HB 864 - SB 1335
FISCAL NOTE
Fiscal Review Committee
Tennessee General Assembly
February 24, 2025
Fiscal Analyst: Elizabeth Bransford | Email: elizabeth.bransford@capitol.tn.gov | Phone: 615-741-2564
HB 864 - SB 1335
SUMMARY OF BILL: Requires proof of financial responsibility, such as an insurance
policy declaration or a self-insurance certificate issued by the Department of Safety (DOS), be
submitted with all vehicle registration applications and renewals. Authorizes county clerks and the
Department of Revenue (DOR) to verify compliance through the Electronic Insurance Verification
System (EIVS).
Clarifies, in the case of state and local traffic violations, the declaration of insurance provided as
proof of financial responsibility must certify an insurance policy has been issued and is expected to
remain in force throughout a vehicle’s registration period. Increases, from $25 to $50, the EIVS fee
associated with the first notice to registrant of coverage failure. Increases, from $5 to $25, the
allocation of such fee to the county clerk of the county the vehicle is registered in. Increases, from
$15 to $20, the allocation of such fee to the Uninsured Motorist Fund (Fund).
Establishes, should a registrant lapse into an unconfirmed status within three years of the initial
notice of noncompliance, a fee of $250 for a second notice and $500 for a third notice. Allocates
$125 of the second notice fee to the county clerk, $50 to DOS, and the remainder to the Fund.
Allocates $250 of the third notice to the county clerk, $100 to DOS, and the remainder to the Fund.
FISCAL IMPACT:
STATE GOVERNMENT
REVENUE Department of Safety Uninsured Motorist Fund
FY25-26 & Subsequent Years $1,190,400 $1,113,600
EXPENDITURES Uninsured Motorist Fund
FY25-26 $1,478,400
LOCAL GOVERNMENT
REVENUE Mandatory
FY25-26 & Subsequent Years $4,992,000
HB 864 - SB 1335 2
Assumptions:
• There are approximately 5,993,932 registered vehicles in Tennessee.
• According to DOR, Tennessee has an uninsured motorist rate of approximately 15 percent;
therefore, the number of uninsured vehicles at any given time is estimated to be 899,090
(5,993,932 x 15%).
• Based on information provided by DOR, approximately 619,339 information request letters
are sent annually. Of these, approximately 383,990 first-notice letters are sent to motorists
who have yet to provide proof of insurance.
• Pursuant to Tenn. Code Ann. § 55-12-210:
o A fee of $25 is imposed on the owner of a motor vehicle for the first notice they
receive regarding their failure to provide evidence of insurance coverage; and
o Of the $25 coverage failure fee, $5 must be distributed to the county clerk of the
county in which the motor vehicle is registered (clerk); $5 to the DOS; and the
remainder shall be deposited into the Fund.
• The proposed legislation increases this fee to $50.00 and of this fee, $25 will be distributed
to the county clerk, with all other distributions remaining the same.
• The proposed legislation further establishes:
o A fee of $250 for a second notice of insurance coverage failure within three years
from the date of the first notice, to be distributed as follows:
▪ $125 to the clerk;
▪ $50 to DOS; and
▪ The remaining $75 to the Fund;
o A fee of $500 for a third notice of insurance coverage failure within three years
from the date of the second notice, to be distributed as follows:
▪ $250 to the clerk;
▪ $100 to DOS; and
▪ The remaining $150 to the Fund.
• For the purposes of this analysis, it is assumed with every notice, motor vehicle owners are
more likely to provide the requested information to avoid paying a higher fee. However, it
is further assumed that those owners receiving their third notice of violation are more likely
to remain noncompliant.
• Therefore, it is estimated:
o 20 percent, or 76,798 (383,990 x 20%), of motorists will receive a first notice
violation;
o 20 percent, or 15,360 (76,798 x 20%), of motorists receiving their first violation will
receive a second notice of violation; and
o 50 percent, or 7,680 (15,360 x 50%), of such motorists will not comply and will
receive a third notice of violation.
• The total increase in state and local revenue are as follows:
Allocation County Clerks Department of Safety Uninsured Motorist Fund
First Violation Notice $1,535,960 - $383,990
Second Violation Notice $1,612,800 $460,800 $230,400
Third Violation Notice $1,843,200 $729,600 $499,200
Total $4,991,960 $1,190,400 $1,113,590
HB 864 - SB 1335 3
• A total increase in revenue in FY25-26 and subsequent years of $1,190,400 to DOS and
$1,113,590 to the Fund.
• A total mandatory increase in local revenue of $4,991,960 in FY25-26 and subsequent years.
• DOR cannot meet the provisions of this Act within existing resources.
• According to DOR, it will cost $1,478,400 to necessitate substantial and fundamental
system changes to numerous applications utilized by the department. It is assumed that
funding in the Fund will be available to fund such expenditures.
• According to DOR, the balance of the Fund as of June 30, 2024 was $21,415,872, of which
100 percent was unobligated.
CERTIFICATION:
The information contained herein is true and correct to the best of my knowledge.
Bojan Savic, Executive Director