BILL ANALYSIS                                                                                                                                                                                                    






                             SENATE INSURANCE COMMITTEE
                           Senator Ronald Calderon, Chair


          AB 1708 (Gatto)          Hearing Date:  June 27, 2012  

          As Amended: June 11, 2012
          Fiscal:             Yes
          Urgency:       No

          VOTES:              Asm. Floor(05/10/12)73-0/Pass
                         Asm. Appr.          (05/02/12)17-0/Pass
                         Asm. Ins. (04/18/12)13-0/Pass


          SUMMARY:  Would clarify existing law to allow motorists to 
          present proof of insurance electronically to a court or law 
          enforcement agents upon request. The measure would also 
          authorize auto insurance companies to provide, upon request of a 
          policyholder, an electronic version of the proof of insurance 
          card required by law.  
           
           DIGEST
           
          Existing law
            
           1.  Requires every driver and every owner of a motor vehicle to be 
              able to establish financial responsibility, and, at all times, 
              carry in the vehicle evidence of a form of financial 
              responsibility, which may be obtained by a law enforcement 
              officer from the electronic
              reporting system established by the Department of Motor 
              Vehicles;

           2.  Requires, upon the demand of a peace officer, that evidence 
              of registration and proof of financial responsibility be 
              provided by a person driving a motor vehicle;

           3.  Requires a driver who is issued a notice to appear for any 
              alleged violation of the Vehicle Code or the driver of a 
              motor vehicle involved in an accident to furnish written 
              evidence of financial responsibility;

           4.  Requires an insurer issuing policies of automobile 
              liability insurance or motor vehicle liability insurance, 
              upon the request of its insured or the Department of Motor 




                                                AB 1708 (Gatto), Page 2




              Vehicles, to promptly issue written verification as to the 
              existence of that coverage;

           5.  The California Constitution requires the state to reimburse 
              local agencies and school districts for certain costs 
              mandated by the state. Statutory provisions establish 
              procedures for making that reimbursement.











































                                                AB 1708 (Gatto), Page 3




           This bill

            1.  Would authorize an insurer issuing policies of automobile 
              liability insurance or motor vehicle insurance to issue, 
              upon the request of the insured and to the extent available, 
              electronic verification as to the existence of the coverage 
              to a mobile electronic device, as defined, and would allow a 
              person to provide evidence of financial responsibility, upon 
              the demand of a peace officer, through the use of a mobile 
              electronic device;

           2.  Would require, when a person provides evidence of financial 
              responsibility, using a mobile electronic device, to a peace 
              officer or clerk of the court, the peace officer or the 
              clerk of the court to only view the evidence of financial 
              responsibility and would prohibit him or her from viewing 
              any other content on the mobile electronic device; 

           3.  Would also require, whenever a person presents a mobile 
              electronic device upon the demand of a peace officer, the 
              person to assume all liability for any damage to the mobile 
              electronic device; 

           4.  By expanding the duties of local public officials and 
              expanding the scope of existing crimes, the bill would 
              impose a state-mandated local program;

           5.  Would provide that with regard to certain mandates no 
              reimbursement is required by this act for a specified 
              reason. With regard to any other mandates, this bill would 
              provide that, if the Commission on State Mandates determines 
              that the bill contains costs so mandated by the state, 
              reimbursement for those costs shall be made pursuant to the 
              statutory provisions noted above.
           
           COMMENTS
           
          1.  Purpose of the bill.   Would clarify existing law to allow 
              motorists to present proof of insurance electronically to a 
              court clerk or law enforcement agent upon request. The 
              measure would also authorize auto insurance companies to 
              provide, upon request of a policyholder, an electronic 
              version of the proof of insurance card required by law.  
              According to the author, AB 1708 seeks to bring uniformity 
              to the process of proving financial responsibility and 
              guarantee that a motorist may present to law enforcement, 




                                                AB 1708 (Gatto), Page 4




              and an auto insurance company may provide, an electronic 
              version of the proof of insurance.

