HB 1690

The James Lee Atwood Jr. Law requires the department of revenue to provide notice to an owner of a motor vehicle if there is evidence that a motor vehicle is not insured. Such notice requires the vehicle owner to provide (i) proof of financial security, (ii) proof of exemption from financial security requirements, (iii) proof that the vehicle is no longer in the owner's possession, or (iv) a statement that the vehicle is not in use on any public road. Failure to respond to the notice results in an init ia l coverage failure fee, and continuing failure to respond results in increasing additional fees. This bill prohibits the department of revenue or a county clerk from processing an application for registration of a motor vehicle after the owner becomes subject to issuance of the above-described notice until the applicant provides proof of financial r esponsibility. If the applicant elects to use a policy of insurance as proof, the documentation must state that the policy will be in force for at least 30 days. This bill clarifies that the owner of a motor vehicle becomes subject to issuance of the abo ve -described notice if the department of revenue has included a designation in the Tennessee Vehicle Title and Registration System database or other available database that there is evidence that a motor vehicle is not insured and the department of revenue has not issued a notice to the owner. INCREASED COVERAGE FAILURE FEES The James Lee Atwood Jr. Law provides that failure to respond to a notice from the department of revenue, as described above, results in an initial $25 coverage failure fee. This bill increases this coverage failure fee to $500. $200 of this fee must b e distributed to the county clerk of the county in which the motor vehicle is registered, $50 must be distributed to the department of safety, and the remainder must be deposited into the uninsured motor identification restricted fund. Further, this bill r equires that 20% of the revenue distributed to the county clerk must be earmarked for the clerk's work in the administration of the vehicle insurance verification program and the remainder of the county clerk's revenue must be used for the clerk's benefit. The James Lee Atwood Jr. Law requires the department of revenue to provide notice to the owner that the owner must pay the initial coverage failure fee and provide satisfactory proof of financial responsibility within 30 days. If the owner fails to comp ly, then the owner is subject to a $100 continued coverage failure fee. This bill increases the continued coverage failure fee to $1,000. $400 of this fee must be distributed to the county clerk of the county in which the motor vehicle is registered, $100 must be distributed to the department of safety, and the remainder must be deposited into the uninsured motor identification restricted fund. Further, this bill requires that 20% of the revenue distributed to the county clerk must be earmarked for the c lerk's work in the administration of the vehicle insurance verification program and the remainder of the county clerk's revenue must be used for the clerk's benefit. SUBSEQUENT NOTICES This bill requires that, if an owner of a motor vehicle becomes subject to the issuance of a second notice within three years from the date of issuance of the first notice, then such owner is subject to a repeated coverage failure fee of $1,500 and suspe nsion or revocation of the owner's motor vehicle registration if they do not provide proof of financial responsibility within 30 days. $600 of this fee must be distributed to the county clerk of the county in which the motor vehicle is registered, $150 m us t be distributed to the department of safety, and the remainder must be deposited into the uninsured motor identification restricted fund. Further, this bill requires that 20% of the revenue distributed to the county clerk must be earmarked for the clerk 's work in the administration of the vehicle insurance verification program and the remainder of the county clerk's revenue must be used for the clerk's benefit. The department of revenue must also provide the motor vehicle owner the legal consequences o f operating a motor vehicle with a suspended or revoked registration and without proof of financial responsibility and instructions on how to effect the reinstatement of registration. PUBLICATION This bill directs the department of revenue to publicize the changes made to the James Lee Atwood Jr. Law. REPORTING REQUIREMENTS FOR LIABILITY INSURERS Present law requires automobile liability insurers who choose not to utilize the IICMVA model to provide the department of revenue with a full book of business by the 7th day of each month but does not prevent the insurer from reporting more frequently. This bill, instead, requires insurers to submit a full book of business on a weekly basis and clarifies that insurers may update their book of business with the department of revenue daily. PROHIBITION ON NONECONOMIC DAMAGES This bill prohibits a plaintiff from being awarded noneconomic damages in a civil action for bodily injury, property damage, or death arising out of the use or operation of a motor vehicle if the plaintiff is the owner or operator of a motor vehicle that was not in compliance with financial responsibility laws. If such a plainti ff is awarded economic damages, then the plaintiff must be held liable for all court costs incurred by all parties to the action. A defendant in the civil action may assert this limitation of recovery as an affirmative defense. However, such limitations o n recovery do not apply if any of the following is true:  The defendant was cited for driving while under the influence, reckless driving, or aggravated reckless driving, as a result of the use or operation of the motor vehicle and is subsequently convicted or pleads nolo contendere to the offense.  The defendant acted with the intent to inflict the injury, damage, or death.  The defendant failed to stop at the scene of the accident.  