# Title 26.1 — Insurance

## Chapter 26.1-40 — Automobile Insurance and Warranties

### § 26.1-40-01. Definitions - Limitations.

As used in sections 26.1-40-02 through 26.1-40-12:
1. "Declination" means the refusal of an insurer to issue a policy upon receipt of a written
nonbinding application or written request for coverage from its insurance producer or
an applicant. The offering of insurance coverage with a company within an insurance
group which is different from the company requested on the nonbinding application or
written request for coverage, or the offering of policy coverage or rates substantially
less favorable than requested in the nonbinding application or written request for
coverage, is a declination.
2. "Nonpayment of premium" means failure of the insured to discharge when due any of
the insured's obligations in connection with the payment of premium on a policy, or any
installment of the premium, whether the premium is payable directly to the insurer or
its insurance producer or indirectly under any premium finance plan or extension of
credit.
3. "Policy" means any automobile policy which includes automobile liability coverage,
uninsured motorist coverage, underinsured motorist coverage, automobile medical
payments coverage, basic or optional excess no-fault benefits, or automobile physical
damage coverage, delivered or issued for delivery in this state, insuring as the named
insured an individual residing in this state, and under which the insured vehicles
designated in the policy are of the following types only:
a. A motor vehicle of the private passenger type that is not used as a public or livery
conveyance, nor rented to others.
b. Any four-wheel motor vehicle with a load capacity of one thousand five hundred
pounds [680.39 kilograms] or less which is not used in the occupation,
profession, or business of the insured, nor used as a public or livery conveyance,
nor rented to others.
c. Any motorcycle as that term is defined in section 39-01-01 that is not used as a
public or livery conveyance, nor rented to others.
d. An unconventional vehicle as that term is defined in subsection 2 of section
"Policy" does not include any policy that has been in effect less than sixty days at the
time notice of cancellation is mailed or delivered by the insurer unless it is a renewal
policy; any policy issued under the North Dakota assigned risk plan; any policy
insuring more than six motor vehicles; any policy covering the operation of a garage,
automobile sales agency, repair shop, service station, or public parking place; any
policy providing insurance only on an excess basis; or any other contract providing
insurance to a named insured even though the contract may incidentally provide
insurance with respect to such motor vehicles.
4. "Renewal" or "to renew" means the issuance and delivery by an insurer of a policy
replacing, at the end of the previous policy period, a policy previously issued and
delivered by the same insurer; the issuance and delivery of a certificate or notice
extending the term of a policy beyond its policy period or term; or the extension of the
term of a policy beyond its policy period or term pursuant to a provision for extending
the policy by payment of a continuation premium. The term includes a change or
alteration in the amount of a deductible, coverage, or exclusion which results in
substantially equivalent coverage if the altered terms are provided to the insured in the
notice of renewal. Any policy with a policy period or term of less than six months must
be considered as if written for a policy period or term of six months except in case of
termination under any of the circumstances specified in subsection 2 of section
### § 26.1-40-05. Any policy written for a term longer than one year or any policy with no

fixed expiration date must be considered as if written for successive policy periods or
terms of one year and any termination by an insurer effective on an anniversary date
of the policy is deemed a failure to renew.

5. "Termination" means cancellation or nonrenewal of automobile insurance coverage in
whole or in part. Cancellation occurs during the policy term. Nonrenewal occurs at the
end of the policy term. An insurer's substitution of insurance upon renewal which
results in substantially equivalent coverage is not a termination. The transfer of a
policy between companies within the same insurance holding company system is not a
termination. A renewal with altered terms as provided in subsection 4 is not a
termination.
### § 26.1-40-02. Cancellation of policy - Exclusive reasons.

