8.1 Hawaii Motor Vehicle Insurance Law: Purpose, Required Coverages, 40/80/20 Limits, UM/UIM & Self-Insurance

8.1 Hawaii Motor Vehicle Insurance Law: Purpose, Required Coverages, 40/80/20 Limits, UM/UIM & Self-Insurance

Section VI of the Hawaii adjuster outline — Hawaii laws pertinent to casualty insurance — carries about 12 to 14 of the 80 scored questions, and most of it is the Motor Vehicle Insurance Law in HRS chapter 431, article 10C. This chapter divides it into four sections: required coverages (8.1), PIP and the tort threshold (8.2), rates, the Joint Underwriting Plan and cancellation (8.3), and financial responsibility (8.4). Hawaii workers' compensation, also on section VI, is in 8.5.

Casualty Insurance Defined (HRS § 431:1-209)

General casualty insurance includes vehicle insurance and insurance against:

• legal liability for death, injury or disability of any person, or damage to property;
• medical, hospital, surgical and funeral benefits regardless of the insured's liability, when issued with liability coverage;
• employers' obligations for injuries to employees (workers' compensation);
• burglary, theft, robbery, forgery, fraud, vandalism and similar perils;
• the personal property floater written on an all-risk basis;
• glass breakage, boiler and machinery explosions, elevators, sprinkler leakage, credit and livestock;
• collision (other than vessels and instrumentalities of navigation);
• malpractice; and
• motor vehicle warranty contracts (other than service contracts under chapter 481X).

Vehicle insurance (§ 431:1-208) covers loss of or damage to land vehicles, aircraft and their contents, and liability arising from their ownership, maintenance or use.

Purpose of the Motor Vehicle Insurance Law (§ 431:10C-102)

The article's purpose is to:

1. create a system of reparations for accidental harm and loss arising from motor vehicle accidents;
2. compensate these damages without regard to fault; and
3. limit tort liability for these accidents.

To encourage participation, uninsured drivers are dealt with more severely than insured drivers, and people truly unable to afford insurance are provided for through public assistance provisions (8.3).

Key Definitions (§ 431:10C-103)

• Accidental harm — bodily injury, death, sickness or disease caused by a motor vehicle accident to a person. It does not include property damage.
• Motor vehicle — any vehicle required to be registered under chapter 286, including an attached trailer, but not motorcycles and motor scooters. Those are governed by article 10G.
• Insured — the named insured, plus household residents who are a spouse, reciprocal beneficiary or other relative of the named insured, and minors in the custody of the named insured or a household relative.
• Uninsured motor vehicle — a motor vehicle with no bodily injury liability insurance or self-insurance applicable at the time of the accident, or an unidentified vehicle that causes an accident resulting in injury, if the accident is reported to the police or proper authority within 30 days or as soon as practicable.
• Underinsured motor vehicle — a vehicle whose total applicable bodily injury liability limits and self-insurance are less than the liability for damages imposed by law.

The Duty to Insure (§§ 431:10C-104, 10C-114)

No person may operate or use a motor vehicle on a public street, road or highway in Hawaii unless it is insured at all times under a motor vehicle insurance policy, except as allowed for self-insurers. Every owner must obtain and maintain that policy for the entire registration period. Federal government vehicles and antique vehicles are exempt. An owner who stops maintaining insurance must surrender the registration certificate and plates to the county director of finance, and may not operate the vehicle until it is insured again (§ 431:10C-114).

Required Coverages (§ 431:10C-301)

Every Hawaii motor vehicle insurance policy must provide:

1. Personal injury protection (PIP) benefits under § 431:10C-304 (8.2); and
2. Liability insurance for the owner and any operator using the vehicle with a reasonable belief of being entitled to do so. It covers sums they are legally obligated to pay for injury, death or damage to others' property arising from ownership, maintenance or use of the vehicle. Property owned by, transported by or in the charge of the insured is excluded. Special rules apply to rental (U-drive) vehicles.

Minimum Limits

The increase was enacted by Act 138 (2024). The Insurance Division applies the new minimums to new and renewal policies with effective dates on or after January 1, 2026, so a policy that took effect in 2025 could still carry 20/40/10 limits until it renewed. The adjuster confirms the limits on the declarations page in force on the date of loss. Commercial policies and many personal policies carry higher limits.