           2.  Background and Discussion   


              According to the author, the law is currently silent on 
              whether or not a motorist may provide an electronic version 
              of their proof of insurance. This creates uncertainty for 
              both auto insurance providers and motorists as to what form 
              their proof of insurance may be presented in. There have 
              been reports of some officers accepting electronic forms, at 
              their discretion, due to the vagueness of the code sections 
              that cover proof of insurance. 


              Privacy Protection.  Some concerns have been expressed about 
              the personal information stored on a cell phone.  
              Probabilities what they are, at some point some personal 
              information will be unintentionally disclosed when providing 
              a peace officer an electronic device with personal 
              information.  At issue than is what can be done with the 
              information, especially under the laws of criminal 
              procedure.


              Proposition 8 (1982) added Article 1, Section 28(f)(2), to 
              the California Constitution ("Victim's Bill of Rights") that 
              requires that all relevant evidence be admissible in a 
              criminal proceeding, with some exceptions.  Fourth Amendment 
              jurisprudence has firmly established, under the Plain View 
              Doctrine, that when a person voluntarily grants access to 
              otherwise protected area, evidence discovered in the course 
              of that search is admissible if the evidence is in plain 
              view; the officer discovers evidence, contraband, or a fruit 
              or instrumentality of a crime; and the officer has probable 
              cause to believe (is immediately apparent) that the item is 
              evidence, contraband, or a fruit or instrumentality of a 
              crime.  (See Arizona v. Hicks 480 U.S. 321 (1987).)  


              In order to protect personal privacy, AB 1708 provides that 
              "the peace officer ? shall only view the evidence of 
              financial responsibility and is prohibited from viewing any 
              other content on the mobile electronic device."  This 
              clarifies that the individual is only voluntarily granting 




                                                AB 1708 (Gatto), Page 5




              access to the proof of financial responsibility when turning 
              over the personal electronic device.  


              Nonetheless, AB 1708 does not seek to amend Proposition 8 
              (which would require a two-thirds vote).  Evidence 
              unintentionally accessed during an examination (for 
              instance, an unexpected text received while the officer is 
              reviewing the electronic proof of coverage) might still be 
              admissible under Proposition 8 and the Plain View Doctrine.  


              Practically speaking, this might mean that any person who 
              hands their cell phone over to a peace officer voluntarily 
              risks disclosure of private information accidentally 
              revealed, even though AB 1708 only narrowly authorizes peace 
              officers to view evidence of financial responsibility.  


              Officer Safety.  As technology develops, new risks may 
              emerge.  Anecdotes involve small weapons disguised as cell 
              phones or small electronics may pose some additional danger. 
               The author has expressed an interest in monitoring this 
              issue, although no public safety groups oppose the bill and 
              no proposals have been made to address the issue.


           3.  Summary of Arguments in Support  


                a.      The author states that this measure would be a 
                  step towards greater convenience for motorists by 
                  government acknowledging and adapting to the more common 
                  use of electronics in everyday life. With the rise of 
                  smartphones and other personal electronic devices, more 
                  and more transactions between persons and business, as 
                  well as between persons and government, are occurring 
                  electronically. As a result, various sorts of 
                  information are being transmitted to, and kept on, these 
                  devices for easier access.


                b.      The author also points out that in many cases, the 
                  law and government services have not kept up with new 
                  technology. One such instance is with vital documents on 
                  personal electronic devices.  With more and more 




                                                AB 1708 (Gatto), Page 6




                  companies connecting with their customers and providing 
                  services via mobile applications, it seems that now is 
                  the time for the State of California to provide the same 
                  convenience to their customers-the People of our State.


                c.      The Personal Insurance Federation of California 
                  believes that AB 1708 provides a customer-friendly and 
                  "green" option to consumers, in part because it would 
                  eliminate the need for paper copies of the insurance 
                  identification card.


                d.      The Association of California Insurance Companies 
                  (ACIC) writes that AB 1708 is the wave of the future.  
                  In an effort to keep up, policymakers across the country 
                  are changing the rules to allow drivers tot show proof 
                  of insurance electronically.  Indeed, AB 1708's approach 
                  is consistent with laws adopted in other states like 
                  Alabama, Arizona, Colorado, and Idaho.  