1. No insurer may cancel a policy except for the following reasons:
a. Nonpayment of premium.
b. Because the motor vehicle operator's license or motor vehicle registration of
either the named insured or any other operator who resides in the same
household as the named insured or who customarily operates a motor vehicle
insured under the policy has been suspended, rescinded, canceled, or revoked
during the policy period, or, if the policy is a renewal, during its policy period or for
one hundred eighty days immediately preceding its effective date. This
subdivision does not apply and the insurer may not cancel a policy when the
operator whose license is suspended or revoked is excluded from coverage
under the policy. The insurer shall notify the named insured of the possibility of
excluding an operator whose license has been suspended or revoked prior to
cancellation of the policy. When an operator whose license is suspended or
revoked is excluded from coverage under the policy covering a secured motor
vehicle, the owner of the motor vehicle who gives expressed or implied consent
to the operator to use the motor vehicle is not relieved of liability under
subsection 5 of section 26.1-41-02.
c. Fraud or material misrepresentation made by or with the knowledge of any
insured in obtaining the policy, continuing the policy, or in presenting a claim
under the policy.
d. The insured motor vehicle is:
(1) So mechanically defective that its operation might endanger public safety;
(2) Used in carrying passengers for hire or compensation; provided, however,
that the use of an automobile for a car pool is not use of an automobile for
hire or compensation;
(3) Used in the transportation of flammables or explosives or for an illegal
purpose;
(4) An authorized emergency vehicle; or
(5) Altered by an insured during the policy period so as to substantially increase
the risk.
e. The named insured moves to a state where the insurer is not licensed to do
business.
f. Failure to pay dues or fees when payment of the dues or fees is a prerequisite to
obtaining or continuing automobile insurance coverage.
g. A determination by the commissioner that the continuation of the policy would
place the insurer in violation of the law or would be hazardous to the interests of
policyholders, creditors, or the public.
2. During the policy period no modification of automobile physical damage coverage,
except coverage for loss caused by collision, by which provision is made for the
application of a deductible amount not exceeding one hundred dollars is deemed a
cancellation of the coverage or of the policy.
3. Renewal of a policy does not constitute a waiver or estoppel with respect to grounds
for cancellation which existed before the effective date of the renewal.
### § 26.1-40-02.1. Cancellation of minor's driving privileges - Effect.

An insurer may not use or rely on the cancellation of a minor's driving privileges under
section 39-06-01.1 as the sole reason to cancel, deny, or not renew the automobile insurance

policy of the minor or a parent of the minor unless the points or offenses on the minor's public
driving record, separate from a cancellation under section 39-06-01.1, would be a reason to
cancel, deny, or not renew the policy.
### § 26.1-40-03. Notice of cancellation.

No insurer may exercise its right to cancel a policy unless a written notice of cancellation is
mailed or delivered to the named insured, at the address shown in the policy, at least twenty
days prior to the effective date of cancellation. When cancellation is for nonpayment of
premium, the notice must be mailed or delivered to the named insured at the address shown in
the policy at least ten days prior to the effective date of cancellation.
### § 26.1-40-04. Statement of reason for cancellation.

A notice of cancellation for nonpayment of premium must include or be accompanied by a
statement of the reason for cancellation. Any other notice of cancellation must state or be
accompanied by either a statement of the reason for cancellation, or a statement that upon
written request of the named insured, the insurer will specify in writing the reason for
cancellation. The written request must be mailed or delivered to the insurer at least ten days
prior to the effective date of cancellation. The insurer shall mail or deliver the reason to the
named insured within ten days after receipt of the written request. Failure to comply with the
notice of cancellation provisions of section 26.1-40-03 or failure to furnish reasons for
cancellation when required or requested is sufficient cause for the commissioner to cancel,
revoke, or refuse to renew that company's certificate of authority to do business in this state.
### § 26.1-40-05. Nonrenewal - Notice - Statement of reasons - Nonrenewal not to be based

on certain facts.
1. No insurer may fail to renew a policy unless a written notice of nonrenewal is mailed or
delivered to the named insured, at the address shown in the policy, at least thirty days
prior to the expiration date of the policy or anniversary date of a policy written for a
term longer than one year or with no fixed expiration date. The insurer shall include a
statement of the reasons for nonrenewal with the notice or shall furnish it upon the
written request of the insured mailed or delivered to the insurer at least ten days prior
to the expiration date of the policy. The insurer shall comply with such a request within
ten days after receipt thereof.
2. Subsection 1 does not apply:
a. If the insurer has manifested in any way its willingness to renew;
b. In case of nonpayment of premium for the expiring policy; or
c. If the insured fails to pay the premium as required by the insurer for renewal.
### § 26.1-40-06. Notification of possible eligibility for assigned risk policy.