The defendant was in furtherance of the commission of a felony offense under state or federal law. This bill clarifies that its provisions do not preclude a passenger in a motor vehicle from recovering noneconomic damages. However, this bill does not apply to a passenger who is also the owner of the motor vehicle that was not in compliance with finan cial responsibility requirements. Further, an insurer does not lose any rights of subrogation for claims paid for the recovery of noneconomic damages. The provisions under this heading apply to civil actions filed on or after the bill becomes law. PUBLIC NOTICES This bill authorizes the departments of safety, revenue, and transportation to use existing permanent electronic overhead informational displays to provide periodic messages to the public regarding financial responsibility requirements. ON APRIL 22, 2026, THE SENATE ADOPTED AMENDMENT #1 AND PASSED SENATE BILL 1667, AS AMENDED. AMENDMENT #1 rewrites the bill to, instead, prohibit the initial issuance of registration of a motor vehicle if the vehicle has not met the requirements of the Financial Responsibility Law of 1977, which provides insurance and financial responsibility re quirements for motor vehicle operators. In order to provide satisfactory proof that a vehicle has met the financial responsibility requirements, the following documentation may be submitted: (i) documentation, in paper or electronic format, stating that a policy of insurance meeting the requirements of the Financial Responsibility Law of 1977 has been issued and will be in force for at least 30 days; or (ii) a certificate, valid for one year, issued by the commissioner of revenue stating that a cash deposi t or bond in the required amount has been paid or filed with the commissioner of revenue or the driver has qualified as a self-insurer. Acceptable electronic formats include display of electronic images on a cell phone or another type of portable electro ni c device. Every registration and renewal of registration be accompanied by a notice stating vehicle owners and/or operators are required to carry proof of financial responsibility. Such a notice may be incorporated into any other notice required by this part to accompany the registration and renewal of registration. These provisions are repealed on June 30, 2029. This amendment prohibits the department of revenue or a county clerk from processing an application for renewal of registration of a motor vehicle until the owner or lessee of the motor vehicle pays all coverage failure fees, and provides proof of financ ial responsibility, proof of an exemption from financial security requirements, or a statement that the vehicle is not in use on any public road. If the owner or lessee uses a policy of insurance as proof of financial security, then the documentation mus t state the policy will be in force for at least 30 days. NOTICES The James Lee Atwood Jr. Law requires the department of revenue to provide notice to an owner of a motor vehicle if there is evidence that a motor vehicle is not insured. Such notice requires the vehicle owner to provide (i) proof of financial security, (ii) proof of exemption from financial security requirements; (iii) proof that the motor vehicle is no longer in the owner's possession; or (iv) a statement that the vehicle is not in use on any public road. Failure to respond to the notice results in a n initial coverage failure fee, and continuing failure to respond to the notice results in increasing additional fees. If the department of revenue suspend or revokes a motor vehicle registration for failure to respond to a subsequent notice, then the department of revenue must provide notice to the owner or lessee of the motor vehicle of the legal consequences of operat ing a motor vehicle with a suspended or revoked registration and without proof of financial security. The department of revenue may direct a designated agent to provide such notice. COVERAGE FAILURE FEES The James Lee Atwood Jr. Law provides that failure to respond to a notice from the department of revenue, stating that a motor vehicle does not meet financial responsibility requirements, results in an initial $25 coverage failure fee. This amendment inc reases such coverage failure fee to $500. $200 of the fee must be distributed to the county clerk of the county in which the motor vehicle is registered, $50 must be distributed to the department of safety, and the remainder must be deposited into the un in sured motorist identification restricted fund. Of the revenue distributed to the county clerk, 20% must be earmarked for the county clerk's work in administration of the vehicle insurance verification program and for other usual and necessary insurance v erification related expenses. The James Lee Atwood Jr. Law imposes a $100 continued coverage failure fee on the owner of a motor vehicle that has received an initial notice from the department of revenue and has not paid the initial coverage failure fee and provided proof of financia l responsibility within 30 days. This amendment increases the continued coverage failure fee to $1,000. $400 of the fee must be distributed to the county clerk of the county in which the motor vehicle is registered, $100 must be distributed to the depar tm ent of safety, and the remainder must be deposited into the uninsured motorist identification restricted fund. Of the revenue distributed to the county clerk, 20% must be earmarked for the county clerk's work in administration of the vehicle insurance ve rification program and for other usual and necessary insurance verification related expenses. If a motor vehicle is subject to the issuance of a subsequent notice within three years from the date of the first notice, then this amendment requires that a $1,500 repeated coverage failure fee be imposed on the owner or lessee. The subsequent notice must include a statement that, if the owner or lessee of the motor vehicle fails to comply with the requirements of the notice, then the owner or lessee is subject to a $1,500 repeated coverage failure fee and suspension or revocation of the motor vehicle r egistration. Of this $1,500 fee, $600 must be distributed to