Motor Vehicle Records: Agents Beware!

By: Robert Procter & Judd Genda | Axley Attorneys

Recently, we've been receiving inquiries from agents about the usage and disclosure of motor vehicle records (MVRs). This issue comes up all the time and it is important to remind agents about the law and consequences. Insureds often request copies of MVRs from insurance agents for human resource purposes, such as making hiring decisions. Agents cannot provide an MVR to an insured for such purposes. An agent may inform the insured that a new driver does or does not qualify as a driver for underwriting purposes, but—to be clear—agents should not send an MVR or disclose its confidential information to an insured.

MVRs contain confidential information such as driver's license information, point history, violations, convictions, and license status. Federal law provides significant safeguards to employees regarding access and use of such information for employment purposes. Under the federal Driver Privacy Protection Act (DPPA), insurance agents are authorized to access MVRs containing confidential information about a driver, but cannot disclose the reports to others except for certain permitted uses. One such use is to assist the agent and the insurer in the underwriting of insurance. Sending an MVR to an insured employer who may use it for human resource purposes is not a permitted usage under the DPPA.

The federal Fair Credit Reporting Act (FCRA) has strict guidelines on the use of consumer reports, including MVRs. If agents provide copies of consumer reports such as MVRs to employer insureds, they are no longer “underwriting insurance” but acting as a “credit reporting agency” for the purposes of the FCRA. This means they assume the additional role of reporting the information and must follow substantial disclosure requirements and procedures. Therefore, insurance agencies should avoid becoming a credit reporting agency under the FCRA at all costs.

Disclosure of the MVR to unauthorized parties may also be a breach of the contract with the third-party vendors who obtain the MVR. Most third-party vendor contracts include a prohibition against sharing the MVR or its information with any other person other than the intended underwriting use. Giving insureds copies of MVRs provided by the third-party vendor would violate that contract.

Finally, providing MVRs to employer insureds for human resource purposes very likely falls outside the coverage of insurance agent errors and omissions (E&O) policies. As a result, an agent's E&O policy may not cover them if legal action results from their actions as a credit reporting agency.

We understand agents want to help their insureds in any way possible, but providing MVRs to insureds should not be their means of value-added service. The risks are inherently too great. Instead, agents may coach their insureds and even assist the insured on how to order MVRs themselves using the forms provided by the Department of Motor Vehicles. We can certainly assist with that.