[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 2454 Placed on Calendar Senate (PCS)]





                                                       Calendar No. 568

105th CONGRESS

  2d Session

                                S. 2454

_______________________________________________________________________

                                 A BILL

To provide for competition between forms of motor vehicle insurance, to 
permit an owner of a motor vehicle to choose the most appropriate form 
  of insurance for that person, to guarantee affordable premiums, to 
provide for more adequate and timely compensation for accident victims, 
                        and for other purposes.

_______________________________________________________________________

                           September 10, 1998

            Read the second time and placed on the calendar





                                                       Calendar No. 568
105th CONGRESS
  2d Session
                                S. 2454

To provide for competition between forms of motor vehicle insurance, to 
permit an owner of a motor vehicle to choose the most appropriate form 
  of insurance for that person, to guarantee affordable premiums, to 
provide for more adequate and timely compensation for accident victims, 
                        and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           September 9, 1998

 Mr. McConnell (for himself, Mr. Moynihan, Mr. Lieberman, Mr. Nickles, 
  Mr. Grams, and Mr. Gorton) introduced the following bill; which was 
                          read the first time

                           September 10, 1998

            Read the second time and placed on the calendar

_______________________________________________________________________

                                 A BILL


 
To provide for competition between forms of motor vehicle insurance, to 
permit an owner of a motor vehicle to choose the most appropriate form 
  of insurance for that person, to guarantee affordable premiums, to 
provide for more adequate and timely compensation for accident victims, 
                        and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Auto Choice Reform Act of 1997''.

SEC. 2. FINDINGS.

    Congress finds that--
            (1) the costs of operating a motor vehicle are excessive 
        due in substantial part to the legal and administrative costs 
        associated with the resolution of claims under the tort 
        liability insurance system;
            (2) the tort liability insurance system often results in--
                    (A) the failure to provide compensation 
                commensurate with loss;
                    (B) an unreasonable delay in the payment of 
                benefits; and
                    (C) the expenditure of an excessive amount for 
                legal fees;
            (3) the incentives of the tort liability insurance system 
        for motor vehicles are distorted, and result in--
                    (A) significant fraud in the claims process, which 
                exacerbates the level of distrust of many individuals 
                in the United States with respect to the legal process 
                and the rule of law;
                    (B) significant, wasteful, fraudulent, and costly 
                overuse and abuse of scarce health care resources and 
                services;
                    (C) unbearable cost burdens on low-income 
                individuals, imposing on them the Hobson's choice of 
                driving on an unlawful, uninsured basis or foregoing 
                essential needs, such as food and adequate shelter;
                    (D) significant reductions in, access to, and 
                purchases of, motor vehicles, which--
                            (i) damage the economic well-being of many 
                        low-income individuals; and
                            (ii) cause unnecessary harm to a critical 
                        component of the economy of the United States;
                    (E) significant deterioration of the economic well-
                being of the majority of major cities in the United 
                States through the imposition of a massive tort tax 
                that--
                            (i) places a disproportionate burden on 
                        urban residents; and
                            (ii) contributes to the abandonment of the 
                        cities by many taxpayers who are able to 
                        achieve substantial after-tax savings on 
                        automobile insurance premiums by moving to 
                        adjacent suburban communities; and
                    (F) significant inability to achieve market-based 
                discounts in insurance rates for owners of safer cars, 
                which reduces the level of safety for drivers and 
                passengers of motor vehicles;
            (4) insurance to indemnify individuals for personal 
        injuries arising from motor vehicle collisions is frequently 
        unavailable at a reasonable cost because of the potential 
        liability for third-party tort claims;
            (5) a system that gives consumers the opportunity to insure 
        themselves and that separates economic and noneconomic damages 
        for the purposes of purchasing insurance would provide 
        significant cost savings to drivers of motor vehicles;
            (6) a system that enables individuals to choose the form of 
        motor vehicle insurance that best suits their needs would--
                    (A) enhance individual freedom;
                    (B) reduce the cost of motor vehicle insurance; and
                    (C) increase average compensation in the event of 
                an accident; and
            (7) a system that targets and emphasizes the scourge of 
        those individuals who drive under the influence of drugs or 
        alcohol will further deter such dangerous and unlawful conduct.

