# Insurance (GIN)

## Title 20. Maryland Automobile Insurance Fund

### Subtitle 5. Policies for Covered Vehicles

#### Section 20-501

(a) In this subtitle, "covered vehicle" means a vehicle for which the Fund is required to provide coverage under this subtitle.

(b) "Covered vehicle" includes:

  (1) any motor vehicle required to be registered under Title 13 of the Transportation Article;

  (2) a moped; and

  (3) a motor scooter.

#### Section 20-502

(a) On payment of the premium set by the Fund, the Fund is authorized to and shall sell, issue, and deliver a policy that provides the security required under Sec. 17-103 of the Transportation Article to a person:

  (1) that owns a covered vehicle registered with the Motor Vehicle Administration, has a license issued by the Motor Vehicle Administration to drive a covered vehicle, or is a lessee under a "lease not intended as security", as defined in Sec. 11-127.2(b) of the Transportation Article;

  (2) that does not owe to the Fund:

    (i) an unpaid premium with respect to a policy that has expired or been canceled; or

    (ii) a claim payment obtained by fraud;

  (3) that:

    (i) has attempted in good faith to obtain a policy that provides the security required under Sec. 17-103 of the Transportation Article from at least two Association members and has been rejected or refused the policy by two Association members for any reason other than nonpayment of premiums;

    (ii) has had a policy that provides the security required under Sec. 17-103 of the Transportation Article canceled or nonrenewed by an Association member for any reason other than nonpayment of premiums; or

    (iii) has had a motor vehicle liability insurance policy but has been uninsured for a continuous period of 12 months or more immediately preceding the effective date of the Fund policy, as verified by a commercial third-party database or a State agency; and

  (4) that meets the requirements of subsection (b) of this section.

(b) To be eligible for a policy issued under this subtitle, a person must:

  (1) be domiciled in the State;

  (2) own, lease, or rent a primary place of residence in the State and, regardless of the person's domicile, reside in the State for more than 1 year;

  (3) maintain a main or branch office or warehouse facility in the State, and base and operate motor vehicles intrastate in the State;

  (4) have filed as a State resident for income tax purposes; or

  (5) have a nonresident permit issued under Sec. 13-402.1(e) of the Transportation Article.

(c)

  (1) Except as provided in paragraph (2) of this subsection, this section does not apply to a person to the extent that the person:

    (i) leases a covered vehicle that is a private passenger vehicle to an individual who does not meet the requirements of subsection (b) of this section; or

    (ii) garages the covered vehicle principally outside of the State.

  (2) This section applies to a person described in paragraph (1) of this subsection who is:

    (i) a member, on active duty, of the uniformed services; or

    (ii) a student enrolled in an accredited school, college, or university or serving a medical internship.

(d) The eligibility of an applicant for insurance from the Fund shall be certified at a time and in a manner approved by the Fund.

(e)

  (1) If a prospective insured fails to qualify under this section, any policy issued is void and a commission may not be paid by the Fund to a fund producer.

  (2)

    (i) Subject to the provisions of subparagraph (ii) of this paragraph, if a person fails to meet the requirements of subsection (b) of this section, the Fund may charge and collect the greater of:

      (1) a policy processing fee to cover its expenses; or

      (2) the amount that the person would have received after the Fund returns to a fund producer, or any other person other than the person who fails to meet the requirements of subsection (b) of this section, any gross unearned premiums that are due under the policy.

    (ii) Prior to charging and collecting a policy processing fee or the amount allowed under subparagraph (i) of this paragraph, the Fund shall refer to the Insurance Fraud Division in the Administration for investigation and possible prosecution of the person who fails to meet the requirements of subsection (b) of this section.

#### Section 20-503

(a) Each policy issued by the Fund shall contain the minimum coverages required under Title 19, Subtitle 5 of this article and may contain other provisions determined by the Executive Director and approved by the Board of Trustees and the Commissioner.

