No rvch insurance benefit* applicable to rhe 

accidenral harm can be identified; or 

(31 The only identifiable insurance benefits un- 

der no-fault policies sppl>cable ra the ac- 

cidencel harm will no% be paid in full 

because of financial inabiliry of one or 

more self-lnsurcir or insurers ro fulfill 

their obligsrions. 

(bl A person, or his legal represenratire, shall 

be dzsquallfied from ieceivlng benefzrs ihraugh ihe 

plan, if: 

(1) Such person is dirqualifled for crlmlnal 

conduct under sect~on 29i-i(c) from rerexi,- 

ing the no-fault benefiis, or 

(2) Such person was: 

(A) The m ei or registrant of an unxnsurrd 

or insuzed motor vehicle ei the rime of 

its involvement in the eiciderit ouc of 

which such person's eccldenrai harm 

arose, or 

(B) The operator or any pesrenger of such a 

vehicle ar such time with reason to 

believe ther such vehicle =as an unln- 

suied lmror vehicle. 

(r) Any person eligible for benefirs under chis 

section, or who becomes eligible to file s claim or en 

ecrion againsr the manderory public liabiliry or 

property damage policies, shall, upon the bureau's 

deierminaiion of svch cligibiliry, be enriiled io: 

(1) The full no-fsulr benefits ss if such victim 

had been covered as M insured BL the time 

of che accidenr producing the accidenral 

harm. 

(2) The rights of claim and action egainsr the 

inscrl?r. asrimed vndcr section 29

~pplicable. be aubstirured for the date of the sici- 

dent for purposes of section 294-36. 

(d) By reguletion, promulgaied by the 

comisaioner, each self-insurer rhail be assessed its 

equitable proiarion of ell costs and claims paid undei 

rhir section, annually. No claim shali be ess~gned to 

eny self-insurer for servicmg. Proration for In- 

surers and relf-insurers shall be founded upon e pro 

rara disrriburion for each premium dollar actually or 

theoretically received. Self-insureis shall be as- 

sessed that prorezed asovnt based upon the *oral pre- 

mium cost for the coverage and vehicles stared in iis 

cerrificate of self-insurance, as if ihe srlf-insrrrei 

had sold such coverage at the premium razes applicable 

under section 294-24. 

(e) If s person qualifies for essignment or 

benefirs under this secrion, rhe joinr underirlring 

plan or my insurer ro whom the claim is assigned by 

rhe plan shall be subiogared to the righrs of such 

person and shall have a clam for relief or e cause of 

action, separare from that of such persass, to rhe ex- 

lenf that: 

(1) Ir has paid no-fault benefiis; and 

(2) Eienenrs of damage compensaied lac by the 

plan vith ieference to the mandatory public 

lisb~lity policy for eciidenral harm end 

ultli reference lo the rnandsrory properly 

damage polxcy for propriry damage sustained 

are paid /I. 1974, i 168. pr of 53; ern L 

1977, c 166, 58; em L 1976, c 33, 521 

0294-24 JCCC~ n~ddd~r:i:igpi~~-h5_ (a) The 

iafing rules. iefxnemenr of ciars:fxcst~ons, rnrer. 

rerang plans, teiiitarles, and farms for use 

undei rhr lolnr underwriting plan shall be errabllahed 

by the commissioner afror consuliar>on r-lth the bcard~ 

All racing rules, clersificsrion srsndards and rules, 

rates, iaizng plans, territories, and pollcy forms far 

use in the provision of all motor veh~cle Insurance 

issued vnder the joinr underwriting plan shall be made 

end promulgsied by the commissioner in accordance with 

the foilouing provisions: 

(1) Consideration shall be given to ihe plan's 

pssr and prospecrive loss experience within 

the Siate; ranfingencier in the ad-inirrre- 

rion of mror vehicle insurance sold; pest 

and prospective expenses in the sale and ed- 

minzstration of motor vehicle insurance; in- 

cae frw investments of premiums end orher 

procaedr received on sccovni of joini undei- 

writing plan moror vehicle insurance sold; 

and all other feciars demonstrated to be 

rrlevanr by s cvrrrnr acrvaiially round 

study of the definable risks involved, 

piovlded rhsr no premium isre shall exceed 

the rrwparsbl~ rate not under the plan by s 

facrar of -re rhan rue. 

(2) Raring tcrrirorier pay be rrtsbljshtd aod 

risks may h grouped by clasrificarions for 

the cstsblishing of iaros snd minimum 

premiums. The c-issioner may by regula- 

lion provide for a uniform clsssifiiazion of 

risks and isting rerritorier for rhc vaiiour 

coverages. Clsssificarion rarcs may be 

aadified ro produce rslcs in accordance vith 

raring planr uhich .srablirh standards for 

meesvring variations in hersids or expense 

provisions, or both. Such srsndards nay 

measure any differences smong risks includ- 

ing vahiclts, occuparions, past risffii 

convictions. end invalvemenr in pas: 

accidents, provided :hey are established io 

have a demonsrrable effecr upon lcrses or 

expense. No riendaid or razing plan shall 

be based, in whole or in part, diieirly or 

indireiliy, upon race, creed, ethnic 

exiracrion, age, sex, length of driving 

experience. ciedit bureau raring, or marital 

siaius. 