SEC. 3. PURPOSE.

    The purpose of this Act is to allow consumers of motor vehicle 
insurance to choose between--
            (1) an insurance system that provides substantially the 
        same remedies as are available under applicable State law; and
            (2) a predominately first-party insurance system that 
        provides for--
                    (A) more comprehensive recovery of economic loss in 
                a shorter period of time; and
                    (B) the right to sue negligent drivers for any 
                uncompensated economic losses.

SEC. 4. DEFINITIONS.

    In this Act:
            (1) Accident.--The term ``accident'' means an unforeseen or 
        unplanned event that--
                    (A) causes loss or injury; and
                    (B) arises from the operation, maintenance, or use 
                of a motor vehicle.
            (2) Add-on law.--The term ``add-on law'' means a State law 
        that provides that persons injured in motor vehicle accidents--
                    (A) are compensated without regard to fault for 
                economic loss; and
                    (B) have the right to claim without any limitation 
                for noneconomic loss based on fault.
            (3) Economic loss.--The term ``economic loss'' means any 
        objectively verifiable pecuniary loss resulting from an 
        accident, including--
                    (A) reasonable and necessary medical and 
                rehabilitation expenses;
                    (B) loss of earnings;
                    (C) burial costs;
                    (D) replacement services loss;
                    (E) costs of making reasonable accommodations to a 
                personal residence to make the residence more habitable 
                for an injured individual; and
                    (F) loss of employment, and loss of business or 
                employment opportunities, to the extent recovery for 
                such losses is allowed under applicable State law.
            (4) Financial responsibility law.--The term ``financial 
        responsibility law'' means a law (including a law requiring 
        compulsory coverage) penalizing motorists for failing to carry 
        defined limits of tort liability insurance covering motor 
        vehicle accidents.
            (5) Injury.--The term ``injury'' means bodily injury, 
        sickness, disease, or death.
            (6) Insurer.--The term ``insurer'' means--
                    (A) any person who is engaged in the business of 
                issuing or delivering motor vehicle insurance policies 
                (including an insurance agent); or
                    (B) any person who is self-insured within the 
                meaning of applicable State law.
            (7) Intentional misconduct.--
                    (A) In general.--Except as provided in subparagraph 
                (B), the term ``intentional misconduct'' means 
                conduct--
                            (i) with respect to which harm is 
                        intentionally caused or attempted to be caused 
                        by a person who acts or fails to act for the 
                        purpose of causing harm, or with knowledge that 
                        harm is substantially certain to result from 
                        that action or failure to act; and
                            (ii) that causes or substantially 
                        contributes to the harm that is the subject of 
                        a claim.
                    (B) Clarification.--For purposes of this paragraph, 
                a person does not intentionally cause or attempt to 
                cause harm--
                            (i) solely because that person acts or 
                        fails to act with the understanding that the 
                        action or failure to act creates a grave risk 
                        of causing harm; or
                            (ii) if the act or omission by that person 
                        causing bodily harm is for the purpose of 
                        averting bodily harm to that person or another 
                        person.
            (8) Motor vehicle.--The term ``motor vehicle'' means a 
        vehicle of any kind required to be registered under the 
        provisions of the applicable State law relating to motor 
        vehicles.
            (9) No-fault motor vehicle law.--The term ``no-fault motor 
        vehicle law'' means a State law that provides that--
                    (A) persons injured in motor vehicle accidents are 
                paid compensation without regard to fault for their 
                economic loss that results from injury; and
                    (B) in return for the payment referred to in 
                subparagraph (A), claims based on fault including 
                claims for noneconomic loss, are limited to a defined 
                extent.
            (10) Noneconomic loss.--The term ``noneconomic loss'' means 
        subjective, nonmonetary losses including pain, suffering, 
        inconvenience, mental suffering, emotional distress, loss of 
        society and companionship, loss of consortium, hedonic damages, 
        injury to reputation, and humiliation.
            (11) Occupy.--The term ``occupy'' means, with respect to 
        the operation, maintenance, or use of a motor vehicle, to be in 
        or on a motor vehicle or to be engaged in the immediate act of 
        entering into or alighting from a motor vehicle before or after 
        its use for transportation.
            (12) Operation, maintenance, or use of a motor vehicle.--
                    (A) In general.--The term ``operation, maintenance, 
                or use of a motor vehicle'' means occupying a motor 
                vehicle.
                    (B) Exclusions.--The term ``operation, maintenance, 