(b) At the time a policy of private passenger auto liability insurance is issued to an applicant, the Fund shall include in the policy a written notice to the applicant that contains the following disclosures:

  (1) the time and the conditions under which the applicant is eligible to seek insurance from an Association member;

  (2) that if the applicant seeks insurance from an Association member, the Association member may not refuse to underwrite the private passenger auto liability insurance risk solely because the applicant or named insured previously obtained insurance from the Fund; and

  (3) that if the applicant seeks insurance from an Association member and the Association member refuses to underwrite the applicant solely because the applicant or named insured previously obtained insurance from the Fund, the applicant may file a complaint with the Commissioner against that Association member.

(c) Whenever the Fund issues a policy of commercial auto liability insurance under this subtitle, the Fund:

  (1) may provide coverages in addition to and in excess of the minimum coverages required by Title 19, Subtitle 5 of this article and by Title 17 of the Transportation Article; but

  (2) is not required to provide coverages in addition to and in excess of the required minimum coverages except to the extent that reinsurance for the additional or excess coverage is available and acceptable to the Fund.

#### Section 20-504

(a)

  (1) In this section, "add-on coverage" means coverages or services sold in connection with a policy issued by the Fund, other than coverages authorized to be offered by the Fund under this subtitle.

  (2) "Add-on coverage" includes:

    (i) rental reimbursement coverage;

    (ii) personal effects theft coverage;

    (iii) collision and comprehensive deductible waiver coverage, other than collision and comprehensive coverages provided by the Fund or other authorized insurers;

    (iv) supplemental hospital benefit coverage;

    (v) emergency living expense coverage;

    (vi) vehicle towing coverage;

    (vii) emergency vehicle repair service coverage; and

    (viii) motor club services.

  (3) "Add-on coverage" does not include fire, life, and health insurance coverages that are not directly related to the underlying motor vehicle insurance coverage and are written by an authorized insurer.

(b)

  (1) At the time coverage provided by the Fund is bound and before any add-on coverage is sold, a fund producer shall provide a clear and conspicuous written disclosure, in the form approved by the Commissioner, that:

    (i) states that the cost of add-on coverage is not part of the premium for the related policy issued by the Fund;

    (ii) includes an itemized list of any add-on coverages to be sold to the insured;

    (iii) states the nature and cost of each add-on coverage to be sold; and

    (iv) states that add-on coverage is optional and is not required under Sec. 17-103 of the Transportation Article.

  (2) Before an insured may purchase add-on coverage, the insured shall expressly consent to the purchase by signing the disclosure form.

(c) On continuation of a policy that includes add-on coverage, an insured need not sign a disclosure form if:

  (1) the number and type of add-on coverages under the continuation do not change from the preceding policy; and

  (2) the insured has signed the original disclosure form.

(d)

  (1) A fund producer may not:

    (i) require an insured or prospective insured to purchase an add-on coverage as a condition to purchasing the related policy issued by the Fund; or

    (ii) sell add-on coverage or any combination of add-on coverages in an amount that exceeds $200 per covered vehicle in connection with a private passenger auto insurance policy.

  (2) A pattern or practice of violations of this section by a fund producer is subject to the same penalties as a violation of Sec. 20-513 of this subtitle.

#### Section 20-505

(a) The Executive Director shall settle, compromise, or defend claims against the Fund.

(b) Notwithstanding Sec. 9-602 of the Criminal Law Article, the Executive Director may authorize an employee of the Fund to record a telephone conversation with a policyholder, witness, claimant, investigating officer, or other interested party if:

  (1) the conversation is relevant to an accident or claim;

  (2) the party to be recorded has or might have information that is relevant to the accident or claim; and

  (3) before recording, the party to be recorded is advised of and consents to the recording.

#### Section 20-506

(a) The Executive Director shall:

  (1) establish and maintain reasonable and adequate reserves for payment of claims against the Fund; and

  (2) use the same criteria as is required for use by an Association member in determining the amount of reserves that are necessary.

(b) At least annually, the Board of Trustees shall review the reasonableness and adequacy of reserves.

#### Section 20-507

(a) Subject to the authority of the Commissioner to determine whether rates are excessive, inadequate, or unfairly discriminatory, as provided in Title 11, Subtitle 2 or Subtitle 3 of this article, the Executive Director shall determine the premiums to be charged on policies issued by the Fund.

(b)

  (1) Except as provided in subsections (c) and (d) of this section, the provisions of Title 11, Subtitle 3 of this article apply to the determination of premiums by the Executive Director and the filing of rates with the Commissioner.