(3) Raies shall not be excessive, inadequate, or 

unfairly disciiainarory. 

(b) The romi+sioner shall periodjcally sei raze 

schedules, but nor less frequently rhan annua:ly, for 

all classes, in accordance virh rhis parr and the fol- 

>wing criteria, se thar the rota1 premium income, 

from all plen ahitor vehicle insurance, when conbined 

with the investment income, shall annually fund ihc 

costs of all joinr underwriting plan clah%es, the 

joinr underwriting assigned claims plen, end the ad- 

minisrrarian of the planr. The commissioner shall es- 

tablish rates for ihe foUaing classes ~iihrn the 

restiicrxonr stared: 

(1) nororcycles end motor scooters shall be as- 

sessed a piemaurn rate not in excess of rhar 

assessed rhe same driver for automobile 

coverage; virh pio\,isiois for dedorr;ble 

no-fault pollcirs of $100. $300, $500. end 

$1,000; 

(2) For rhe licensed public esslriance diivri, 

er defined ec section ZPL-?:(bj(?j(A), no 

premiwn shall be assessed for rhe basic 

no-fault, the mandarorg public liability or 

the mandaiory properr). damage pol~iies; and 

all polirles shall conf";m io the pror,sioos 

of serrion 29L-zZ(b)(Z); and 

(3) For the phyriceliy limlred driver drfiiled at 

section 294-22(b)(Z)(E), no rate shall be 

set hxgher rhen rhar sssessed a cornparahie 

driver r-xtbout i>miiaiian, except rhar a 

higher rare may be surcharged undei any ap- 

pliceble rcandaid confoimzng viih seciion 

294-2l(e)(2). 

The commissioner shell set various systems and 

schedules of rates bared upon the risks involved, ihe 

experience vith vsrious exposures. uses, and dravers, 

and ma). include the erteblisholenr of surcharges for 

specific i s , drivers. and user, for each of rhe 

enumerated classes except the classes limiied under 

paragraphs (2) and (3). 

c The commissioner shall, in the same manner 

as wrder s*b;hretriai (b), rer rsres for an). oprional 

addirionsl coverages rhe plan shell offer. 

(d) hring any prc~ivm gear, or in any subse- 

quent premium yesr, the E-irsioner may adjust en). 

rere ro reflect my excess charged. ne may 

order s itfund io any clsrs. [L 1974. c 168. pr of $1; 

ma L 1975, c 113, $10) 

529C-25 Beelstions, rcviev, 

procedure. The c-isrion.r shall make and promulgarc 

ell necessary md approprisre rtgvlarzans for rhrr execvtion 

of his duties under rhis pair. Any final rulins 

or dir;.o%iiion by ibr bureeu, or by any asxignrd 

insurer or by a self-insurer, shell be appealed io =he 

r-irrioner. Adminisirsri~~ rrvitx, and the irgula- 

Zions prmulgated therefor by the commxrrloner, shall 

ccnfoim ro cha~ter 91. Jvdiiial zcuiew rhlll be

evslleble to any person eggireved as provided iin chap- 

ter 51. 

The provisions of ell orher parts of chis chapter 

apply co the joint underwriting plan, ~heiher d~rect 

reference is made or nor, unless in conflict with the 

provisioiis, of this pair. JL 19jL, r 168, pi of 51) 

PART 111. GENERAL PROVISIOXS 

$294-30 W r ' s airoinev's fees. (a1 A person 

making s claim for no-feulr benefirs may be allwed 

an &-aid of e reasoneble +w for attorney's fee, 

based upon ecrual rime expended, which rhall be 

treated separately from rhe cleim and be paid direcrly 

by the insurer to the attorney, and all reesanable 

coats of suit in en action broughi against an insurer 

rho denies all or part of a claim far benefits under 

the policy unlesr the court or the canmissioner, upon 

judiclal or adminisirerive proceedings, respectively. 

determines that the claim was fraudulent, excessive, 

or frivolous. 

lb) A person suing in tort, as permitied under 

this chapter. may enter into any arrengemeni virh an 

atrorney. IL 1573, i 203. pr of $3; reenaired L 1574, 

c 168. pi of 51; em L 1977. i 166. 55; em L 1583, c 

201, 541 

5254.31 Fzauddleni OT frivolour claims. i'lrhin 

the disrre~xon of the court or the commissioner, upon 

judicial or adm~niiriaiive proceedings, respecrively, 

an insurer or self-insurer may be sllih-ed an sward of 

B ressonable sum as siiorney's fee, based upon ecrual 

time expended, and ail reasonable costs of suir for 

ics defense against s person making claim againsr the 

insurer or relf-insurer where the claim is determined 

by 'he couir or the commxssionei io be Irauduleili 0: 

frzuolous, and %he srrorney's fee and ell reasoneble 

cosr~ of S U Z ~ $0 awarded may be treated as an offser 

egsinsr any benefirs due or to become due to rhr 

person. IL 1973, c 203, pt of 5i; reenacted L 197L. c 

168, pr of $1; sm L 1978, c 121, 51; am L 1983, c 201, 

$51 

$294-31.5 Administt~tite hearing on den+ai.p_f 

(e) If a claimant objecis to the deais! of 

benefits by sn insurer or self-insurer pursvaar ro 

section 29;-4 end desires an administrative hearxng 

thereupon, rhe clelmanr shall file with the commis- 

sioner ruo copies of rhe denial, a wririen request for 

review and e wriiren statement $erring forth specific 

reasons for the claimanits objeciions. n e documenrr 

must be filed wirhin rixry days sfrer the deie of 

denial of rhe claim. 