                or use of a motor vehicle'' does not include--
                            (i) conduct within the course of a business 
                        of manufacturing, sale, repairing, servicing, 
                        or otherwise maintaining motor vehicles, unless 
                        the conduct occurs outside of the scope of the 
                        business activity; or
                            (ii) conduct within the course of loading 
                        or unloading a motor vehicle, unless the 
                        conduct occurs while occupying the motor 
                        vehicle.
            (13) Person.--The term ``person'' means any individual, 
        corporation, company, association, firm, partnership, society, 
        joint stock company, or any other entity, including any 
        governmental entity.
            (14) Personal protection insurance.--The term ``personal 
        protection insurance'' means insurance that provides for--
                    (A) benefits to an insured person for economic loss 
                without regard to fault for injury resulting from a 
                motor vehicle accident; and
                    (B) a waiver of tort claims in accordance with this 
                Act.
            (15) Replacement services loss.--The term ``replacement 
        services loss'' means expenses reasonably incurred in obtaining 
        ordinary and necessary services from other persons who are not 
        members of the injured person's household, in lieu of the 
        services the injured person would have performed for the 
        benefit of the household.
            (16) Resident relative or dependent.--The term ``resident 
        relative or dependent'' means a person who--
                    (A) is related to the owner of a motor vehicle by 
                blood, marriage, adoption, or otherwise (including a 
                dependent receiving financial services or support from 
                such owner); and
                    (B)(i) resides in the same household as the owner 
                of the motor vehicle at the time of the accident; or
                    (ii) usually makes a home in the same family unit 
                as that owner, even though that person may temporarily 
                live elsewhere.
            (17) State.--The term ``State'' means any State of the 
        United States, the District of Columbia, the Commonwealth of 
        Puerto Rico, Guam, the United States Virgin Islands, American 
        Samoa, the Commonwealth of the Northern Mariana Islands, the 
        Trust Territories of the Pacific Islands, and any other 
        territory or possession of the United States.
            (18) Tort liability.--The term ``tort liability'' means the 
        legal obligation to pay damages for an injury adjudged to have 
        been committed by a tort-feasor.
            (19) Tort liability insurance.--The term ``tort liability 
        insurance'' means a contract of insurance under which an 
        insurer agrees to pay, on behalf of an insured, damages that 
        the insured is obligated to pay to a third person because of 
        the liability of the insured to that person.
            (20) Tort maintenance coverage.--
                    (A) In general.--The term ``tort maintenance 
                coverage'' means insurance coverage under which a 
                person described in subparagraph (B), if involved in an 
                accident with a person covered by personal protection 
                insurance, retains a right to claim for injury based on 
                fault for economic and noneconomic losses under 
                applicable State law, without modification by any other 
                provision of this Act.
                    (B) Tort maintenance insured.--A person described 
                in this subparagraph is a person covered by the form of 
                insurance described in section 5(a)(2).
                    (C) Responsibility for payment.--The responsibility 
                for payment for any claim under subparagraph (A) is 
                assumed by the insurer of the person with tort 
                maintenance coverage to the extent of such coverage.
            (21) Uncompensated economic loss.--
                    (A) In general.--The term ``uncompensated economic 
                loss'' means economic loss payable based on fault.
                    (B) Attorneys' fees.--The term includes a 
                reasonable attorney's fee calculated on the basis of 
                the value of the attorney's efforts as reflected in 
                payment to the attorney's client.
                    (C) Exclusions.--The term does not include amounts 
                paid under--
                            (i) personal protection insurance;
                            (ii) tort maintenance coverage;
                            (iii) no-fault or add-on motor vehicle 
                        insurance;
                            (iv) Federal, State, or private disability 
                        or sickness programs;
                            (v) Federal, State, or private health 
                        insurance programs;
                            (vi) employer wage continuation programs; 
                        or
                            (vii) workers' compensation or similar 
                        occupational compensation laws.
            (22) Uninsured motorist.--The term ``uninsured motorist'' 
        means the owner of a motor vehicle, including the resident 
        relatives or dependents of the owner, who is uninsured under 
        either the personal protection system or the tort maintenance 
        system described in section 5(a)--
                    (A) at the limits prescribed by the applicable 
                State financial responsibility law; or
                    (B) an amount prescribed under section 5(b)(1)(A).

