AN ACT MODIFYING THE ACTION TO BE TAKEN BY THE dIVISION OF MOTOR VEHICLES When it is notified of a lapse in financial responsibility, allowing an electronic notice of a lapse in financial responsibility, creating a new action by the division upon proof of specific circumstances, and requiring the division to create a plan to allow electronic receipt of forms from insurance companies.

The General Assembly of North Carolina enacts:

SECTION 1.  G.S. 20‑309.2 is amended by adding a new subsection to read:

(a1)    Division Records. – The Division shall ensure that its records accurately reflect the insurance coverage status of each owner of a motor vehicle registered or required to be registered in this State by reconciling all notices received under this section pertaining to that motor vehicle owner. A termination notice received under subdivision (2) of subsection (a) of this section shall not be recorded as a lapse in financial responsibility or initiate action by the Division under G.S. 20‑311 if an earlier notice received by the Division under this section establishes that the owner of the motor vehicle has met the duty to have continuous financial responsibility for the vehicle, as required under G.S. 20‑309, through a motor vehicle liability policy that is not the subject of the later termination notice.

SECTION 2.  G.S. 20‑311(a) reads as rewritten:

(a)      Action. – When the Division receives evidence, by a notice of termination of a motor vehicle liability policy or otherwise, that the owner of a motor vehicle registered or required to be registered in this State does not have financial responsibility for the operation of the vehicle, the Division shall send notify the owner a letter. electronically or by mail. The letter shall notify notice shall inform the owner of the evidence demonstrating lapse and inform the owner that the owner shall must respond to the letter notice within 10 days of the date on the letter and the notice was sent. The owner's response must explain how the owner has met the duty to have continuous financial responsibility for the vehicle. Based on the owner's response, the Division shall take the appropriate action listed:

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(5)        No penalty. – If the owner responds within the required time and the response establishes all of the following, the Division shall not assess the owner a penalty:

a.         The owner sold the vehicle under G.S. 20‑62.1 or transferred title under G.S. 20‑72 or G.S. 20‑109.1 within 10 days of the termination of financial responsibility for the vehicle.

b.         The owner did not operate or allow the vehicle to be operated during the lapse because the vehicle was either (i) unable to be driven due to damage or mechanical defect or (ii) no longer in the possession of the owner as a result of a sale or transfer for which there was a delay between physical transfer of the vehicle and completion of the paperwork required under G.S. 20‑62.1, 20‑72, or 20‑109.1.

c.         The owner has returned the North Carolina registration plate or has submitted an affidavit indicating that the North Carolina registration plate has been lost, stolen, or destroyed.

SECTION 3.  The Division of Motor Vehicles shall develop a plan to implement a system for accepting documentation from insurers required under G.S. 20‑309.2 in an electronic format that allows for immediate transmission of insurance coverage status for owners of motor vehicles registered or required to be registered in this State. The plan shall also provide for electronic submission of all documentation required to be submitted by insurers to the Division in order to license an individual or register a motor vehicle in this State. The Division shall report to the Chairs of the House of Representatives and Senate Transportation Committees, the House of Representatives Insurance Committee, and the Senate Commerce and Insurance Committee on or before October 1, 2021, detailing the plan developed in accordance with this section.

SECTION 4.  This act is effective when it becomes law.