(b) The caanissioner shall nor reviev any denial 

of benefirs vhere the disputed mount exceeds 55.000 

sr of the dare of ihe denial; provided char if the 

amovnt in dispure cxeeeds $5.000 due solely io an 

iilsurer's or self-insurer's noncwlirnce with section 

29L-4, then the claim rhall remain within the juris- 

diction ef the c-irsioner. 

!c) me commirsioner *hail cooduct s bearing to 

review the denial of benefirs in conformity with chaprer 

91. The commissioner shall hsre 811 rbe psers ro 

sonduci s bearing as set fairh in serrien 92-16. 

Afcer graniing en ~pporz~nicy for hearing ro the insorer 

and ciaimanr, the c-isrioner rhall affirm the 

denial or reject the denial and order rhe payment of 

benefits as the fsirt may warrant. 

(di ne C O ~ ~ ~ may S S assess ~ O

einsurance, or other realloisti~n procedure in lieu 

of case-by-case reimbursement. 

(d) The c-irsionei may not approve or esta- 

blish cere-by-case proportionate reimbursesent on the 

basis of faulr in csscs involving only privsiely amed 

passenger motor vehicles designed io carry ten or 

fewer passengers. 

!e) All clpiims for case-by-cese propoiiionare 

reimbursement beiseen insurers inclvding 

self-insurers, if not settled by agreement, mag be 

settled through arbitretion or lirigarion. 

(fl In order further to reduce the incidence of 

rarr liabiliiy arising under rhis chapter, and io sie- 

bilize ihe numberr and emours of claims srising under 

%he join% undewriting esrigned claims plan, in the 

event any inrvrer becomes unable fully to meer and 

fund irs obligarions under this pair, or becomes 

insolvent, ell other no-fault insurers shall guarantee 

rhe ovZstsnding policies and claims obligations of the 

defaulting insurer, in an equitable dirtiiburion of 

such policies and clairns bered upon the slnounr of pre- 

mium revenue or the value of policies uiitten, includ- 

ing both no-faulr. olandatory. end oprionai-addirionnl 

insurance policies viiiten thsr year, ar ihe cornis- 

slonei rhall, by regulation, provide. This guarani? 

st,ali be effected virhour increase in any rsie for any 

such policy being guaranieed, and virhout requiring 

duplicate payment of eny premium bj- sny insured. /L 

1973, c 203, pt of 51; en L 1976, i 168, pt of $11 

4294-35 Allocarion of&u&de_5._ The conmissioner 

shall uirhxn iuo years after the effeciive date of 

ttiis chapier cslabiish a aysrern of prDportiDliare ieimbursemeni 

as svrhorized by the pioviaions on equitable 

allocation of burdens among insurers end self-insureis 

under reciion 294-3Llc). IL 1913, c 203, pr of 51; am 

L 6 , c 168, pr of 51; an L 1975, r Ii?, 511; em L 

3983, c 201, $21 

$294 -35.5 Drivers' educ8tlon ff~d underrriierr' 

(8) There is assessed end levied opon each insurer 

end self-insurer, ss defined in secTion 296-2, e 

drivers' education fuad underwriters' fee of one do]lar 

per year, on each motor vehicle insured by each 

insorer or self-insurer. This fee is due and payable 

in full on ur snnuel basis by mems and st e rime lo 

be determined by the commissioner. 

(h) ?he c-issioner shell deposit fhere 

underr-liters' fees into a special drivers' education 

fvnd acionnr which shell be allocated for the fiscal 

pear 1977-18 and the fircel yesrs rhereafrer, fifty 

per rrnr co the c-irsionei vhich shall be expended 

for :he operation of the driver cducarion progras 

provided for in section 286-128b) and fifiy per cent 

to rhc superinrendenr of the depaiiment of cducsrion 

to rupporr the driver tdvcerion progra. abinirrcred 

by rhr depsrtunc for high scboci rrudmts: pr-ided 

rhar all fwr received, vndrr secrion 294-35.S(a), 

uhich srs derived frm mrorcgclts. =tor rcnnrers. or 

similar ri=hicles, shall bc expcnded by rhc hiversiry 

of Hawaii =-airy college empfo)?nnt training office 

for the optrarion of s driver cducarion progrsm for 

operators of oororcyclcs, mroi rrwiers, or similsr 

vehicles. 

