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Title 15, Commerce and TradeRelease 119-110

§3905 Clarification Concerning Permissible State Authority

Title 15 › CHAPTER 65 — LIABILITY RISK RETENTION › § 3905

Last updated Sep 22, 2026|Official source

Summary

Risk retention groups and purchasing groups must still follow state car-insurance rules about no-fault and financial responsibility. The federal exemptions only apply to liability insurance. They cannot use those exemptions to sell or buy other kinds of insurance. Their policies also cannot include coverage that a state law bans or a state’s highest court has ruled illegal. States keep the power to decide what shows financial responsibility for a license or permit and may accept or reject coverage from admitted insurers, excess lines, risk retention groups, brokers, agents, or others, as long as the rule in section 3902(a)(4) about discrimination is followed.

Full Legal Text

Title 15, §3905

Commerce and Trade, Source: USLM XML via OLRC

(a)No exemption from State motor vehicle no-fault and motor vehicle financial responsibility laws
Nothing in this chapter shall be construed to exempt a risk retention group or purchasing group authorized under this chapter from the policy form or coverage requirements of any State motor vehicle no-fault or motor vehicle financial responsibility insurance law.
(b)Applicability of exemptions
The exemptions provided under this chapter shall apply only to the provision of liability insurance by a risk retention group or the purchase of liability insurance by a purchasing group, and nothing in this chapter shall be construed to permit the provision or purchase of any other line of insurance by any such group.
(c)Prohibited insurance policy coverage
The terms of any insurance policy provided by a risk retention group or purchased by a purchasing group shall not provide or be construed to provide insurance policy coverage prohibited generally by State statute or declared unlawful by the highest court of the State whose law applies to such policy.
(d)State authority to specify acceptable means of demonstrating financial responsibility
Subject to the provisions of section 3902(a)(4) of this title relating to discrimination, nothing in this chapter shall be construed to preempt the authority of a State to specify acceptable means of demonstrating financial responsibility where the State has required a demonstration of financial responsibility as a condition for obtaining a license or permit to undertake specified activities. Such means may include or exclude insurance coverage obtained from an admitted insurance company, an excess lines company, a risk retention group, or any other source regardless of whether coverage is obtained directly from an insurance company or through a broker, agent, purchasing group, or any other person.

Reference

Citations & Metadata

Citation

15 U.S.C. § 3905

Title 15, Commerce and Trade

Last Updated

Sep 22, 2026

Release point: 119-110