Uninsured and Underinsured Motorist Coverage

Uninsured Motorist (UM) — § 431:10C-301(b)(3)

For a vehicle registered or principally garaged in Hawaii, the policy must include UM coverage in at least the bodily injury limits required above. It protects insureds legally entitled to recover damages from owners or operators of uninsured vehicles for bodily injury, sickness, disease or death. The UM requirement does not apply if any named insured rejects the coverage in writing.

Underinsured Motorist (UIM) — § 431:10C-301(b)(4)

The policy must include coverage for bodily injury or death suffered by a person legally entitled to recover from owners or operators of underinsured vehicles. The insurer may offer UIM in the same manner as UM, but the offer of both must:

• be conspicuously displayed;
• show the premium next to the offer so it can easily be subtracted from the total; and
• provide for written rejection, with the insured's signature next to or directly below the offer.

Stacking and Limit Options — § 431:10C-301(c)–(e)

• Stacking (adding together UM or UIM limits for multiple vehicles or policies) is prohibited, except as provided in subsection (d).
• Under subsection (d), each insurer must offer, when a policy is first applied for or issued:
  1. the option to stack UM and UIM coverage; and
  2. the option to select UM and UIM limits up to, but not greater than, the policy's bodily injury liability limits.
• Once the insured has been given the opportunity to purchase or reject these options in writing, no further offer is required at renewal or replacement. A written rejection is presumptive evidence of the insured's decision.

Example: A named insured carries 100/300 liability on two cars, buys UM/UIM at 100/300, and elects stacking. If an underinsured driver seriously injures her, she can access 100,000 per person on each car (200,000) once the at-fault driver's limits are used. Without the stacking option, she is limited to 100,000 per person.

UM/UIM Claims and the Tort Threshold

An injured person may not claim UM benefits from an insurer that has paid or is liable to pay motor vehicle insurance benefits unless the claim meets the article's requirements — in practice, the tort threshold in § 431:10C-306 (§ 431:10C-306(d); see 8.2). UM and UIM claims are first-party claims for damages the insured could recover in tort from the other driver.

Self-Insurance (§ 431:10C-105)

The insurance requirement may be satisfied by an owner who meets the self-insurer requirements in part VI of article 10C (§§ 431:10C-601 to 608). The commissioner must be satisfied that a claimant would have the same rights against the owner as against an insurer. Applications are made to the commissioner, who issues certificates of self-insurance for each vehicle (§ 431:10C-107(d)). Large rental car companies and government-related fleets often use this option. A self-insurer is a "personal injury protection insurer" for purposes of paying PIP (§ 431:10C-304).

Required Optional Coverages (§ 431:10C-302)

Insurers must make available, at the insured's option:

• physical damage (collision and comprehensive) with deductibles including $50, $100, $250, $500, $1,000, $1,500 and $2,000;
• coverage for damages not covered by PIP;
• wage loss benefits for monthly earnings loss, offered in multiples of $500 a month / $3,000 per accident, from $500/$3,000 up to $2,000/$12,000 (higher limits allowed);
• death benefits of $25,000, increasing in $25,000 steps up to $100,000, plus a $2,000 funeral benefit;
• PIP deductibles of $100, $300, $500 and $1,000 applicable to the insured's own claims; and
• full disclosure of all required and optional coverages and deductibles, and their premium effects, at issuance (and at every other renewal thereafter).

Commercial policies need not offer the wage loss, death, managed-care and certain other options.

Proof of Insurance (§ 431:10C-107)

Insurers issue a paper or electronic insurance identification card for each vehicle. It shows the make and serial number (not required for fleets of five or more), policy number, insured and insurer names, and coverage dates. The card must be in the vehicle or accessible on a mobile electronic device at all times and shown to a police officer on demand. On a cancellation, the insured must return the card or an affidavit within 30 days (8.3).

Penalties for Driving Uninsured (§ 431:10C-117)

• Each violation is a separate offense, with a fine of $100 to $5,000.
• If convicted of having no motor vehicle insurance policy in effect when cited, the fine is $500 for the first offense and at least $2,000 for each later offense within five years. The court may suspend the fine or allow community service if the person shows current insurance.
• In addition, the court must either suspend the license (three months for a first conviction, one year for a later offense within five years) or require a nonrefundable six-month policy.