When a policy is canceled, other than for nonpayment of premium, or in the event of failure
to renew a policy to which subsection 1 of section 26.1-40-05 applies, the insurer shall notify the
named insured of the insured's possible eligibility for automobile insurance through the
automobile assigned risk plan or automobile insurance plan. The notification must accompany
or be included in the notice of cancellation or nonrenewal required by sections 26.1-40-03 and
26.1-40-05.
### § 26.1-40-07. Proof of notice of termination.

1. Proof of mailing a notice of cancellation or a notice of an intention not to renew, or
business records of the notice of the insured's willingness to renew, must be retained
for a period of one year by the insurer or insurance producer giving the notice.
2. Sufficient proof of mailing a notice under this section is established if the producer or
insurer produces:
a. A United States postal service certificate of mailing to the named insured at the
address shown on the insured's policy; or

b. Proof or acknowledgment of United States postal service mailing to the named
insured at the address shown on the insured's policy using:
(1) IMb tracing; or
(2) A similar method of first-class mail tracking which identifies the named
insured, the address shown on the insured's policy, and the date of mailing.
### § 26.1-40-08. Reason for cancellation or nonrenewal - Nonliability of parties.

The specific reason for cancellation or nonrenewal which is furnished to the insured does
not constitute grounds for any claim for relief against the insurer or the insured's authorized
representative, or its agents or employees, or any person who in good faith furnishes to the
insurer the information upon which the reasons for cancellation or nonrenewal are based.
### § 26.1-40-09. Duplicate coverage - Termination of coverage when another policy in

force - Notice.
Notwithstanding the failure of an insurer to comply with sections 26.1-40-01 through
26.1-40-12, if an insured obtains a replacement policy providing equal or more extensive
coverage for a motor vehicle covered in both policies, the first insurer's coverage of that motor
vehicle may be terminated either by cancellation or nonrenewal. The termination is effective on
the effective date of the second policy providing duplicate replacement coverage. Upon
termination, the insured is entitled to a refund of the premium and written notice must be mailed
or delivered to the named insured.
### § 26.1-40-10. Notification and reasons for a declination.

1. Upon declining an application or written request for a policy, the insurer making the
declination shall either provide the insurance applicant with the specific reasons in
writing for the declination at the time of the declination or advise the applicant in writing
that specific written reasons for the declination will be provided within twenty-one days
of the timely receipt by the insurer making the declination of the applicant's written
request for the reasons. An applicant's written request is timely under this subsection if
received within ninety days of the date of the notice to the applicant.
2. No insurer not represented by an insurance producer may refuse to provide an
insurance application form or other means of making a written request for insurance to
a prospective applicant who requests insurance coverage from the insurer.
3. No insurance producer, for any reason set out in section 26.1-40-11, may refuse to
provide an insurance application form or other means of making a written request for
insurance to a prospective applicant who requests insurance coverage from the
insurance producer or insurer.
### § 26.1-40-11. Terminations - Declinations - Prohibited reasons.

The declination of an application for, or the termination of, a policy by an insurer or
insurance producer is prohibited if the declination or termination is:
1. Based upon the race, religion, nationality, or ethnic group of the applicant or named
insured.
2. Based solely upon the lawful occupation or profession of the applicant or named
insured, except that this provision does not apply to any insurer or insurance producer
which limits its market to one lawful occupation or profession or to several related
lawful occupations or professions.
3. Based upon the principal location of the insured motor vehicle unless such decision is
for a business purpose which is not mere pretext for unfair discrimination.
4. Based solely upon the age, sex, or marital status of an applicant or an insured, except
that this subsection does not prohibit rating differentials based upon age, sex, or
marital status.
5. Based upon the fact that the applicant or named insured previously obtained insurance
coverage through a residual market insurance mechanism or an insurance company
that insures substandard risks.