(c) Tbc r-issioner of lmror vehicle insurance 

rhall make ell necessary rules end regvlsrions for rhr 

~ecution of this recfian and rhe distribution of =his 

fund. 11 1975, c 113, $14; a;l L 1980, c 271, 42; am L 

1981. c 66. PI] 

9294-36 Stazure of limitatjons. (a) So ~"ir 

shall be brought on any coniiact providiirp. no-faulr 

benefirs or any conirecc providing optional addiricnal 

coverage more than: 

(1) Two years from the date of the moiai vehicle 

arcidenz upon vhich rhe claim js based; or 

(2) Tro yesrs afrer rhe last payment of no-fault 

or optional eddirional benefzis; or 

(3) Tuo years after the entry of a final order 

in arbitrarion; whichever is the last to 

occur 

(bl h'o suit arising our of a motor vehicle acci- 

dent shall be brought in tort more ihan: 

(1) Two years afcer the dare of rhe motor vehi- 

cle accident upon r-hlch rhe claim is based; 

OI 

(2) Two years afrer the dare of ihe Iari psprncni 

of no-feulr or ~piioiiai edditional benefxis; 

whichever is the lerer. / L 1973, c 203. pr 

of $1; reenacred L 1914, i ib8, pr of §I; 

re. L 1983, c 245, $6) 

4294-37 Administration [in] order to carry our 

rhe prouirlonr and fulfill the purpose of this chapier 

the cornmissloner shell: 

(11 Consult isirh iepresenrarives of the prlraze 

insurance business, such orher persorr, 

public end consumer organizaiions, and sgen- 

cies of the federal, state, or local govern- 

menrr as he deems necessary; 

(2) Adopt, amend, and repeal r?ach rules, pur- 

suant to chap~er 91, as h~ deems necessary; 

such rules -BY. in addition io carrying our 

snd fulfilling the purposes of this chapter, 

esrabfish standards for the prompt, fair, 

and eqeitable disposiiion of ell clams 

arising our of motor vehicle accidents; and 

(3) AppouIr surh personnel es necessary for the 

performence of his funcrions under rhis 

chsptei. All personnel appeznied under rhzs 

section shall be subject ro chaprers 76 end 

77. [L 1973, c 203, pi of 51; reenaired L 

1974. c 168. pt of $1; sm L 1979. c 160. PI] 

[5294-37.3) Challenges ro no-fault 1 - m - 

venrion by srtorney genes The airorney general 

shall intervene, ai the request of the c-issioner. 

in any case befor. my sppellace court in chis State 

in uhich the conrrirutionslity or r.alidirg of rhis 

chapter or any part rhercof is ar issue, m d may sp- 

peel to rhe hired Srsrer supreme court, if necessary. 

ro obtain s final dcrermination of any care. [L 1983, 

c 215, 521 

129L-38 Jurisdirrio. h y person mey bring ruir 

for breech of uty cnnrrecivel obligation assumed by an 

insurer under a policy of insvrance conreining surh 

mandatory or oprionsl provisions in any stare court of 

competent jurirdicrion. (L 1973, c 203, pt of $1; 

rcenacred L 1914, c 168, pr of $1) 

9296-39 General pcneliy grovision. (a) Any 

person subject to %he provir~ons of =his chapcer in 

rhe capeciry of the operetor, amti, oi resistrani of

s motor vehicle in rhis Stere, or registered in rhis 

SraCe, uho vxolarer any applicable provision of rhis 

~h~pier, shall be rubjecr LO cirsiion for surh violation 

by any county police department in a form and 

manner approved by ihe violations bvieau of the diszriil 

court of the first circuit. Notuirhsranding any 

pioi.ls~on of the Kai-aii Penal Code, each violarion 

shall be deemed a reparare offense end shall be rubjecr 

to a fine nor less rhan $100 nor more than 52.000 

and such fine shall nor be suspended. 

In the case of muliiple violarions the courr 

sbail in sddirian ~o any ocher 

f~llwing penalries: 

penalty, impose the 

(1) Impiisonmenr of not more than rhiriy days; 

or 

(2) Suspension or revocation of driver's license 

of rhe driver and of the registered owner; 

or 

(3: Suspension or revocation of the morar vehi- 

cle regisiretion plares of ihe vehicle 

involved; or 

(A) Impoundmenr, or impoundment and sale, of the 

moror vehicle for rhe costs of srorage and 

other charger incident ro seizure of ltie 

vehlrie; or any other cost involved pursuant 

ro secikon 294-13; or 

(5) Any combination of such penalties 

(b) Any person, in the cspaciiy of B licensed or 

unlicensed moror vehicle insurer, general egcnr. 

egeni. ~oliciioi, or other repieseniarlve, who ri- 

olarss an! provtrion of chis chapter shall be assessed 

a civil penalty no: to exceed $5,000 for each 

rzolaiion. 

(c) Any person, in the cepscity of e licensed or 

unlirsnsed morar vehicle insurer, general agenr. 

spent. solicitor, or arher represenrerive. $.ho knot- 

ingly violates any provision of rhis chapter shall be 

assessed s civil penalty of nor less rhan $3.000 and 

nor io exceed $10.000 for each ciolarion. 

id) (1) Vioiarionr of suhiectionr (b) and (c) 

shall be subject ro the construcrion ihar 

each repetition of such act shall consriiure 

a separate vtoleiion. 