SEC. 5. AUTO CHOICE INSURANCE SYSTEM.

    (a) Operation of the Right To Choose.--Under this Act, a person 
shall have the right to choose between the following insurance systems:
            (1) Personal protection system.--A person may choose 
        insurance under a system that provides for personal protection 
        insurance for that person and any resident relative or 
        dependent of that person.
            (2) Tort maintenance system.--A person may choose insurance 
        under a system that provides for the form of motor vehicle 
        insurance (including tort liability, no-fault, add-on, or 
        uninsured motor vehicle insurance) that is otherwise required 
        in the State in which the person is insured.
    (b) Personal Protection System.--
            (1) Minimum policy requirements.--In order for a personal 
        protection insurance policy to be covered by this Act, a motor 
        vehicle insurance policy issued by an insurer shall, at a 
        minimum--
                    (A) provide personal protection insurance 
                coverage--
                            (i) with no per accident limit; and
                            (ii) in coverage amounts equal to the 
                        greater of--
                                    (I) the minimum per person limits 
                                of liability insurance for personal 
                                injury under the applicable State 
                                financial responsibility law; or
                                    (II) in a State covered by a no-
                                fault motor vehicle insurance law, the 
                                minimum level of insurance required for 
                                no-fault benefits;
                    (B) contain provisions for a waiver of certain tort 
                rights in accordance with this Act; and
                    (C) contain provisions under the applicable State 
                financial responsibility law relating to liability 
                for--
                            (i) property damage; and
                            (ii) bodily injury to protect third parties 
                        whose rights to recover both economic and 
                        noneconomic loss are not affected by the 
                        immunities provided under this Act for those 
                        persons choosing personal protection insurance 
                        coverage.
            (2) Superseding provision.--This Act supersedes a State law 
        to the extent that, with respect to the issuance of a personal 
        protection insurance policy, the State law--
                    (A) would otherwise bar a provision that provides 
                for the personal protection authorizations and 
                accompanying immunities set forth in this Act; or
                    (B) is otherwise inconsistent with the requirements 
                of this Act.
            (3) Primacy of payment.--
                    (A) In general.--Personal protection insurance 
                benefits shall be reduced by an amount equal to any 
                benefits provided or required to be provided under an 
                applicable Federal or State law for workers' 
                compensation or any State-required nonoccupational 
                disability insurance.
                    (B) Reimbursement of payors.--
                            (i) In general.--A personal protection 
                        insurer may take appropriate measures to ensure 
                        that any person otherwise eligible for personal 
                        protection benefits who has been paid or is 
                        being paid for losses payable by personal 
                        protection insurance from a source other than 
                        the applicable personal protection insurer 
                        shall not receive multiple payment for those 
                        losses.
                            (ii) Accrual of rights.--Any right to 
                        payment for losses referred to in clause (i) 
                        from a personal protection insurer accrues only 
                        to that payor. Payments by a payor referred to 
                        in clause (i) shall not be counted against 
                        personal protection limits for personal 
                        protection insurance until such time as the 
                        payor is reimbursed under this subparagraph.
            (4) Prompt and periodic payment.--
                    (A) In general.--A personal protection insurer may 
                pay personal protection benefits periodically as losses 
                accrue.
                    (B) Late payment.--Unless the treatment or expenses 
                related to the treatment are in reasonable dispute, a 
                personal protection insurer who does not pay a claim 
                for economic loss covered by a personal protection 
                insurance policy issued under this Act within 30 days 
                after payment is due, shall pay--
                            (i) the loss compounded at a rate of 24 
                        percent per annum, as liquidated damages and in 
                        lieu of any penalty or exemplary damages; and
                            (ii) a reasonable attorney's fee calculated 
                        on the basis of the value of the attorney's 
                        efforts as reflected in payment to the 
                        attorney's client.
                    (C) Administration of personal protection 
                benefits.--To the extent consistent with this Act, any 
                applicable provision of a State no-fault motor vehicle 
                law or add-on law governing the administration of 
                payment of benefits without reference to fault shall 
