Iowa Auto Insurance and Transportation Network Companies

Iowa Automobile Insurance Plan — Assigned Risk (Iowa Code 515D.11)

The Iowa Automobile Insurance Plan (AIP) is Iowa’s auto residual market — a plan that provides coverage to drivers who cannot obtain it through the voluntary market because of poor driving records, claim history, or other risk factors. Iowa Code 515D.11 requires an insurer that cancels or nonrenews auto liability coverage for a reason other than nonpayment of premium to tell the insured of possible eligibility through the plan.

• Participation. Iowa Code 515F.17 allows insurers to agree, subject to the commissioner’s approval, on the equitable apportionment among them of applicants who are entitled to but unable to obtain insurance through ordinary methods.
• Purpose. To ensure every Iowa driver who needs coverage to meet financial responsibility requirements can obtain it.

Private-Passenger Auto — UM/UIM and Financial Responsibility

Uninsured/Underinsured Motorist Coverage (Iowa Code 516A)

Iowa Code Chapter 516A requires every Iowa auto liability policy to include UM and UIM coverage unless the named insured rejects it:

• Limits. UM and UIM coverage must carry bodily injury limits at least equal to the financial responsibility minimums of Iowa Code 321A.1(11).
• UM coverage. Responds when an at-fault driver has no liability insurance.
• UIM coverage. Responds when the at-fault driver’s limits are insufficient to cover the damages.
• Rejection (Iowa Code 516A.1-2). The applicant may reject UM/UIM, but the rejection must be in writing. Silence does not equal rejection — and an attempted rejection that does not comply with the statutory writing requirement is ineffective, meaning the policy will be deemed to include UM/UIM coverage, with bodily injury limits at least equal to the financial responsibility minimums.

IOWA CODE CITE — UM/UIM rejection

Iowa Code 516A.1-2 requires UM/UIM rejection to be in writing. If the rejection is verbal, ambiguous, or undocumented, the policy is deemed to include UM/UIM coverage. The exam writes questions specifically around this rejection requirement.

Proof of Financial Responsibility (Iowa Code 321A.18)

Iowa Code 321A.18 sets the procedural rules by which a driver may demonstrate financial responsibility — typically required after an accident or conviction that triggers a financial responsibility requirement:

• SR-22. The insurer files a certificate (commonly called an SR-22) with the Iowa Department of Transportation certifying that the driver has the required liability coverage.
• Maintenance. The SR-22 must be maintained for the duration required by law (typically 2 years from the date the requirement is imposed).
• Lapse notification. If the policy lapses, the insurer must notify the Iowa DOT, which may then suspend the driver’s license.
• Alternative methods. Iowa law permits alternative methods of demonstrating financial responsibility — including a certificate of deposit or a bond — though insurance is by far the most common approach.

Casualty Cancellation and Nonrenewal (Iowa Code 515D.4 through .7)

Iowa Code 515D.4 through .7 governs cancellation and nonrenewal of personal auto policies:

• Within the first 60 days. Insurer may cancel for any underwriting reason with statutory notice.
• After 60 days. Cancellation is restricted to limited grounds — nonpayment of premium (or of certain association dues), fraud or material misrepresentation, violation of the policy’s terms or conditions, and the grounds for excluding a driver: loss of driving privileges, a competitive speed contest, or a conviction within the preceding 36 months for criminal negligence, homicide or assault arising out of operating a motor vehicle, operating while intoxicated, or a violation of Iowa Code 321.261.
• Nonrenewal. Requires at least 60 days advance written notice; the reason accompanies the notice or is stated on the insured’s written request.

Transportation Network Companies (Iowa Code 321N.1(5); 321N.4(2)(a))

Iowa regulates Transportation Network Companies (TNCs) — rideshare platforms like Uber and Lyft — under Iowa Code Chapter 321N:

• Definitions (Iowa Code 321N.1). The section defines the terms of the chapter, among them “transportation network company” (321N.1(5)), “prearranged ride” and “transportation network company driver”.
• Insurance requirements (Iowa Code 321N.4). The TNC, the TNC driver, or a combination must maintain insurance during defined operational periods:
  • Period 1 — App on, no ride request accepted. Primary auto liability of at least $50,000 per person and $100,000 per accident for bodily injury and $25,000 for property damage (Iowa Code 321N.4(2)(a)), plus UM/UIM.
  • Period 2 — Ride accepted, en route to passenger. Higher liability limits required — at least $1 million combined single limit (Iowa Code 321N.4(3)(a)).
  • Period 3 — Passenger in vehicle. Same higher liability limits as Period 2.
• Personal auto gap. Standard Iowa personal auto policies typically exclude coverage when the vehicle is being used to transport persons for hire. Iowa Code 321N forces the TNC and the driver to ensure that gap is filled.

CORE IDEA — TNC insurance is layered across three periods

The exam tests TNC coverage by period: Period 1 (app on), Period 2 (ride accepted), Period 3 (passenger in vehicle). Either the TNC or the driver must carry the required coverage during each period. The personal auto policy typically excludes ride-hailing use, which is why Iowa Code 321N exists.