  (2) Notwithstanding Title 11, Subtitle 2 or Subtitle 3 of this article or any other provision of this title, the Executive Director may base premiums on one or both of the following items:

    (i) the number of points accumulated by an insured or applicant for insurance under the point system provided for in Title 16, Subtitle 4 of the Transportation Article; or

    (ii) the prior claims experience of an insured or applicant for insurance.

(c) The provisions of Title 11, Subtitle 2 of this article apply to the determination of premiums by the Executive Director and the filing of rates with the Commissioner:

  (1) between July 1, 2025, and December 31, 2025, both inclusive; and

  (2) beginning January 1, 2026, if the Fund's total adjusted capital is less than the amount required under Sec. 20-306(c) of this title.

(d)

  (1) Premiums for all commercial coverage shall be determined in accordance with this section and Sec. 20-508 of this subtitle.

  (2) Notwithstanding paragraph (1) of this subsection, the rating principles under subsection (e) of this section may not be used to determine the premium for commercial coverage.

(e) In reviewing rates filed by the Fund, the Commissioner shall consider not only the rating principles under Title 11, Subtitle 2 or Subtitle 3 of this article but also the statutory purpose of the Fund under Sec. 20-301 of this title.

(f)

  (1) The Motor Vehicle Administration and Executive Director may arrange for the Motor Vehicle Administration to collect premiums on policies issued by the Fund when the Motor Vehicle Administration issues a driver's license or certificate of registration.

  (2) A premium collected under this subsection shall be paid to the State Treasurer for the account of the Fund.

(g)

  (1) The Fund may not provide directly or indirectly for the financing of premiums.

  (2) A premium may be financed only by a premium finance company registered with the Commissioner in accordance with Sec. 23-201 of this article.

  (3) If a prospective insured's initial payment to the Fund, a fund producer, or premium finance company is not honored, a policy or endorsement issued in reliance on that payment is void.

(h)

  (1)

    (i) Subject to the approval of the Commissioner and in accordance with this subsection, the Fund may accept premiums on an installment payment basis.

    (ii) In approving the Fund's plan for accepting premiums on an installment payment basis, the Commissioner shall:

      (1) consider as factors:

      (A) the percentage of the initial premium payment in comparison to the total premium under the policy;

      (B) the number of installment premium payments accepted on a policy under the installment payment plan; and

      (C) the overall affordability of the installment payment plan in comparison to other payment options available to the policyholder; and

      (2) ensure that the Fund's installment payment plan

      meets the requirements of Sec. 27-216 of this article.

  (2) The Fund may not discriminate among insureds by charging different premiums to insureds who select, as a payment option, the Fund's installment payment plan instead of a premium finance agreement.

  (3) In determining commissions paid to a fund producer, the Fund may not consider whether the fund producer placed an insured in an installment payment plan.

  (4)

    (i) In accordance with this paragraph, written and electronic communications, including the Fund's website, affecting the placement of coverage by the Fund or a fund producer shall include a statement, on a form approved by the Commissioner, advising an applicant or an insured of the payment options available to the applicant or insured.

    (ii) The statement shall state that the applicant or insured has the following payment options:

      (1) the Fund's installment payment plan;

      (2) a premium finance agreement; or

      (3) payment of the policy in full.

    (iii) The statement shall be included on written or electronic communications at the time the applicant or insured:

      (1) is issued a new policy; or

      (2) is issued a reissuance, rewrite, or renewal of an existing policy.

    (iv) The statement shall state that the applicant or insured should consult a fund producer who will fully describe the terms of each payment option.

(i)

  (1) If the Fund makes a change to its plan for accepting premiums on an installment payment basis, within 90 days after the change, the Commissioner shall submit a report to the General Assembly providing the reason for the change.

  (2) The report required under paragraph (1) of this subsection shall:

    (i) include the effect the change will have on the required factors for consideration under subsection (h)(1)(ii)1 of this section; and

    (ii) be submitted in accordance with Sec. 2-1257 of the State Government Article.

