(1) The department shall upon request consent to the immediate cancellation of any bond or certificate of insurance, or the department shall direct and the State Treasurer shall return to the person entitled thereto any money or securities, deposited pursuant to the Motor Vehicle Safety Responsibility Act as proof of financial responsibility, or the department shall waive the requirement of filing proof, in any of the following events:

(a) At any time after three years from the date such proof was required when, during the three-year period preceding the request, the department has not received record of a conviction or a forfeiture of bail which would require or permit the suspension or revocation of the license, registration, or nonresident's operating privilege of the person by or for whom such proof was furnished;

(b) In the event of the death of the person on whose behalf such proof was filed or the permanent incapacity of such person to operate a motor vehicle; or

(c) In the event the person who has given proof surrenders his or her license and registration to the department, except that the department shall not consent to the cancellation of any bond or the return of any money or securities in the event any action for damages, upon a liability covered by such proof, is then pending or a judgment upon any such liability is then unsatisfied, or in the event the person who has filed such bond or deposited such money or securities has, within two years immediately preceding such request, been involved as an operator or owner in any motor vehicle accident resulting in injury or damage to the person or property of others. An affidavit of the applicant as to the nonexistence of such facts, or that the applicant has been released from all of his or her liability, or has been finally adjudicated not to be liable, for such injury or damage, shall be sufficient evidence thereof in the absence of evidence to the contrary in the records of the department.

(2) Whenever any person, whose proof has been canceled or returned under subdivision (1)(c) of this section applies for a license or registration within a period of three years from the date such proof was originally required, any such application shall be refused unless the applicant shall reestablish such proof for the remainder of such three-year period.