6. Based upon the fact that another insurer previously declined to insure the applicant or
terminated an existing policy in which the applicant was the named insured.
### § 26.1-40-11.1. Juvenile's suspension of driving privileges - Nontraffic delinquent

conduct.
Insurers are prohibited from using or relying on a nontraffic delinquent juvenile's suspension
of driving privileges under section 27-20.4-16 as a reason for canceling, denying, or
nonrenewing the automobile insurance policy of the nontraffic delinquent juvenile offender or the
parents of the nontraffic delinquent juvenile offender.
### § 26.1-40-12. Sanctions.

If the commissioner after hearing determines that an insurer has violated section
26.1-40-02, 26.1-40-10, or 26.1-40-11, the commissioner may require the insurer to accept the
application or written request for insurance coverage at a rate and on the same terms and
conditions as are available to its other risks with similar characteristics, or reinstate insurance
coverage to the end of the policy period; or continue insurance coverage at a rate and on the
same terms and conditions as are available to its other risks with similar characteristics. If the
commissioner has determined, after hearing, that any person has violated sections 26.1-40-02
through 26.1-40-12, the commissioner may issue a cease and desist order to restrain the
person from engaging in practices which violate these sections, or assess a penalty against the
person of up to five hundred dollars for each violation, or assess a penalty against the person of
up to five thousand dollars for each willful and knowing violation, or cancel, revoke, or refuse to
renew a company's certificate of authority to do business in this state.
### § 26.1-40-13. Definitions applicable to sections 26.

1-40-13 through 26.1-40-15.
Repealed by S.L. 1989, ch. 375, § 8.
### § 26.1-40-14. Uninsured and underinsured motorist coverage - Compulsory - Stacking

not permitted.
Repealed by S.L. 1989, ch. 375, § 8.
### § 26.1-40-15. Rights of insurer making payments under uninsured or underinsured

motorist coverage.
Repealed by S.L. 1989, ch. 375, § 8.
### § 26.1-40-15.1. Definitions - Applicable to sections 26.

1-40-15.1 through 26.1-40-15.7.
As used in sections 26.1-40-15.1 through 26.1-40-15.7 and unless the context otherwise
requires:
1. "Motor vehicle" means a vehicle, excluding motor vehicles weighing more than twenty
thousand pounds, having two or more load-bearing wheels, of a kind required to be
registered under the laws of this state relating to motor vehicles, designed primarily for
operation upon the public streets, roads, and highways, and driven by power other
than muscular power, and includes a trailer drawn by or attached to such a vehicle.
2. "Underinsured motor vehicle" means a motor vehicle for which there is a bodily injury
liability insurance policy, or bond providing equivalent liability protection, in effect at the
time of the accident, but the applicable limit of bodily injury liability of such policy or
bond:
a. Is less than the applicable limit for underinsured motorist coverage under the
insured's policy; or
b. Has been reduced by payments to other persons injured in the accident to an
amount less than the limit for underinsured motorist coverage under the insured's
policy.
3. "Uninsured motor vehicle" means a motor vehicle for which:
a. There is no bodily injury liability insurance policy, or bond providing equivalent
liability protection, in effect at the time of the accident.

b. There is an applicable policy or bond, but the insurer or issuer thereof refuses to
provide coverage, denies coverage, or is or becomes insolvent as defined in
section 26.1-42.1-02.
c. The identity of the owner or operator cannot be ascertained and the bodily injury,
sickness, disease, or death of the insured is either caused by actual physical
contact of such motor vehicle with the insured, or with a motor vehicle occupied
by the insured, or is independently verified by a disinterested witness.
4. The terms "uninsured motor vehicle" and "underinsured motor vehicle" do not mean a
motor vehicle:
a. Insured under the liability coverage of the same policy of which the uninsured
motorist or underinsured motorist coverage is a part.
b. Owned by any governmental unit, political subdivision, or agency thereof.
c. Located for use as a residence or premises.
d. With respect to uninsured motorist coverage, a self-insured motor vehicle within
the meaning of the financial or safety responsibility law of the state in which the
motor vehicle is registered, or any similar state or federal law.
e. Operated by any person who is specifically excluded from coverage in the policy.
The term "underinsured motor vehicle" may not be construed to include an "uninsured
motor vehicle".
### § 26.1-40-15.2. Uninsured motorist coverage.

