Iowa Car Insurance Laws: Minimum Coverage, Penalties and SR-22

Iowa requires minimum liability coverage of $20,000 for bodily injury or death of one person in any one accident, $40,000 for bodily injury or death of two or more people in any one accident, and $15,000 for injury to or destruction of others' property in any one accident (20/40/15). Auto liability policies must also include uninsured, hit-and-run and underinsured motorist coverage unless the named insured rejects it in writing. A person who must file proof of financial responsibility may, instead of an insurer's SR-22, file a surety bond, cash or securities totaling $55,000.

Iowa is an at-fault (tort) state, not a no-fault state. The Alabama Department of Insurance's national list places Iowa among the "Tort States."

Every auto liability policy issued in Iowa for a vehicle registered or principally garaged in Iowa must include uninsured motorist (including hit-and-run) and underinsured motorist coverage for bodily injury or death, with limits at least equal to the state liability minimums ($20,000 per person / $40,000 per accident). The named insured may reject all of this coverage, or just the uninsured/hit-and-run part or just the underinsured part, by a signed written rejection; a rejection on an insurer's or agent's form must be on a separate sheet containing only the rejection. Once rejected, the same insurer need not add it to renewal policies.

A person may not drive on Iowa highways (including public and customer parking lots) unless financial liability coverage is in effect and the driver has the proof of financial liability coverage card for the vehicle in the vehicle; out-of-state vehicles may carry other evidence of coverage. The card may be shown on paper or electronically, including an image displayed on a cell phone or other portable electronic device. Insurers must issue a card for each insured Iowa vehicle showing the vehicle, expiration date, insurer and an emergency phone number; a card for coverage that ends early must be destroyed.

If a driver of an Iowa-registered vehicle cannot show proof of coverage at a stop, the officer may issue a warning, issue a citation, issue a citation and remove the plates and registration (the vehicle may then be driven for up to 48 hours only to get it off the road), or issue a citation, remove the plates and registration and impound the vehicle. The scheduled fine is $325, or $645 if the violation is connected with a motor vehicle accident; a court may order unpaid community service instead of the fine. To get new plates and registration the owner must show proof of coverage, proof the fine was paid, and pay a $15 administrative fee to the county treasurer; an impounded vehicle also requires payment of towing and storage and may be treated as abandoned if not claimed within 30 days. A citation is dismissed (with court costs) if the driver shows the clerk that coverage was in effect at the time of the stop.

When the Iowa DOT requires proof of financial responsibility after a suspension or revocation, it is required from the first day of the suspension or revocation and must be maintained for two years. It can be provided by an Iowa-authorized insurer filing an SR-22, by filing a surety bond, cash or securities totaling $55,000, by an employer's fleet insurer filing an SR-23 (employer vehicles only), or by driving a vehicle of a self-insured certificate holder or Motor Carrier Services permit holder with written authorization. Only vehicles listed on the SR-22 may be driven and registered. Failing to show or maintain the proof results in suspension of the license and registrations.

Under the Iowa Automobile Insurance Cancellation Control Act, once a policy has been in effect 60 days (or is a renewal), an insurer may cancel only for nonpayment of premium, certain association dues, fraud or material misrepresentation, violation of policy terms, or reasons that allow excluding a driver (such as a license suspension or revocation, a speed contest, or a conviction within 36 months for vehicular homicide or assault, OWI, or another listed offense). Cancellation notice must be mailed or delivered at least 30 days before the effective date, or at least 10 days for nonpayment of premium; excluding a driver requires 20 days' notice. A notice of nonrenewal must be mailed or delivered at least 30 days before the policy expires under one provision of the Act and at least 60 days under another. Insurers may not refuse to renew solely because of age, residence, sex, race, color, creed or occupation. The insured can request the reason in writing and may ask for a hearing before the Insurance Commissioner within 15 days of receiving it. The Act covers private-passenger policies insuring four or fewer cars and does not apply to assigned-risk plan policies.

In Iowa a "wrecked or salvage vehicle" is a damaged vehicle whose cost of repair exceeds 70% of its fair market value before the damage. A vehicle that an insurer takes ownership of through a settlement for damage or unrecovered theft is treated as wrecked or salvage, and the insurer must get a salvage certificate of title (marked "SALVAGE") within 30 days; rebuilders and dealers acquiring such a vehicle (worth $500 or more before damage) must also apply within 30 days, for a $20 fee. After repairs, the owner may get a regular title by surrendering the salvage title with a salvage theft examination certificate, and every later title and registration will show the vehicle was previously titled as salvage. Sellers must also disclose damage on the title when repair costs exceeded 70% of fair market value (with exceptions, such as vehicles more than seven model years old).

Titles are transferred at a county treasurer's office. The seller removes the plates, completes the odometer and damage disclosure statements on the back of the title, signs the title, prints the buyer's name and address and the sale date, and tells the buyer the county of last registration and the registration expiration date; the seller should keep proof of sale (for example Form 411107, Notice of Sale of Vehicle and Delivery of Title). The buyer receives the signed title and a bill of sale and applies with an Application for Certificate of Title and/or Registration (Form 411007); the DOT recommends buyer and seller go to the treasurer's office together. A buyer must submit the title and bill of sale to the county treasurer within 30 days of purchase to get plates; meanwhile a currently registered vehicle may be driven up to 30 days with the bill of sale or assigned title in the vehicle. A 30-day temporary permit costs $25. For transfers to a spouse, parent or child, the recipient must apply for title within 30 days.

New residents must title and register their vehicles with any county treasurer's office within 30 days of establishing Iowa residency, bringing the current title and a completed application signed by all owners. To get an Iowa driver's license, a new resident makes an appointment at a DMV location (or county office) and shows proof of identity, residence and Social Security number; holders of a valid license from another U.S. state, D.C., a U.S. territory or Canada may not need the knowledge or driving test, but a vision test is required.

File a complaint with the Iowa Insurance Division using its online complaint form (English or Spanish), which the Division calls the most efficient method; you receive an automated confirmation email. Include the policy, policy number, correspondence, claim forms and numbers, relevant dates and names of representatives. The Division can only handle policies issued in Iowa (or group policies issued to an Iowa employer). The process typically takes 30 to 45 days. Phone: 515-654-6600; address: 1963 Bell Avenue, Suite 100, Des Moines, IA 50315.