(1) A private passenger motor vehicle insurance policy providing physical damage coverage, including collision or comprehensive coverage, may not be issued in this state unless the insurer has inspected the motor vehicle in accordance with this section.
(2) This section does not apply:
(a) To a policy for a policyholder who has been insured for 2 years or longer, without interruption, under a private passenger motor vehicle policy that provides physical damage coverage for any vehicle if the agent of the insurer verifies the previous coverage.
(b) To a new, unused motor vehicle purchased or leased from a licensed motor vehicle dealer or leasing company. The insurer may require:
1. A bill of sale, buyer’s order, or lease agreement that contains a full description of the motor vehicle; or
2. A copy of the title or registration that establishes transfer of ownership from the dealer or leasing company to the customer and a copy of the window sticker.
For the purposes of this paragraph, the physical damage coverage on the motor vehicle may not be suspended during the term of the policy due to the applicant’s failure to provide or the insurer’s option not to require the documents. However, if the insurer requires a document under this paragraph at the time the policy is issued, payment of a claim may be conditioned upon the receipt by the insurer of the required documents, and no physical damage loss occurring after the effective date of the coverage may be payable until the documents are provided to the insurer.
(c) To a temporary substitute motor vehicle.
(d) To a motor vehicle which is leased for less than 6 months, if the insurer receives the lease or rental agreement containing a description of the leased motor vehicle, including its condition. Payment of a physical damage claim is conditioned upon receipt of the lease or rental agreement.
(e) To a vehicle that is 10 years old or older, as determined by reference to the model year.
(f) To any renewal policy.
(g) To a motor vehicle policy issued in a county with a 1988 estimated population of less than 500,000.
(h) To any other vehicle or policy exempted by rule of the commission. The commission may base a rule under this paragraph only on a determination that the likelihood of a fraudulent physical damage claim is remote or that the inspection would cause a serious hardship to the insurer or the applicant.
(i) When the insurer’s authorized inspection service has no inspection facility either in the municipality in which the automobile is principally garaged or within 10 miles of such municipality.
(j) When the insured vehicle is insured under a commercially rated policy that insures five or more vehicles.
(k) When an insurance producer is transferring a book of business from one insurer to another.
(l) When an individual insured’s coverage is being transferred and initiated by a producer to a new insurer.
(3) The inspection required by this section shall be provided by the insurer or by a person or organization authorized by the insurer. The applicant may be required to pay the cost of the inspection, not to exceed $5. The inspection shall be recorded on a form prescribed by the commission, and the form or a copy shall be retained by the insurer with its policy records for the insured. The insurer shall provide a copy of the form to the insured upon request. Any inspection fee paid directly by the applicant may not be considered part of the premium. However, an insurer that provides the inspection at no cost to the applicant may include the expense of the inspection within a rate filing.
(4) The inspection shall include at least the following:
(a) Taking a physical imprint of the vehicle identification number of the vehicle or otherwise recording the vehicle identification number in a manner prescribed by the commission.
(b) Recording the presence of accessories required by the commission to be recorded.
(c) Recording the locations of and a description of existing damage to the vehicle.
(5) An insurer may defer an inspection for 30 calendar days following the effective date of coverage for a new policy, but not for a renewal policy, and for additional or replacement vehicles to an existing policy, if an inspection at the time of the request for coverage would create a serious inconvenience for the applicant and such hardship is documented in the insured’s policy record.
(6) The commission may, by rule, establish such procedures and notice requirements that it finds necessary to implement this section.
(7) Notwithstanding any other provision of this section, an insurer may opt out of the inspection requirements of this section. An insurer opting out of the inspection must file a manual rule with the office indicating that the insurer will not participate in the inspection program under this section. An insurer that files such a manual rule with the office may establish its own preinsurance inspection requirements as a condition to issuing a private passenger motor vehicle insurance policy. The insurer’s preinsurance inspection requirements must be included in the manual rule filed with the office. An insurer opting out of the inspection requirements of this section may not require an applicant to pay for the cost of an inspection.