           4.  Summary of Arguments in Opposition   

              None received.



           5.  Suggested Amendments  


              a.    The Judicial Counsel of California has expressed 
                concerns that a hardcopy of the verification of evidence 
                of financial responsibility by filed with the court.  


                Amend page 5, lines 8 through 32, to read:


                   (e) A person issued a notice to appear for a violation 
                of subdivision (a) may personally appear before the clerk 
                of the court, as designated in the notice to appear, and 
                provide written evidence of financial responsibility  or 
                provide verification of evidence of financial 
                responsibility using a mobile electronic device  in a form 
                consistent with Section 16020, showing that the driver was 




                                                AB 1708 (Gatto), Page 7




                in compliance with that section at the time the notice to 
                appear for violating subdivision (a) was issued. In lieu 
                of the personal appearance, the person may submit by mail 
                to the court written evidence of having had financial 
                responsibility at the time the notice to appear was 
                issued. Upon receipt by the clerk of that written evidence 
                of financial responsibility  or verification of evidence of 
                financial responsibility using a mobile electronic device  
                in a form consistent with Section 16020, further 
                proceedings on the notice to appear for the violation of 
                subdivision (a) shall be dismissed.
                   (f) For purposes of this section, "mobile electronic 
                device" means a portable computing and communication 
                device that has a display screen with touch input or a 
                miniature keyboard.
                   (g) For the purposes of this section, when a person 
                provides evidence of financial responsibility using a 
                mobile electronic device to a peace officer  or clerk of 
                the court  , the peace officer  or clerk of the court  shall 
                only view the evidence of financial responsibility and is 
                prohibited from viewing any other content on the mobile 
                electronic device.
                   (h) Whenever a person presents a mobile electronic 
                device pursuant to this section, that person assumes all 
                liability for any damage to the mobile electronic device.
           
          6.  Prior and Related Legislation in California and Other State  

              SB 290 (Committee on Transportation) (Chapter 825, statutes 
              of 2001) provided that proof of financial responsibility 
              requires the name of the insurance company to be included, 
              as well as the number of the insurance policy, and may be 
              obtained by an officer from an electronic reporting system 
              established by the Department of Motor Vehicles.

              Alabama - The Alabama Department of Revenue is promulgating 
              regulations that, effective January 1, 2013, would allow 
              motorists to prove they have insurance to both DMV officials 
              (for purposes of vehicle registration and renewal) and law 
              enforcement officers.

              Arizona - HB 2677 (Dial) was signed into law on March 27, 
              2012, and provides that a display or an image of a valid 
              insurance card that is displayed on a wireless communication 
              device meets the evidentiary requirements of proof of 
              insurance or financial responsibility.




                                                AB 1708 (Gatto), Page 8





              Colorado - Colorado law requires state officials to verify 
              insurance coverage prior to registering a new vehicle.  For 
              purposes of satisfying this requirement, Colorado Department 
              of Revenue regulations allow motorists to present proof of 
              coverage in myriad formats, including computer printout, fax 
              and electronic image/proof on applicant's cellular phone, 
              lap top or other portable type of electronic device.

              Idaho - SB 1319 was signed into law on March 27, 2012, and 
              provides that a certain certificate or proof of liability 
              insurance may be produced in paper or electronic format and 
              to provide the acceptable electronic formats.

              Louisiana - HB 1130 provides for electronic display of proof 
              of insurance effective August 1, 2012.

              Mississippi - The Mississippi Legislature is expected to 
              consider legislation this year that would adopt a program 
              designed to verify insurance coverage and allow motorists to 
              display proof of insurance coverage in either paper or 
              electronic format. 

           
          POSITIONS
          
          Support
           
          Association of California Insurance Companies
          Department of Insurance
          Personal Insurance Federation of California
           

          Opposition
           
          None received.


          Consultant:   Hugh Slayden, (916) 651-4773