(2) The imposition of any civil penelr). un- 

der subsections (e). (b), or (c) shall be in 

addition LO, end shall noi in any osy Iimir 

or affeir rhe applicarian of, any ocher 

civil or criminal penslcy, ar public sefeiy 

condition or requirement, provided by leu. 

IL 1971. i 168. pr of 41; em L 1975. c 113, 

512; am L 1978, c 91, 98; am L 1980, c 234, 

131 

15294-39.31 Fee is lieu of fine; defense. (a) 

*ny person bringing en action in tort under *his cbap- 

rer vho was vninsured at the Lime of rhe accidenr 

shall pay s fee of $1,000 in lieu of any fine which 

could have been levied s* s crimieal penalty for fsil- 

ing ro obiain rhe no-feuli inrvraare cover88e required 

by this cheprer. 

(h) The fee required under subsection (a) shell 

be paid by rhc person directly, or deducred from any 

settlemenr or verdict received. or both. 

(c) No person shall be required to pay rhe fee 

in subsection (a1 if the person can show proof of hay- 

ing been convicfed in a prior criminal proceeding for 

failing Lo hsve no-fauli insurance coverage on the 

dare of ihe aicidenr which is rhp subject of rhc iarr 

acrion. IL 1983, c 245, 531 

5294-40 Shori ritle. This chapter sha!! be 

known and may be rired as the "Havaii no-faulz isi" 

IL 1973. c 203, pr of 51; renumbered L 1914, c 168, pr 

of 411 

5294-41 Severability. (a) Except as provided 

in subsection (b), if any provision of this cha;tcr or 

the applicstion thereof ro any person or rircumstanre 

is held unconsiirurionsl, the remainder of chis chap- 

ter and the appliriliion of such provision ra oiher 

persons or circumstances shall nor be effezied 

thereby, and ir shall be conclusively presumed ihar 

the legislarure would have enacted ihe remalndei of 

this chaprer withour surh invelld or unconsriiurioiiai 

provision 

(bi In rhe event section 294-6(a) is held can- 

~~it~~ion~lly invalid, rhen ir is the intent of the 

legislature that the follaiog sections only ahall be 

voided: sections 29A-3, 291-4, 294-5, 29L-8(a)(l), 

and recrion 29L-12. It shall be conclusively presumed 

thsr the legislarure would hsve enacted ihe reminder 

of rhis chhprer virhoui such invalid or unrons:xrutionel 

provlrion. IL 1974. c 168. pi of §!I

Appendix C 

SURVEY OF REGISTERED MOTORCYCLE OWNERS 

To obtain information about the motorcycle population in Hawaii and 

viewpoints about the no-fault issue, the Bureau sent a confidential 

questionnaire to 800 randomly selected registered motorcyclists with the intent 

of eliciting at least 400 responses for a response rate of 50 per cent. 

Seventy-three of the questionnaires mailed out were returned because 

forwarding addresses of the registered motorcyclists were not available. 

Nevertheless, of the 727 questionnaires that were delivered, the Bureau 

received 324 responses for a response rate of 45 per cent. A sample of 400 

would have limited the sampling error to $5.0 per cent; but with the 324 

responses, the sampling error is calculated at 25.5 per cent. This means 

that in the worst case situation where 50 per cent responded "yes" on a 

question and 50 per cent answered "no", the true value of the response will 

be somewhere inside the interval 44.5 to 55.5, 95 per cent of the time. 

According to authorities on surveying methods, the response rate for 

mail surveys are frequently very low and a return of between 30 to 50 per 

cent is usual. Since the survey results are being used only to indicate 

general observations about the motorcycle population, the Bureau believes 

that the response rate of 45 per cent with a sampling error of Z5.5 per cent 

is sufficient for the purpose of this study. 

In analyzing the survey responses, the Bureau is aware that certain 

responses may not be accurate because respondents may have been afraid to 

truthfully answer questions concerning whether they had insurance or had 

been involved in accidents even though they were told that the questionnaire 

was confidential. The Bureau also is aware of possible attempts to skew the 

responses as many of the questionnaires received were either unauthorized 

photocopies of the Bureau questionnaire or questionnaires mailed in envelopes 

other than the Bureau's official return envelope. In order to maintain the 

integrity of the random sample population that was systematically obtained, 

the Bureau checked each questionnaire returned and eliminated all 

questionnaires that were obviously unauthorized photocopies. Since there was 

a slight possibility that the Bureau could have missed providing return 

envelopes to all respondents, returned questionnaires in unofficial envelopes 

were only disqualified if the questionnaire also was an unauthorized 

photocopy. 

Certain questions are of limited value because of errors in the 

questionnaire. Those questions include: 

(1) Item lllA(1) concerning the types of insurance coverage in the 

motorcyclist's policy. The check-off instruction should have 

read "check all appropriate" instead of "check one". While 

some respondents answered correctly despite the instruction, 

others were obviously confused in trying to decide which one 

answer was the most appropriate.