                apply to the payment of benefits under personal 
                protection insurance under this subsection.
            (5) Motor vehicles with fewer than 4 load-bearing wheels.--
        A personal protection insurer may offer, but shall not require, 
        personal protection coverage of any motor vehicle that has 
        fewer than 4 load-bearing wheels, not including the wheels of 
        an attachment to the motor vehicle.
            (6) Authorizations for personal protection insurers.--A 
        personal protection insurer may write personal protection 
        coverage--
                    (A)(i) without any deductible; or
                    (ii) subject to a reasonable deductible, applicable 
                in an amount not to exceed $1,000 per person per 
                accident;
                    (B) with an exclusion of coverage for injuries 
                incurred by a person with personal protection coverage 
                whose injuries are caused by that person's driving 
                under the influence of alcohol or an illegal drug (as 
                those terms are defined under applicable State law);
                    (C) at appropriately reduced premium rates, 
                deductibles and exclusions reasonably related to 
                health, disability, and accident coverage on an insured 
                person; and
                    (D) the deductibles and exclusions described in 
                subparagraphs (A) and (C) shall apply only to--
                            (i) the person named in the applicable 
                        insurance policy; and
                            (ii) the resident relatives or dependents 
                        of the person described in clause (i).
            (7) Recovery against drunk drivers.--Nothing in this Act 
        shall be construed to limit the right of recovery for economic 
        or noneconomic losses of an injured person that are caused by a 
        person who was--
                    (A) driving under the influence of alcohol or an 
                illegal drug (as those terms are defined under 
                applicable State law); or
                    (B) engaging in intentional misconduct.
    (c) Tort Maintenance System.--
            (1) Required tort maintenance coverage.--The coverage for a 
        person who chooses insurance under subsection (a)(2) shall 
        include tort maintenance coverage at a level that is at least 
        equivalent to the level of insurance required under the 
        applicable State financial responsibility law for bodily injury 
        liability.
            (2) Administration of tort maintenance coverage benefits.--
        To the extent consistent with this Act, any applicable 
        provision of a State law governing the administration of 
        payment of benefits under uninsured or underinsured motorist 
        coverage applies to the payment of benefits under tort 
        maintenance coverage under section 5(c).
    (d) Effect of Choice on Resident Relatives and Dependents.--
            (1) In general.--Except as provided in paragraph (2), a 
        person who chooses either personal protection insurance or tort 
        maintenance coverage also binds the resident relatives and 
        dependents of that person.
            (2) Exception.--An adult resident relative or a dependent 
        of a person described in paragraph (1) may select the form of 
        insurance that that person does not select if the adult 
        relative makes that selection expressly in writing.
            (3) Implied consent.--In any case in which the resident 
        relative or dependent is injured in a motor vehicle accident, 
        the coverage of such person shall be the same as the person 
        described in paragraph (1).
            (4) Terms and conditions.--Insurers may specify reasonable 
        terms and conditions governing the commencement, duration, and 
        application of the chosen coverage depending on the number of 
        motor vehicles and owners thereof in a household.
    (e) Rules To Encourage Uniformity of Choice.--In order to minimize 
conflict between the 2 options described in subsection (d), insurers 
may maintain and apply underwriting rules that encourage uniformity 
within a household.
    (f) Failure To Elect Type of Insurance.--
            (1) In general.--Any person who fails to elect a type of 
        insurance under this section shall be deemed to have elected 
        insurance under the tort maintenance system in effect in that 
        State.
            (2) Rule of construction.--This subsection shall not be 
        construed to prevent a State from enacting a law that deems a 
        person who fails to elect a type of insurance under this 
        section to have elected insurance under the personal protection 
        system.
    (g) Consumer Information Program.--
            (1) State program.--The State official charged with 
        jurisdiction over insurance rates for motor vehicles may 
        establish and maintain a program designed to ensure that 
        consumers are adequately informed about--
                    (A) the comparative cost of insurance under the 
                personal protection system and the tort maintenance 
                system; and
                    (B) the benefits, rights, and obligations of 
                insurers and insureds under each system.
            (2) Insurer program.--An insurer that offers a choice of 
        insurance systems under subsection (a)(1) shall provide to each 
        consumer, before that consumer chooses motor vehicle insurance, 
        written consumer information to ensure that consumers are 
        adequately informed about--
                    (A) the comparative cost of insurance under the 
                personal protection system and the tort maintenance 
                system; and
                    (B) the benefits, rights, and obligations of 
                insurers and insureds under each system.