1. No motor vehicle liability insurance policy may be delivered, issued for delivery, or
renewed in this state with respect to any specifically insured or identified motor vehicle
registered, licensed, and principally garaged in this state unless uninsured motorist
coverage is provided therein or supplemental thereto in limits set forth in section
### § 39-16.1-11. Uninsured motorist coverage must pay compensatory damages which an

insured is legally entitled to collect for bodily injury, sickness, or disease, including
death resulting therefrom, or such insured, from the owner or operator of an uninsured
motor vehicle arising out of the ownership, maintenance, or use of such uninsured
motor vehicle.
2. At the request of a named insured, or applicant for insurance, the insurer providing
uninsured motorist coverage shall also make available higher limits of uninsured
motorist coverage in accordance with its rating plan and rules. The insurer need not
provide uninsured motorist coverage limits in excess of the insured's bodily injury
liability limits, or one hundred thousand dollars per person and three hundred
thousand dollars per accident, or if consistent with such rating plan and rules, a
combined single limit equivalent of three hundred thousand dollars per accident,
whichever is less.
3. The maximum liability of the uninsured motorist coverage is the lower of:
a. The amount of compensatory damages established but not recovered by any
agreement, settlement, or judgment with or for the person or organization legally
liable for the bodily injury, sickness, disease, or death resulting therefrom; or
b. The limits of liability of the uninsured motorist coverage.
4. In any claim for uninsured motorist benefits, the insured and the insurer each bear
responsibility for one's own attorney's fees incurred unless the insurance contract
specifically provides otherwise or the insurance company is found to have acted in bad
faith. It is neither a conflict of interest nor bad faith for an insurer to contest and press
all defenses that the uninsured motorist could press.
### § 26.1-40-15.3. Underinsured motorist coverage.

1. The insurer shall also provide underinsured motorist coverage at limits equal to the
limits of uninsured motorist coverage. Underinsured motorist coverage must pay
compensatory damages which an insured is legally entitled to collect for bodily injury,
sickness, disease, including death resulting therefrom, of such insured, from the owner
or operator of an underinsured motor vehicle arising out of the ownership,
maintenance, or use of such underinsured motor vehicle.

2. The maximum liability of the underinsured motorist coverage is the lower of:
a. The amount of compensatory damages established but not recovered by any
agreement, settlement, or judgment with or for the person or organization legally
liable for the bodily injury, sickness, disease, or death resulting therefrom; or
b. The limits of liability of the underinsured motorist coverage.
3. In any claim for underinsured motorist benefits, the insured and the insurer each bear
responsibility for one's own attorney's fees incurred unless the insurance contract
specifically provides otherwise or the insurance company is found to have acted in bad
faith. It is neither a conflict of interest nor bad faith for an insurer to contest and press
all defenses that the underinsured motorist could press.
### § 26.1-40-15.4. Other insurance and priority of payment.

1. Any damages payable to or for any insured for uninsured or underinsured motorist
coverage must be reduced by:
a. The amount paid, or payable under any workforce safety and insurance or other
similar law, exclusive of nonoccupational disability benefits; and
b. Amounts paid or payable under any valid and collectible motor vehicle medical
payments, personal injury protection insurance, or similar motor vehicle
coverages.
2. Regardless of the number of motor vehicles involved, the number of persons covered
or claims made, vehicles or premiums shown in the policy or premiums paid, the limit
of liability for uninsured motorist or underinsured motorist coverage may not be added
to or stacked upon limits for such coverages applying to other motor vehicles to
determine the amount of coverage available to an insured in any one accident.
3. If an insured is entitled to uninsured motorist or underinsured motorist coverage under
more than one policy, the maximum amount such insured may recover may not
exceed the highest limit of such coverage provided for any one vehicle under any one
policy. If more than one policy applies, the following order of priority applies:
a. A policy covering a motor vehicle occupied by the injured person at the time of
the accident.
b. A policy covering a motor vehicle not involved in the accident under which the
injured person is a named insured.
c. A policy covering a motor vehicle not involved in the accident under which the
injured person is an insured other than a named insured.
Coverage available under a lower priority policy applies only to the extent it exceeds
the coverage of a higher priority policy.
### § 26.1-40-15.5. Reimbursement and subrogation.