(2) Item lllA(3) concerning the amount of deductible on the 

personal injury protection coverage. The first option of "$50" 

should have been "no deductible". The Bureau believes that 

people in general are not very familiar with deductibfes as 

applied to personal injury protection benefits and the 

respondents may have been thinking more in terms of collision 

and comprehensive deductibles. However, the listing of a $50 

option may have further misled respondents since there is no 

$50 deductible for personal injury protection coverage.

SURVEY OF MOTORCYCLISTS 

I. Personal date (check one for each question) 

A. Age: 

(a) 3% bela. 18 years ( e ) m 41 - 50 years 

(b)=% 18 - 21 years ( f ) 51 ~ - 55 pears 

(c)mz 22 - 30 years (~)-zJ% over 55 years 

( d ) 31 ~ - 40 years .6% no response 

8. Personal Status: 

- 

( h ) Civilian ~ 

(1)- Military .6% other 

C. Employment Status: 

(j)S% Employed (I)= Retired 2 no response 

(k)- tinemployed (m)&% Studenr 

D. Do you also own s vehicle wirh four or more wheels? 

( n ) a Yes (0115.4% KO .3% no response - 

E. You are currently driving your mororcycle with e: 

( p ) m nororcycle learner's permir for the State of Havsii 

( q ) permanenr ~ Hawaii state moiorcycle operator's license 

F. 

( r ) m Permanent oororcycle operator's license from anorher Srere 

- 2.5% no response 

Have you reken s highway safeiy course for driving motorcycles in 

Hawaii? (s)l~l$ yes ('1- no no reswnse 

11. nororcycle dsra 

A. Type of motorcycle owned- (check one) 

(u)- under 125 CC's (Y)-% 361 - 1,000 CC'5 

(v)- 126 - 360 CC's over 1,000 CC's 

B. Use of motorcycle: (check one) 

(y)2= pleasure use only 

(z)l* driving ro school or work only 

(a)63.D% a11 of the above 

C. How long have you been dr~ving a mororcycle? 

(b)&%under 1 year (e)lm 6 - 9 years 

(c)A%l - 2 years (f)2- 10 - 15 years 

( d ) m % 3 - 5 years (g)2- over 15 years 

D. (I) Have you ever been involved in a collision with a: (answer ell) 

movlng vehicle ( h ) U yes (i)- no 

pedesrrian ( 3 ) yes ~ (k)- no 

non-moving object (1)- yes (m)_ no 

(2) 

71.6% no response 

If you answer yes to any of -hove, how many times were you 

involved in collisions? (check one) 

(n)m%once (p)= three times 

(o)a% twice (q)= over three 

(31 Hoc were your medicel, rehabilitation, and other out-of-posker 

expenses caused by the accident paid? (check one) 

(r)~%motorcycle no-fault insurance 

(s)U%the military covered everything 

(t)x%I paid for everything 

(uju%other (hpecifyj pax indicated no . . .- --* . Or 

tht other vebzcle be2:vg at fault paid or :ht 

health insurance covered injuries

Ill. Insurance Data 

A. Is your motorcycle insured? (v)=Pyes (u)=%no L n o 

response 

(1) If yes, what is covered by your insurance? (check one) 

(x)x%personal injury prorection (for yourself and your 

passenger) 

(y)=% liability protection (for bodily injury and properry 

~ 

damage to another person when you are et fault and suedj 

(z)=%collision expenses (for damages to your motocycle) 

( e ) z % casprehensive expenses (for damages caused things other 

than collision such as, fire, flood, theft, etc.) 

(2) Hw much do you pay a year for your insurance? (check one) 

(b)E% less than $250 ( e ) e % $451 - 550 

( c ) G % $251 - 350 (f)x%$551 - 650 

(d)xX $351 - 450 (g)z%over $651 

- 


(3) =rat is the deductible amount for your no-feult coverage? (Hw 

much must you pay on a claim before the insurance company makes s 

payment)? (check one) 

(h)=% $50 (k)2.2q500 

(i)e% $100 (>)A% $1000 

B. 

(j)s.o% $300 2.1% no deductible 

- 29.6% no response 

Do you have e health or accident insurance plan? 

(m)=% yes (n)r.S% no - 1.9% no reswnse 

If yes, what is the nene of the plan? (check one) 

( o ) u % XYSA 

( p j ~ Kaiser z 

( q ) Orher ~ (specify) ?ny indicated military coverage; others indicated 

~lans such as Aetna, Tr-?, G=Llre, and 

Who pays for the plan? (check one) Prudential 

(r)- your employer (includes where bath worker and employer 

share cost) 

(s)*% your spouse's employer 

(t1.90 your parent's employer 

(u)= yourself (employer doesn't pay anything) 

( v ) z % orher (specify) a few indicated self-insured 


- 

IV. Lxclurion of notorcycles from No-fault 

A. If mororcycles are excluded from the personal injury protection 

insurance requirement and required only to be covered by liabiliry 

insurance, h w will you take care of the personal injury expenses for 

you and your passenger in the event of an accident? (check one) 

(w)s I will claim medical expenses rhrough my current health 

insurance or accidenr insurance plan 

(x)= 1 will sue the other driver 

(~18.6% I sill buy a new accident insurance policy to cover personal 

injury losses 

(z)- IPy expenses in case of injury will be covered by 

the militsry 

(a)- I will pay my a?i expenses 

(b)i,lr Other (specify) 

19S no response 

B. Do you want mrorcycIes excluded from the requirement of maintaining 

personal injury no-faulr insursnce? (c)6B.Z% yes (d)=: no 

3.19 no resmose 

-

The following are some of the general comments made by respondents: 

1. "!ly motorcycle has been parked for 7 months because 1 feel 

that the no-fault insurance is unnecessary and I refuse to pay over 

$400 per year for insurance on a KZ-1000 when 1 seldom drove over 

150 miles per week. If no-fault wasn't required, my insurance would 

cost about $250 per year which I feel is reasonable at least for the 

state of Hawaii." 