#### Section 20-508

(a) A policyholder is entitled to continuation of coverage from the Fund at rates that are reasonably comparable to those charged by standard insurers and approved by the Commissioner if, for 3 continuous years of coverage under a policy issued by the Fund, the policyholder has not:

  (1) been charged with a moving traffic violation;

  (2) had a chargeable traffic accident; and

  (3) been assessed more than one point by the Motor Vehicle Administration.

(b) A policyholder who meets the requirements of subsection (a) of this section is not entitled to a safe driver credit as defined in the rules and rate schedules of the Fund filed with the Commissioner.

(c) In determining eligibility for rates that are reasonably comparable to those charged by standard insurers, the Fund may not consider:

  (1) a lapse in coverage of 30 days or less; and

  (2) the addition of a driver to the policy who has certified in a manner approved by the Fund for the immediately preceding 3 continuous years that the driver has not had a moving traffic violation, has not been assessed more than one point, and has not had a chargeable traffic accident.

#### Section 20-509

(a)

  (1) Subject to this section and the policies adopted by the Board of Trustees that relate to the binding of coverage, a fund producer may bind the minimum required coverage for an applicant in the Fund if the applicant submits an application to the fund producer and pays the appropriate premium.

  (2) To effect coverage, the fund producer must receive payment of the appropriate premium required under the policies adopted by the Board of Trustees that relate to the binding of coverage.

  (3) Payment of the appropriate premium does not occur so as to effect coverage if payment of all or part of the premium is made by an instrument that is later dishonored.

(b)

  (1) The Board of Trustees shall adopt and make available to each fund producer reasonable policies that relate to the authority of fund producers to bind coverage.

  (2) The policies shall include:

    (i) the amount of premium to be collected;

    (ii) the evidence necessary to establish the qualification of an applicant to be insured by the Fund;

    (iii) procedures for notifying the Fund of the binding of coverage; and

    (iv) the time within which the fund producer is to give notice.

(c) The Fund:

  (1) may refuse to grant the authority of a fund producer to an insurance producer that has been previously terminated as a fund producer or that has had its license previously revoked or surrendered; and

  (2) subject to the hearing provisions of Sec. 20-514 of this subtitle, may discipline a fund producer that:

    (i) employs or otherwise retains a person described in item (1) of this subsection; and

    (ii) allows the person to become involved in the fund producer's operations or management contrary to a requirement of this article or order of the Administration.

(d) Subject to subsection (e) of this section, the Fund is liable for coverage from the date that the fund producer binds coverage.

(e)

  (1) On review of an application, the Fund may cancel coverage and refuse to issue a policy if the Fund finds that:

    (i) the applicant is not qualified for insurance issued by the Fund;

    (ii) the applicant has not paid the appropriate premium; or

    (iii) the Fund is authorized to reject the application under Sec. 20-516 of this subtitle.

  (2) Cancellation of coverage may occur not later than 60 days after coverage is effective.

(f) Whenever coverage is canceled:

  (1) the Fund promptly shall notify the applicant, fund producer, and Motor Vehicle Administration of the cancellation;

  (2) the applicant has the right of appeal under Sec. 20-517 of this subtitle; and

  (3) if the cancellation occurred because an applicant did not pay the appropriate premium, the Fund shall give the applicant a reasonable opportunity to pay the appropriate premium.

#### Section 20-510

(a) Each fund producer is a fiduciary as to all premiums, return premiums, or other money that the fund producer receives from any person in connection with a policy or policy application issued by, to be issued by, or bound in the Fund.

(b) Each fund producer shall deposit as trust money into an account for premiums all money received under subsection (a) of this section to be accounted for and paid over to the Fund as the law requires.

#### Section 20-511

(a)

  (1) On application to the Fund for appointment as a fund producer, an applicant shall file with the Fund a bond for the benefit of the Fund for the balance of the current year.

  (2) On or before December 31 of each year, each fund producer shall file with the Fund a bond for the benefit of the Fund for the next succeeding year.

(b) A bond required under this section shall be:

  (1) in the amount of $10,000;

  (2) executed by an authorized surety insurer; and

  (3) conditioned that the fund producer will account for and pay over to the person entitled to it all money belonging to the person that comes into the fund producer's possession in accordance with this subtitle and the regulations that relate to the binding of coverage.