1. In the event of payment under uninsured or underinsured motorist coverage, the
insurer making payment to the extent of the payment is entitled to the proceeds of any
agreement, settlement, or judgment resulting from the exercise of any rights of
recovery of such insured for compensatory damages or be entitled to exercise a right
of subrogation against any person or organization legally responsible for the bodily
injury, sickness, disease, or death for which such payment is made.
2. No insurer providing underinsured motorist coverage has a right of subrogation against
an underinsured motorist if the insurer has been provided with a written notice in
advance of an agreement, settlement, or judgment between its insured and the
underinsured motorist, and the insurer fails to advance a payment to the insured in an
amount equal to the tentative agreement or settlement within thirty days following
receipt of such notice. An insurer advancing such payment has full rights of
subrogation.
3. If an insurer makes payment under uninsured or underinsured motorist coverages
because of an insurer insolvency, as defined in section 26.1-42.1-02, the paying
insurer's rights of reimbursement and subrogation do not include any rights of recovery
against the insured of the insolvent insurer or against the North Dakota guaranty fund,

except for the amount that is in excess of the limits of liability of the policy of the
insolvent insurer.
### § 26.1-40-15.6. Limitations.

The uninsured and underinsured coverages provided for in sections 26.1-40-15.1 through
insured:
1. While occupying a motor vehicle owned by, furnished or available for the regular use of
the insured, a resident spouse, or resident relative, if such motor vehicle is not
described in the policy under which a claim is made, or is not a newly acquired or
replacement motor vehicle covered under the terms of the policy;
2. While operating or occupying a motor vehicle without the specific permission of the
owner thereof, or without a reasonable belief that the insured is entitled to do so;
3. For damages for pain, suffering, mental anguish, inconvenience, or other noneconomic
loss which could not have been recovered had the owner or operator of the motor
vehicle responsible for such loss maintained the security required under any
applicable state no-fault law;
4. For punitive, exemplary, or other noncompensatory damages;
5. With respect to which the applicable statute of limitations has expired on the insured's
claim against the uninsured or underinsured motorist;
6. Until the limits of all bodily injury liability policies and bonds that apply have been
exhausted by payment of settlements or judgments, or such limits or the remaining
part of them have been offered to the insured in writing;
7. When the insured, without the written consent of the insurer, shall make any
agreement or settlement with any person who may be legally liable therefor, if such
agreement adversely affects the rights of the insurer. The insurer is not bound by any
agreement or settlement without its prior knowledge and consent. This limitation does
not apply to underinsured motorist coverage when the insured has advised the insurer,
in compliance with subsection 2 of section 26.1-40-15.5, and the insurer has failed to
advance the required payment to protect its right of reimbursement and subrogation;
8. If the insured has failed to report the accident to the proper law enforcement
authorities as soon as practicable; and
9. While operating a motor vehicle in which the individual is specifically excluded.
### § 26.1-40-15.7. General provisions.

1. After selection of limits by a named insured or applicant for insurance, the insurer or
any of its affiliates is not required to notify any insured in any renewal, reinstatement,
substitute, amended, or replacement policy as to the availability of optional limits. Such
selection by a named insured or an applicant is valid for all insureds under the policy.
The insured may make, subject to the limitations expressed in sections 26.1-40-15.1
through 26.1-40-15.7, a request for additional coverage or coverage more extensive
than that provided on a prior policy.
2. No insurer is required to offer, provide, or make available coverage conforming to
sections 26.1-40-15.1 through 26.1-40-15.7 in connection with any excess policy,
umbrella policy, or any other policy which does not provide primary motor vehicle
insurance for liabilities arising out of the ownership, maintenance, operation, or use of
a specifically insured motor vehicle.
3. Notwithstanding any other provision of sections 26.1-40-15.1 through 26.1-40-15.7, an
insurer may make underinsured motorist coverage a part of uninsured motorist
coverage.
4. Notwithstanding any other provision of sections 26.1-40-15.1 through 26.1-40-15.7 or
other laws of this state, a motor vehicle liability insurance policy may provide as to
uninsured and underinsured motorist coverage, that any dispute with respect to issues
of liability and damages may be submitted to binding arbitration if both parties agree.
Such policy may also provide that coverage questions are not subject to arbitration.