SEC. 6. SOURCE OF COMPENSATION IN CASES OF ACCIDENTAL INJURY.

    (a) Accidents Involving Persons Choosing the Tort Maintenance 
System.--A person described in section 5(a)(2) who is involved in an 
accident with another person shall be subject to applicable tort law 
for injury except that, based on fault, that person--
            (1) may claim against any person covered by personal 
        protection insurance only for uncompensated economic loss; and
            (2) may be claimed against by a person covered by personal 
        protection insurance only for uncompensated economic loss.
    (b) Accidents Involving Persons With Personal Protection 
Insurance.--
            (1) Right to recover economic loss.--A person covered by a 
        personal protection insurance policy who is injured in an 
        accident is compensated under that policy only for economic 
        loss, without regard to fault.
            (2) Right to sue for uncompensated economic loss based on 
        fault.--If a person who chooses personal protection insurance 
        is--
                    (A) involved in an accident with a person insured 
                under either the personal protection system or tort 
                maintenance system under section 5(a); and
                    (B) sustains uncompensated economic loss,
        that person shall have the right to claim against the other 
        person involved in the accident for that loss based on fault.
    (c) Accidents Involving Persons With Personal Protection Insurance 
and Persons Who Are Unlawfully Uninsured.--
            (1) Recovery for persons with personal protection 
        insurance.--A person covered by personal protection insurance 
        who is involved in an accident with an uninsured motorist 
        shall--
                    (A) be compensated under that insured person's 
                insurance policy for economic loss without regard to 
                fault; and
                    (B) have the right to claim against the uninsured 
                motorist for economic loss and for noneconomic loss 
                based on fault.
            (2) Recovery for persons who are unlawfully uninsured.--An 
        uninsured motorist shall have the right to claim against a 
        motorist who has chosen personal protection insurance only for 
        economic loss, without regard to fault.
    (d) Accidents Involving Motorists Under the Influence of Alcohol or 
Illegal Drugs or Engaging in Intentional Misconduct.--A person who is 
insured under personal protection insurance shall have the right to 
claim, and be subject to a claim, for--
            (1) driving under the influence of alcohol or illegal drugs 
        (as those terms are defined under applicable State law); or
            (2) intentional misconduct.
    (e) Priority of Benefits.--A person who is insured under the 
personal protection system or tort maintenance system under section 
5(a) may only claim benefits under such coverage up to the limits 
selected by or on behalf of such person in the following priority:
            (1) The coverage under which the injured person was an 