the county clerk of the county in which the motor vehicle is registered, $150 must be distributed to the department of safety, and the remainder must be deposited into the uninsured motorist id entification restricted fund. of the revenue distributed to the county clerk, 20% must be earmarked for the county clerk's work in administration of the vehicle insurance verification program and for other usual and necessary insurance verification relat ed expenses. AUTOMOBILE LIABILITY INSURERS The James Lee Atwood Jr. Law authorizes a liability insurer that chooses not to utilize the IICMVA model to instead provide the department of revenue a full book of business by the seventh day of each month. This amendment generally requires each automo bile liability insurer to utilize the IICMVA model. However, insurers of commercial motor vehicles and automobile liability insurers writing fewer than 500 noncommercial policies in this state are exempt from the IICMVA requirement. In instances where t he liability insurance status is unable to be verified, automobile liability insurers that utilize the IICMVA model must (i) accept unknown carrier requests; and (ii) provide a full book of business upon request. This amendment requires every liability insurer to provide a full book of revenue to the department of revenue weekly. Such full book of business must include (i) the vehicle identification number of each insured motor vehicle; and (ii) the automobile l iability insurer's NAIC code, policy number, and effective date of each policy. LIMITS ON NONECONOMIC DAMAGES This amendment generally limits the amount of noneconomic damages that may be awarded to a plaintiff in a civil action for injury or death arising out of the use or operation of a motor vehicle to $375,000 if all of the following requirements are met:  The plaintiff seeking noneconomic damages is the owner or lessee of the motor vehicle involved in the collision giving rise to the civil action .  The motor vehicle owned or leased by the plaintiff and involved in the collision was not covered or otherwise in compliance with financial responsibility requirements at the time of the collision.  The department of revenue or county clerk issued at least three separate written notices of noncompliance to the owner or lessee of the specific motor vehicle owned or leased by the plaintiff involved in the collision that was not in compliance with financial responsibility requirements. However, this amendment provides that the limitation on noneconomic damages applies only to the owner or lessee of a motor vehicle involved in a collision, and not to any of the following:  An operator of a motor vehicle who is not the owner or lessee of the motor vehicle and who is operating the motor vehicle with the permission of the owner or lessee .  A passenger, other than the owner or lessee, in the motor vehicle .  A plaintiff whose alleged noncompliance with the financial responsibility requirements arises from the ownership or operation of a motor vehicle other than the motor vehicle involved in the collision giving rise to the civil action .  A plaintiff whose claim does not arise from the operation of the motor vehicle that is owned or leased by the plaintiff and involved in the collision that was not in compliance with financial responsibility requirements at the time of the collision. This amendment raises the limit on noneconomic damages to $750,000, if there is a catastrophic loss or injury. In an action for wrongful death, the limits on noneconomic damages only apply if the decedent was the owner or lessee of the motor vehicle inv olved in the collision, the motor vehicle owned or leased by the plaintiff involved in the collision was not in compliance with financial responsibility requirements, and the department of revenue or county clerk issued at least three separate written not ic e of noncompliance to the owner or lessee. The limits on noneconomic damages apply only to civil actions filed on or after this amendment becomes a law. This amendment provides that a defendant asserting the limitations on noneconomic damages must plead such limits as an affirmative defense. The defendant bears the burden of proving each statutory prerequisite for applicability of the noneconomic damage limits. The limitations on noneconomic damages imposed by this amendment must not be disclosed to the jury, but must be applied by the court to any award of noneconomic damages. Further, the limitations do not apply to personal injury and wrongful deat h actions if (i) the defendant had a specific intent to inflict serious physical injury; (ii) the defendant intentionally falsified, destroyed, or concealed records containing material evidence; (iii) the defendant was under the influence of alcohol, drugs, or any other intoxicant or stimulant; or (iv) the defendant's act or omission resulted in the defendant being convicted of a felony. This amendment requires the trier of fact to make a specific finding of fact, by special verdict, as to whether the plaintiff was in compliance with financial responsibility requirements if the plaintiff claims that the plaintiff was in compliance at the time of the accident and there is a disputed issue of fact. PUBLICATION This amendment requires the department of revenue to publicize the changes to present law made to the James Lee Atwood Jr. Law. This amendment authorizes the department of transportation, in consultation with the departments of safety and revenue, to use the department of transportation's existing permanent electronic overhead informational displays on the interstate to provide p eriodic messages discussing financial responsibility requirements for all motor vehicles operated on public highways in this state. DEPARTMENT REPORTING REQUIREMENTS This amendment requires the department of commerce and insurance to issue a data call every six months to each insurer authorized to write automobile liability insurance business in this state requesting aggregated data on automobile liability policies t hat were issued and subsequently cancelled within 60 days of issuance.