HB 496: INSURANCE/AUTOMOBILE: Provides relative to lapses in required insurance coverage - Louisiana

HB496 Original → HB496 Act 476 · 6 edits

MODERATE

This bill modifies how insurance companies handle lapses in motor vehicle coverage. It clarifies that insurers cannot charge a surcharge for a driver's first lapse in coverage if that gap is 90 days or less, but subsequent lapses may result in higher rates. The law also ensures that maintaining continuous coverage for five years resets the clock, treating any new lapse as a first-time event.

Scope change

The bill refines the definition of a 'lapse in coverage' and removes specific exemptions related to surrendering license plates or military duty, broadening the protection against rate hikes for drivers with minor, infrequent gaps in insurance.

DEFINITION

The definition of 'lapse in coverage' was updated to explicitly include any period where a vehicle owner fails to maintain required liability coverage.

REQUIREMENT

Insurers are now prohibited from increasing premiums or adding surcharges based solely on an insured's first lapse in coverage, provided the gap does not exceed 90 days.

A new provision states that if a driver maintains continuous coverage for five or more years, any subsequent lapse is treated as a first lapse for the purpose of avoiding surcharges.

The prohibition on insurers denying applications solely based on a lapse in coverage was removed from the text, though the digest suggests the intent remains to prevent denial.

EXEMPTIONS

Previous specific exemptions regarding surrendering license plates or notifying the state of military duty were repealed, as the new 90-day rule supersedes them.

TECHNICAL

The bill text was cleaned up to remove redundant language and formatting errors present in the original draft.

HB496 Enrolled → HB496 Original · 4 edits

MODERATE

This bill simplifies the rules regarding how insurance companies handle lapses in auto coverage. It removes the specific definition of a 'lapse' and deletes the exemption that allowed insurers to ignore lapses if the driver surrendered their license plate or was on out-of-state military duty. The core protection against rate hikes remains, but the special exceptions are gone.

Scope change

The bill narrows the scope of exemptions available to drivers who lose insurance coverage.

DEFINITION

Deleted the specific definition of 'lapse in coverage' and the 90-day threshold used to determine if a lapse counts as a first offense.

EXEMPTIONS

Removed the exemption allowing insurers to ignore lapses if the vehicle's license plate was surrendered or if the owner was on out-of-state military duty.

TECHNICAL

Repealed the repealed section of the statute (R.S. 22:1284.1(B)) to clean up the law.

REQUIREMENT

Changed the language to prohibit insurers from using any lapse in coverage as the sole basis for denying insurance or increasing rates, removing the previous conditional language.

HB496 Reengrossed → HB496 Enrolled · 5 edits · Jun 20, 2025

MODERATE

This bill was finalized as an enrolled version, adding the required signatures of the House Speaker, Senate President, and Governor. The substantive policy changes remain focused on insurance lapses: insurers are now prohibited from charging surcharges for a driver's first lapse in coverage, but they may charge for subsequent lapses. A new rule requires insurers to treat a second lapse as a 'first-time' lapse if the driver maintained continuous coverage for at least five years between lapses. The bill also clarifies that removing a discount due to ineligibility is not considered a surcharge and sets the effective date for January 1, 2026.

Scope change

The bill's scope regarding insurance rules remains unchanged; the only differences are the addition of official signatures and the removal of the legislative digest and committee summary.

TIMELINE

Added the official signatures of the Speaker of the House, President of the Senate, and Governor, converting the bill to its final enrolled status.

Added the specific effective date of January 1, 2026, and provisions for what happens if the bill is vetoed.

REQUIREMENT

Added a requirement that insurers must treat a second lapse in coverage as a first-time lapse if the insured maintained continuous coverage for at least five years following the prior lapse.

Modified the surcharge rule to allow insurers to charge for subsequent lapses while maintaining the prohibition on surcharges for the first lapse.

DEFINITION

Added a clarification that removing a discount because an insured no longer qualifies does not count as a premium increase or surcharge.

HB496 Engrossed → HB496 Reengrossed · 3 edits · Jun 8, 2025

MINOR

This bill updates rules for how insurance companies handle drivers who lapse their coverage. It clarifies that removing a discount when a driver no longer qualifies is not considered a price increase. It also adds a 'grace period' rule, stating that if a driver maintains coverage for five consecutive years after a lapse, their next lapse will be treated as their first one rather than a repeat offense.

Scope change

The bill's scope expanded to include a new exception for drivers who have maintained continuous coverage for five years following a previous lapse, effectively resetting their penalty status.

REQUIREMENT

Insurers must treat a lapse as a first-time offense if the insured maintained continuous coverage for five or more consecutive years following the prior lapse.

DEFINITION

Clarified that the withdrawal of a discount due to an insured no longer qualifying is not considered an increase in the premium rate or a surcharge.

TECHNICAL

Minor formatting and structural changes to the bill text, including adding new sponsors and updating the digest summary.

INSURANCE/AUTOMOBILE: Provides relative to lapses in required insurance coverage

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