(c)

  (1) A fund producer is considered to have complied with this section if an Association member certifies to the Fund that:

    (i) the Association member has a bond in effect that covers the fund producer and complies with the requirements of this section; and

    (ii) the bond coverage extends to the Fund when persons apply to the Fund for coverage through the fund producer.

  (2) The certification shall be made by an authorized representative of the Association member.

  (3) A copy of the certification shall be mailed promptly to the Fund.

(d) A fund producer's authority to bind coverage in the Fund may be terminated on 10 days' written notice if the bond is not:

  (1) filed with the Fund in a timely manner; or

  (2) continuously maintained in effect while the fund producer has authority to bind coverage in the Fund.

#### Section 20-512

(a) Except as provided in subsection (b) of this section, the Fund shall pay to a fund producer of a policyholder to whom a policy is issued a commission:

  (1) for private passenger auto insurance issued by the Fund, at a rate determined by the Fund but not less than 5% and not to exceed 15% of the total premium; and

  (2) for any other insurance issued by the Fund, at a rate determined by the Fund but not to exceed 10% of the total premium.

(b) The Fund may not pay a commission:

  (1) on a fully earned basis;

  (2) if a prospective insured fails to qualify under Sec. 20-502 of this subtitle;

  (3) if a prospective insured's initial payment to the Fund, a fund producer, or premium finance company is not honored; or

  (4) on a policy written directly by the Fund without the involvement of a fund producer.

(c) If a policy issued by the Fund is canceled, the Fund shall refund any unearned commissions.

#### Section 20-513

The Fund may refuse to accept further applications from a fund producer or may terminate the authority of the fund producer to bind coverage or both if:

(1) the Fund finds that the fund producer has engaged in the practice of binding coverage in the Fund in violation of policies adopted by the Board of Trustees; or

(2) after demand has been made by the Fund, the fund producer fails to pay money owed the Fund as a result of:

  (i) the binding or change of coverage; or

  (ii) a commission paid to the fund producer on a policy that is canceled after the effective date of coverage.

#### Section 20-514

(a) Except as provided in subsection (b) of this section, the Fund shall give prior written notice to a fund producer of its intended action under Sec. 20-513 of this subtitle and give the fund producer an opportunity for a hearing before taking the action.

(b)

  (1) The Fund may exercise immediately any option under Sec. 20-513 of this subtitle if the Fund determines that there is a likelihood of substantial and immediate harm to the Fund, its policyholders, or others because of:

    (i) a violation of a policy adopted by the Board of Trustees that relates to the binding of coverage; or

    (ii) a failure to pay money owed.

  (2) After taking an action under Sec. 20-513 of this subtitle, the Fund promptly shall give notice to the fund producer and hold a hearing within 10 working days before a member of the Board of Trustees.

(c) The Board of Trustees shall adopt policies to provide procedures for notice and hearings under this section.

#### Section 20-515

(a) The Fund may use the Maryland Tax Refund Intercept Program to recover money owed to the Fund by a fund producer if the Fund makes a demand for the money and the fund producer does not make payment.

(b)

  (1) If the Fund makes payment to a claimant, the Fund is subrogated to the rights of the claimant against a responsible party and is entitled to recover all money that the Fund paid out and actual collection costs, including reasonable attorney's fees.

  (2) The Fund may recover from its insureds all past-due premiums and from the responsible party all money that the Fund paid out under this subtitle in any manner provided by law, including the Maryland Tax Refund Intercept Program.

#### Section 20-516

(a) Subject to Sec. 20-517 of this subtitle, the Fund:

  (1) may reject an application of insurance if the applicant owes to the Fund an unpaid premium on an expired or canceled policy;

  (2) at any time may cancel a policy for nonpayment of premiums; or

  (3) may reject an application of insurance or at any time may cancel a policy if it is found that the driver's license of the applicant or policyholder is:

    (i) suspended, unless the suspension is for a first offense under Sec. 16-205.1 of the Transportation Article for driving with an alcohol concentration of 0.08 or more; or

    (ii) revoked.

(b) The Fund shall notify the applicant or policyholder promptly after the Fund rejects an application or cancels a policy.

(c) If a person does not have a valid license or other privilege to drive a covered vehicle in the State, or is otherwise ineligible to be insured by the Fund, the Fund may issue the appropriate policy with an excluded driver endorsement under Sec. 27-609 of this article.