2. " The current prices for motorcycle full coverage is 

ridiculous--full coverage for my cycle is approx. $1100.00 and that 

is exactly what the motorcycle is worth. I pay more insurance on 

no-fault insurance for my motorcycle than I do for total coverage on 

my new car." 

3. "As with most riders, I do NOT loan my motorcycle. I must 

however, carry two policies, one for my car and one for my bike. 

The real benefit will come when riders are insured, and when such 

coverage can be added on to automobile policies." 

4. "~nsurance is far too expensive--motorcycles are choseil as 

transportation by many because of ECONOEIY." 

5. "1 own 4 motorcvcles and have maintained Hawaii no fault in 

the past however the rates are prohibitive compared to what I pay 

for my car ridiculous!" 

6. "Notorcyclists pay exorbitant rates because no-fault 

penalizes the m/c driver (who is statistically very unlikely to be 

at fault and almost never causes injury to another motorist) for the 

incompetence of the at-fault driver wtio is responsible for the 

injury to the more exposed m/c driver. Experienced motorcyclists 

also pay excessive rates because of the higher injury rate of the 

ir~experienced m/c drivers and those who assume the risk of driving 

without a helmet. This "averaging" is making the cautious driver 

pay for the sins of his reckless bretheren. 

It is to the detriment of the entire driving public that the 

economic burden does not fall upon those responsible for the loss or 

damage, and responsible behavior is not likely to result from the 

3, 

averaging" of this burden. 

"NO-FAULT" perpetuates 

behavior." 

economic injustice and irresponsible 

7. "1t alarms me to think that that hardware should be better 

taken care of than people. Given any crash, the most obvious h most 

immediate damage is to the vehicles. However, chese costs initially 

high but they are finite. The cost of personal injury is subject to 

infinite fluctuation and not readily accountable. Wouldn't it be a 

wiser course of prevention to guard against the unknown rather than 

the known? 

In addition motorcycles involved in inultivehicle accider~ts are 

almost never at fault thus the guilty party's insurance will cover 

material damage. It did in my accident. I therefore beiieve it

unnecessary for motorcycles to carry collision 6: liability 

,, 

insurance. 

8. "Stopped using motorcycle several months agF: 

insurance lapse. Also like to see helmets required again. 

so let 

9. "Note--No fault should be as is BUT--prices are too high. 

Can you do something about the prices it should be governed by 

usage, age, & number of accidents." 

10. "But I would suggest [exclusion]onty for small bikes. You 

must remember there are some crazies riding muscle-type bikes. 

These vehicles are the rolling equivalent of a car. The horsepower 

& weight are equivalent to a honda car or a fiat 850. Tire size 

gets close too. And of course man is at the wheel." 

11. "A distinction should be made between those who always wear 

a helmer and those who do not. Premiums should be adjusted 

accordingly." 

12. "Yes, [motorcycles should be excluded] if it does not raise 

the rates (of personal injury) significantly, in which case I would 

try my HMSA plan. 

I think, if anything, the requirement for liability protection 

(to cover bodily injuries to the people in the other car only) 

should be dropped, seeing as how in an auto-cycle accident the 

cyclist is almost always seriously injured arid the auto passengers 

,* 

almost never injured (from the motorcycle). 

13. "I, like many other Hawaii motorcycle owners, ride without 

insurance due to the exorbitant cost of doing so. The cost of 

insurance here would buy me a new motorcycle every 4-5 years. I 

recently returned from a ttai~iland visit, where the cost of insuring 

my motorcycle was only $300 a year! Safe driving habits along with 

a clean record seem to be irrelevant to setting rates. The majority 

of the State legisIature doesn't appear to support an alternative to 

gas-guzzling, space consuming automobiles, an attitude particularly 

lamentable considering Honolulu's burgeoning traffic congestion. 

One only has to view the situation in Hong Kong to forsee our future 

here in the islands. When will common sense prevail? Mahalo for 

listening. I hope this survey will accomplish more than spending 

taxpayer's money & taking up computer memory space." 

14. "I presently own a 19i8 Yamaha 400XS (400 cc) and 196i 

Harley-Davidson Sporster (900 cc). I am paying $271 for my Yamaha 

and $471 for my Harley. This seems to be rather unfair considering 

I use the Harley only half as often as the Yamaha. 

I could see paying this higher price if it was warranted but as 

far as I know statistically the smaller Japanese motorcycles are 

involved in most of the accidents. It is unfair that the owners of 

the larger motorcycles must subsidize the mistakes of others."