5. Nothing in sections 26.1-40-15.1 through 26.1-40-15.7 may be construed to prevent an
insurer from offering, making available, or providing coverage terms and conditions
more favorable to its insured or limits higher than are required by sections
### § 26.1-40-16. Exclusion of named persons - Restrictive endorsements.

By written agreement with the named insured, a private passenger automobile insurance
policy covering an automobile or other motor vehicle registered or principally garaged in this
state may exclude a named individual, individuals, or class of individuals from coverage. The
policy may contain a restrictive endorsement reducing the limits of liability, uninsured motorist
coverage, underinsured motorist coverage, basic no-fault benefits coverage, or collision
coverage while the vehicle is operated by a named individual or class of individuals. However, if
the policy does provide liability coverage to a person named in a restrictive endorsement, the
coverage may not be less than the minimum provided under section 26.1-40-15.2, section
26.1-40-15.3, subsection 2 of section 26.1-41-01, and section 39-16.1-11. If the policy excludes
a named individual, individuals, or class of individuals from all coverage and the named insured
expressly or impliedly consents to the operation of a secured motor vehicle by the excluded
party, the named insured is not relieved of personal liability as provided by subsection 5 of
section 26.1-41-02.
### § 26.1-40-16.1. Payment of benefits to family members of a policyholder.

An automobile insurance policy that provides coverage for bodily injury may not contain any
provision limiting payment of benefits or reducing the amount of benefits payable to a person
because the person to whom benefits are being paid under that policy is related to the
policyholder by blood, marriage, or adoption, or is a foster child, and resides in the same
household as the policyholder. However, a relative may be excluded from coverage under
section 26.1-40-16.
### § 26.1-40-17. Establishment of primary and excess automobile liability coverages in

certain instances.
When an automobile insurance policy which includes only automobile liability coverage,
uninsured motorist coverage, underinsured motorist coverage, automobile medical payments
coverage, and basic or optional excess no-fault benefits is in force for anyone engaged in the
business of selling, repairing, servicing, storing, leasing, renting, or parking motor vehicles and
the owner of the vehicles loans, rents, or leases a vehicle to any other person or organization
and the vehicle is involved in an accident out of which bodily injury or property damage arises,
the following is applicable:
1. If no other automobile insurance policy is in force at the time of the accident for the
person or organization to whom the vehicle was loaned, rented, or leased, the
coverage provided by the motor vehicle owner's automobile policy extends to the
borrower, rentee, or lessee in the event the owner's automobile insurance policy
extends coverage to the borrower, rentee, or lessee.
2. If another automobile insurance policy is in force for the person or organization to
whom the vehicle was loaned, rented, or leased, any coverage provided by the motor
vehicle owner's automobile insurance policy is excess coverage only but limited,
however, by the terms of the owner's applicable automobile insurance policy. The
policy afforded the person or organization to whom the vehicle was loaned, rented, or
leased is primary.
Any policy provisions at variance with this section must be interpreted so as to comply with this
section.
### § 26.1-40-17.1. Motor vehicle liability policy - Rental vehicles covered.