        insured at the time of the accident.
            (2) The coverage of a motor vehicle involved in the 
        accident, if the person injured was an occupant of, or was 
        struck as a pedestrian by, such motor vehicle at the time of 
        the accident, except that such person shall not recover under 
        the coverage of both paragraph (1) and this paragraph.
    (f) Subrogation Rights.--A personal protection insurer is 
subrogated, to the extent of the obligations of that insurer, to all of 
the rights of the persons insured with personal protection insurance 
issued by the insurer with respect to an accident caused in whole or in 
part, as determined by applicable State law, by--
            (1) the negligence of an uninsured motorist;
            (2) operating a motor vehicle under the influence of 
        alcohol or illegal drugs;
            (3) intentional misconduct; or
            (4) any other person who is not affected by the limitations 
        on tort rights and liabilities under this Act.
    (g) Rights of Lawfully Uninsured Persons.--Nothing in this Act 
shall be construed to affect the tort rights of any person lawfully 
uninsured under the terms of an applicable State law for insurance 
under either the personal protection system or tort maintenance system 
under section 5(a).
    (h) Rights of Persons Occupying Motor Vehicles With Fewer Than 4 
Load-Bearing Wheels.--Nothing in this Act shall be construed to affect 
the tort rights of a person who occupies a motor vehicle with fewer 
than 4 load-bearing wheels or an attachment thereto, unless an 
applicable contract for personal protection insurance under which that 
person is insured specifies otherwise. The preceding sentence applies 
without regard to whether the person is otherwise legally insured for 
personal protection insurance or tort maintenance coverage.
    (i) Renewal or Cancellation.--An insurer shall not cancel, fail to 
renew, or increase the premium of a person insured by the insurer 
solely because that insured person or any other injured person made a 
claim--
            (1) for personal protection insurance benefits; or
            (2) if there is no basis for ascribing fault to the insured 
        or one for whom the insured is vicariously liable, for tort 
        maintenance coverage.
    (j) Immunity.--Unless an insurer or an insurance agent willfully 
misrepresents the available choices or fraudulently induces the 
election of one motor vehicle insurance system described in paragraph 
(1) over the other, no insurer or insurance agent, employee of such 
insurer or agent, insurance producer representing a motor vehicle 
insurer, automobile residual market plan, or attorney licensed to 
practice law within a State, shall be liable in an action for damages 
on account of--
            (1) an election of--
                    (A) the tort maintenance system under section 5(a); 
                or
                    (B) the personal protection system under section 
                5(a); or
            (2) a failure to make a required election.

SEC. 7. RULES OF CONSTRUCTION.