. r"WXL.*- W

State of Hawaii 

Motor Vehicel Insurance Division 

1010 Richards Street 

Honolulu, Hawaii 96813 

Attn: Mr. Tanaka 

Dear Mr. Tanaka. 

@@b December 12, 1983 

The consumers of motorcycle insurance are being mislead by the 

state that motorcycle insurance is available through approximatc,iv 

one hundred thirty four companies that have rates filed. 

"It pays to shop around" is an understatement. I have known 

for some time that those insurance companies that have rates 

filed, are required formalities. Rates are not available by 

the agents that represent the insurance companies. 

I recently made my own survey of twenty companies that were 

picked of the one hundred thirty-four companies for their com- 

petitve rate. Of the twenty: 

2 companies had rates to quote 

2 have withdrawn from Hawaii 

2 had to write to the mainland for quotes 

10 had no rates to quote 

3 no rates for motorcycles-only commercial agents 

- 1 no rates to quote-handled only claims 

20 total 

Myself as well as other motorcycle owners in the state request 

that the Motor Vehicle Insurance Division make an investigation 

of all vehicle insurance carriers licensed in Hawaii if they 

in fact: 

1) Have rates available to quote 

2) If they will write coverage 

3) What is their intent and future in their responsibilities 

as required by the Hawaii No-Fault 

The problem lies with the insurance companies filing rates wtih 

the state and not with the authorized agents. The state has 

to enforce, that rates be readily available at the agents place 

n:-.-i~..-* 6.. *rournnucQv unrnRs LTD. 818 l*.i[si Rd. tfonohrtu. Hawaii (808) 536-7023 Tcfsx: 723 8r21 SUZK! HR

of business and a quote be given within a reasonable time. 

If only the law would be enforced may be change would then come 

sooner. 

In addition to the above I would like to inquire what the criteria 

is when a company asks for rate increases. Are the losses sub- 

stantiated with documented proof? The question has been asked 

many times but has not been answered. 

Your prompt investigation could lead to answers to the problems 

motorcyclist are faced with. It may inturn make everbody more 

law abiding. 

Sincerely Yours, 

CC: John Kiner, Honolulu Insurance Agency 

Tim Lyons, Hawaii Business League 

Russ Lynch, Star Bulletin 

Susan Caveria. Legislative Ref. Bureau 

Hawaii Motorcycel Dealer Association 

ANM: j bm

GEORGE R. AU1"OS"I 

00*Y3" 

STATE OF HAWAII 

INSURANCE DIVISION 

MPARTMMT OF COMMERCE AND CONSWE4 AFFAIRS 

Mr. Alfred N. Montgomery, Jr. 

President 

Montgomery Motors, Ltd. 

818 Iwilei Road 

Honolulu, Hawaii 96817 

Dear Mr. Montgomery: 

P. 0. mx ,st. 

HOWOLULU. HhWA11 -871-3514 

December 19, 1983 

Thank you for your letter of December 12, 1983. 

The results of your recent survey as outlined in your 

letter is of great concern to our office and is a blatant 

violation of the No-fault Law's provisions relating to the 

take-all-comers and complete sales office requirements imposed 

upon all insurers licensed to transact motor vehicle insurance 

business in Hawaii. Insurers guilty of such violations are 

subject to maximum penalties ranging from $5,000 to $10,000 per 

violation. As you may know, we have prosecuted those insurers 

found guilty of violating such requirements. 

To this end, Mr. Allan Gushiken, our chief investigator, 

will contact you in the near future to obtain the identities of 

those insurers involved in your survey as well as any other 

appropriate information which will enable us to commence with a 

complete investigation of this matter. Please be assured that 

should the investigation disclose insurer violations, prosecution 

will follow seeking maximum penalties. 

With respect to your request that we make an investigation 

of all licensed motor vehicle insurers in this State, our current 

work priorities and resource limitations make such an undertaking 

impractical at this time. Numerous bulletins have been previously 

issued to insurers and their agents as to the statutory 

requirements and the penalty provisions for violation. In your 

particular case, it is preferable that we focus our efforts on 

those insurers/agents alleged to be in violation with statutory 

provisions.

Mr. Alfred N. Montgomery, Jr. 

December 19, 1983 

Page 2 

AS tc your inquiry relative to rate increases, please be 

aware that all such filings are required to be accompanied with 

com~leta actuarial review and justification. This issue has 

been discussed at length during numerous legislative hearings; 

we have also met on several occasions with members of the 

Motorcycle Dealers' Association as well as Mr. John Kiner of the 

Honolulu Insurance Agency with respect to possible filing of 

preferred motorcycle insurance rates. To this end, we have 

provided various statistical data available in our office to 

allaw for the filing of such rates; however, numerous other 

concerns, such as the level of benefits required by statute, have 

precluded such a filing to date. Enclosed for your perusal is a 

copy of our latest annual report containing a discussion on motor 

vehicle insurance rate filings. 

Enclosure 

Again, thank you for bringing this matter to our attention. 

HIRAM Y . TANAKA 

Acting Insurance Commissioner

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