1. Every motor vehicle liability insurance policy, as required by section 39-08-20, covering
noncommercial private passenger motor vehicles must provide that all of the obligation
for damage and loss of use to a rented private passenger vehicle will be covered by

the property damage liability portion of the policy and subject to that policy limit. The
obligation of the policy must not be contingent on fault or negligence of the insured.
For purposes of this section, private passenger motor vehicle includes station wagons,
minivans, vans, and pickups, and does not include motor homes, motorcycles, or
trucks other than pickups.
2. A vehicle is rented for purposes of this section if the vehicle is rented under an
agreement for thirty continuous days or less.
3. The policy or certificate issued by the insurer must inform the insured of the application
of the insurance policy to rental vehicles and that the insured may not need to
purchase additional coverage from the rental company.
4. If an insured has two or more vehicles covered by a plan or plans of liability insurance
containing the rented motor vehicle coverage required under subsection 1, the insured
may select the policy that the insured wishes to collect from and the insurer that issued
that plan is entitled to a pro rata contribution from any other plan or insurers based
upon the property damage limits of liability. If the person renting the motor vehicle is
also covered by that person's employer's insurance policy or the employer's
automobile self-insurance plan, the insurer or obligor under the employer's policy or
self-insurance plan has primary responsibility to pay claims arising from use of the
rented vehicle.
5. A notice advising the insured of rental vehicle coverage must be given by the insurer to
each current insured with their first renewal notice following July 6, 1989. The notice
must be approved by the insurance commissioner. The commissioner may specify the
form of the notice.
6. A rental car company may not require as a condition to its rental contract that the
renter make a deposit for a prior payment of damage to the rented vehicle or loss of
use of that vehicle.
7. For each day a damaged vehicle is out of service because of damage to the vehicle
while rented to others, the rental car company is entitled to collect sixty percent of the
daily rental fee applicable to the contract in force when the car was damaged, but not
to exceed fifteen days.
### § 26.1-40-18. Automobile warranties construed.

1. A person who issues a written automobile warranty contract, automobile mechanical
breakdown contract, or automobile service contract shall maintain a policy of
insurance which provides coverage for the person's contractual obligation.
2. The policy must be issued by an insurer licensed, registered, or otherwise authorized
to do business in this state. From the time the policy is filed with the commissioner:
a. The insurer shall maintain surplus as to policyholders and paid-in capital of at
least fifteen million dollars and annually file copies of the insurer's audited
financial statements, the national association of insurance commissioners annual
statement, and the actuarial certification required by and filed in the insurer's
state of domicile; or
b. The insurer shall maintain surplus as to policyholders and paid-in capital of
between fifteen million dollars and ten million dollars, demonstrate to the
satisfaction of the commissioner that the company maintains a ratio of net written
premiums, wherever written, to surplus as to policyholders and paid-in capital of
not greater than three to one, and annually file copies of the insurer's audited
financial statements, the national association of insurance commissioners annual
statement, and the actuarial certification required by and filed in the insurer's
state of domicile.
3. This section does not apply to an original equipment manufacturer.
### § 26.1-40-19. Certificate of authority to issue automobile warranty policy - Issuance -

Qualifications - Renewal.
Repealed by S.L. 2001, ch. 107, § 4.

### § 26.1-40-20. Automobile warranties considered insurance - Surety bond.

Repealed by S.L. 2001, ch. 107, § 4.
### § 26.1-40-21. Revocation of certificate of authority.

Repealed by S.L. 2001, ch. 107, § 4.
### § 26.1-40-22. Penalty.

Any person violating section 26.1-40-18 is guilty of a class A misdemeanor.
### § 26.1-40-23. Notice to transfer.

The insurer transferring a policy to an insurer within the same insurance holding company
system shall give notice to the policyholder of the transfer.
### § 26.1-40-24. Notice requirements following total loss.

If an insurer determines an automobile with physical damage coverage has incurred a total
loss or constructive total loss and that insurer continues to write comprehensive or collision
coverage on that automobile, the insurer shall provide notice to the insured that:
1. The insurer determined the automobile is a total loss;
2. The insured's current coverage on that automobile includes comprehensive or collision
coverage;
3. If the insured does not repair the automobile, the insurer will reduce the amount of any
future physical damage claim for that automobile by the amount paid for the total loss;
and
4. If the insured does not repair that automobile, the insured should contact the agent to
request that the comprehensive or collision coverage on that automobile be
discontinued.
### § 26.1-40-25. Proof of insurance.

An insurer who issues a policy shall provide proof of insurance to the insured in the form of
written or electronic evidence of the policy's terms as to type, duration, and the vehicle covered
by the policy.