    Nothing in this Act shall be construed--
            (1) to waive or affect any defense of sovereign immunity 
        asserted by any State under any law or by the United States;
            (2) to affect the awarding of punitive damages under any 
        State law;
            (3) to preempt State choice-of-law rules with respect to 
        claims brought by a foreign nation or a citizen of a foreign 
        nation;
            (4) to affect the right of any court to transfer venue, to 
        apply the law of a foreign nation, or to dismiss a claim of a 
        foreign nation or of a citizen of a foreign nation on the 
        ground of inconvenient forum;
            (5) subject to paragraph (1), to create or vest 
        jurisdiction in the district courts of the United States over 
        any motor vehicle accident liability or damages action subject 
        to this Act which is not otherwise properly in the United 
        States District Court;
            (6) to prevent insurers and insureds from contracting to 
        limit recovery for lost wages and income under personal 
        protection coverage in such manner that only 60 percent or more 
        of lost wages or income is covered;
            (7) to prevent an insurer from contracting with personal 
        protection insureds, as permitted by applicable State law, to 
        have submitted to arbitration any dispute with respect to 
        payment of personal protection benefits;
            (8) to relieve a motorist of the obligations imposed by 
        applicable State law to purchase tort liability insurance for 
        bodily injury to protect third parties who are not affected by 
        the immunities under this Act;
            (9) to preclude a State from enacting, for all motor 
        vehicle accident cases including cases covered by this Act, a 
        minimum dollar value for defined classes of cases involving 
        death or serious bodily injury;
            (10) to preclude a State from providing that forms of 
        insurance other than those listed in section 5(b)(3) shall be 
        subtracted from personal protection insurance benefits 
        otherwise payable for injury;
            (11) to preclude a State from enacting a law that--
                    (A) allows litigation by tort maintenance insureds 
                against personal protection insureds for economic and 
                noneconomic loss; and
                    (B) assures through a reallocation device that the 
                advantage of tort claim waivers by personal protection 
                insureds against tort maintenance insureds is reflected 
                in the premiums of personal protection insureds;
            (12) to alter or diminish the authority or obligation of 
        the Federal courts to construe the terms of this Act; or
            (13) to preclude a State or State official charged with 
        regulatory authority over the business of insurance from fully 
        exercising that regulatory authority, including adopting 
        regulations and procedures regarding--
                    (A) rates;
                    (B) policy forms;
                    (C) company solvency;
                    (D) consumer protection;
                    (E) underwriting and marketing practices; and
                    (F) carrying out the requirements of this Act.

SEC. 8. APPLICABILITY TO STATES; CHOICE OF LAW; AND JURISDICTION.

    (a) Election of Nonapplicability by States.--This Act shall not 
apply with respect to a State if such State enacts a statute that--
            (1) cites the authority of this subsection;
            (2) declares the election of such State that this Act shall 
        not apply; and
            (3) contains no other provision.
    (b) Nonapplicability Based on State Finding.--
            (1) In general.--This Act shall not apply with respect to a 
        State, if--
                    (A) the State official charged with jurisdiction 
                over insurance rates for motor vehicles makes a finding 
                that the statewide average motor vehicle premiums for 
                bodily injury insurance in effect immediately before 
                the effective date of this Act will not be reduced by 
                an average of at least 30 percent for persons choosing 
                personal protection insurance (without including in the 
                calculation for personal protection insureds any cost 
                for uninsured, underinsured, or medical payments 
                coverages);
                    (B) a finding described under subparagraph (A) is 
                supported by evidence adduced in a public hearing and 
                reviewable under the applicable State administrative 
                procedure law; and
                    (C) a finding described under subparagraph (A) and 
                any review of such finding under subparagraph (B) 
                occurs not later than 180 days after the date of 
                enactment of this Act.
            (2) Comparison of bodily injury premiums.--For purposes of 
        making a comparison under paragraph (1)(A) of premiums for 
        personal protection insurance with preexisting premiums for 
        bodily injury insurance (in effect immediately before the date 
        of enactment of this Act), the preexisting bodily injury 
        insurance premiums shall include premiums for--
                    (A) bodily injury liability, uninsured and 
                underinsured motorists' liability, and medical payments 
                coverage; and
                    (B) if applicable, no-fault benefits under a no-
                fault motor vehicle law or add-on law.
    (c) Choice of Law.--In disputes between citizens of States that 
elect nonapplicability under subsection (a) and citizens of States that 
do not make such an election, ordinary choice of law principles shall 
apply.
    (d) Jurisdiction.--This Act shall not confer jurisdiction on the 
district courts of the United States under section 1331 or 1337 of 
title 28, United States Code.
    (e) Statutes of Limitations.--Nothing in this Act shall supersede 
an applicable State law that imposes a statute of limitations for 
claims related to an injury caused by an accident, except that such 
statute shall be tolled during the period wherein any personal 
protection or tort maintenance benefits are paid.

SEC. 9. EFFECTIVE DATE.

    This Act shall take effect 180 days after the date of enactment of 
this Act.