---
kind: "section"
citation: "15 U.S.C. § 3905"
title: "15"
title_heading: "Commerce and Trade"
number: "3905"
heading: "Clarification concerning permissible State authority"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/15/3905"
units:
  - "Chapter 65 — Liability Risk Retention"
---

# §3905. Clarification concerning permissible State authority

- (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](/usc/15/3901.md?p=a-4) or [purchasing group](/usc/15/3901.md?p=a-5) authorized under this chapter from the policy form or coverage requirements of any [State](/usc/15/3901.md?p=a-6) motor vehicle no-fault or motor vehicle financial responsibility [insurance](/usc/15/3901.md?p=a-1) law.
- (b) **Applicability of exemptions—** The exemptions provided under this chapter shall apply only to the provision of liability [insurance](/usc/15/3901.md?p=a-1) by a [risk retention group](/usc/15/3901.md?p=a-4) or the purchase of liability [insurance](/usc/15/3901.md?p=a-1) by a [purchasing group](/usc/15/3901.md?p=a-5), and nothing in this chapter shall be construed to permit the provision or purchase of any other line of [insurance](/usc/15/3901.md?p=a-1) by any such group.
- (c) **Prohibited insurance policy coverage—** The terms of any [insurance](/usc/15/3901.md?p=a-1) policy provided by a [risk retention group](/usc/15/3901.md?p=a-4) or purchased by a [purchasing group](/usc/15/3901.md?p=a-5) shall not provide or be construed to provide [insurance](/usc/15/3901.md?p=a-1) policy coverage prohibited generally by [State](/usc/15/3901.md?p=a-6) statute or declared unlawful by the highest court of the [State](/usc/15/3901.md?p=a-6) 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](/usc/15/3902.md?p=a-4) relating to discrimination, nothing in this chapter shall be construed to preempt the authority of a [State](/usc/15/3901.md?p=a-6) to specify acceptable means of demonstrating financial responsibility where the [State](/usc/15/3901.md?p=a-6) 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](/usc/15/3901.md?p=a-1) coverage obtained from an admitted [insurance](/usc/15/3901.md?p=a-1) company, an excess lines company, a [risk retention group](/usc/15/3901.md?p=a-4), or any other source regardless of whether coverage is obtained directly from an [insurance](/usc/15/3901.md?p=a-1) company or through a broker, agent, [purchasing group](/usc/15/3901.md?p=a-5), or any other [person](/usc/15/7a.md?p=6).

## Source credit

(Pub. L. 97–45, § 6, as added Pub. L. 99–563, § 8(c), Oct. 27, 1986, 100 Stat. 3175.)