(d)

  (1) The Fund may cancel a policy if:

    (i) the temporary registration issued for the covered vehicle under Sec. 13-405 or Sec. 23-107(b) of the Transportation Article has expired; and

    (ii) the covered vehicle is not otherwise validly registered in the State.

  (2) The cancellation may not take effect until the day after the temporary registration of the covered vehicle expires.

#### Section 20-517

(a) An applicant whose application for insurance has been rejected or a policyholder whose policy has been canceled for a reason other than nonpayment of premiums may appeal the decision to a special board within 10 days after receipt of notice of the rejection or cancellation.

(b)

  (1) The special board consists of two members of the Board of Trustees and the Commissioner or designee of the Commissioner.

  (2) The Executive Director may not sit on the special board.

(c)

  (1) The special board:

    (i) may affirm, reverse, or modify the decision on the record; or

    (ii) on at least 10 days' written notice to the applicant, may hold a hearing and then affirm, reverse, or modify the decision.

  (2) The current policy of a policyholder who appeals the decision to the special board remains in effect until the special board decides the appeal.

(d) The Fund shall notify the Motor Vehicle Administration immediately after:

  (1) the Fund cancels a policy or terminates coverage of an insured; or

  (2) the Fund rejects an application for insurance and the action is final because:

    (i) the rejection was not appealed to the special board; or

    (ii) the special board does not reverse or modify the decision to cancel as to require issuance of a policy.

#### Section 20-518

(a)

  (1) The Executive Director shall refer the status of an insured's driver's license to the Motor Vehicle Administration for a determination whenever the Executive Director finds that the insured, in the last 12-month period, had three or more chargeable accidents under the rules and rate schedules of the Fund filed with the Commissioner involving third-party liability, regardless of the number of points assessed for those accidents.

  (2) The Executive Director may refer any other matter about an insured's driving record to the Motor Vehicle Administration for a determination.

(b) If, after a hearing, the Motor Vehicle Administration suspends or revokes the insured's driver's license, the Executive Director shall cancel or refuse to continue the coverage after having given the notice required under Sec. 27-602 of this article.

(c) If the Motor Vehicle Administration does not suspend or revoke the insured's driver's license under subsection (b) of this section, the Executive Director may not cancel or refuse to continue the coverage of the insured.

#### Section 20-519

If a policy covers a spouse or other household member of the family of the policyholder:

(1) cancellation of the policy of an insured whose driver's license is suspended or revoked does not result in the cancellation of the coverage of the spouse or other family member whose driver's license is not suspended or revoked; and

(2) the Fund shall reclassify the rate of risk of the spouse or other family member for the purpose of setting the premium.

#### Section 20-520

(a) Except as provided in subsection (b) of this section, an insurer that issues, sells, or delivers private passenger motor vehicle insurance in the State may not refuse to issue a policy of private passenger motor vehicle insurance to any person who, for the immediately preceding 3 continuous years:

  (1) has been insured by the Fund;

  (2) has not had a moving traffic violation; and

  (3) has not had a chargeable traffic accident.

(b) Subject to Sec. 27-501 of this article, an insurer may refuse to issue a policy under subsection (a) of this section if the person does not satisfy the insurer's eligibility or underwriting standards.

(c) A person who is entitled to insurance under subsection (a) of this section:

  (1) shall be rated by the insurer in the same manner as any other policyholder not previously insured by the Fund having the same risk characteristics; and

  (2) may not be surcharged or rated by the insurer solely because the person was insured by the Fund.

(d)

  (1) At least 60 days before expiration or renewal of a policy of private passenger motor vehicle insurance, the Fund shall provide written notice to each person entitled to insurance under subsection (a) of this section.

  (2) The notice shall:

    (i) inform the person of the person's right to insurance under subsection (a) of this section;

    (ii) advise the person to contact the fund producer that bound the person's coverage with the Fund during the most recent coverage period;

    (iii) include a copy of a sample rate guide produced by the Administration; and

    (iv) provide the toll-free telephone number established under Sec. 2-109 of this article.

#### Section 20-521

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Md. Code Ann., Ins. (as displayed at mgaleg.maryland.gov, October 16, 2026)