Are drivers really operating without insurance?
Were you ever involved in a motor vehicle accident with someone you later learned had no insurance, or had limits that were inadequate to cover your injuries or the damage to your car? It is a very common issue in Rhode Island.
Rhode Island’s mandatory insurance law has been on the books in its current form since 1993. Not everyone is complying with this law.
About a year ago the Providence Journal reported on a RI Department of Motor Vehicles projection that close to 25% of Rhode Island drivers were operating without insurance. The Legislature responded to that with a series of hearings, and finally, the passage of RI General Law 31-47.4 last year. During the hearings a study by the Insurance Institute for Highway Safety was quoted as indicating that the true percentage of uninsured drivers was likely over 30%. That means between one in every three or four cars you pass on the road has no insurance. That brings new meaning to the adage when driving down the road that you are “taking your life into your own hands!”
For years the registry thought they had no way to effectively track who had or did not have insurance. It ea game for people get by without insurance. They’d go into an insurance agency and take out an auto insurance policy. Pay the insurance agent the minimum deposit using a check or credit card. Receive the necessary insurance ID card then go to the registry. Once armed with their registration, they’d stop payment on the check or credit card. The policy would cancel for non-payment and the individual would drive around for the next two years with an ID card on a cancelled policy. Then when you were involved in an accident with such a person, both you and the police would assume the ID card was representing the existence of a valid insurance policy. The Registry’s “computer system” is still being blamed on being too antiquated to identify or track such data.
Many insurance agents have been burned by at uninsured motorist scheme. The cost in the administrative time to quote and issue a policy, combined with the insufficient funds charged by the banks result in a financial drain on that local insurance agency. Agents have sent notices to the registry to identify these violators only to be told not to submit such data.
The passage of RI General Law 31-47.4 last year appeared to be ready to tackle this issue. All insurance companies licensed to write automobile insurance in Rhode Island are now required to monthly send a full listing of their insured business to the “RI Insurance Verification System” where a third party has been contracted with to match policy data to the DMV registration data.
If a registered vehicle does not have an insurance policy for three months in a row, a notice will be sent to the registered owner of the vehicle notifying them that they are required to obtain insurance. If after a second notice the owner fails to comply, the DMV will revoke the registration and block the owner’s ability to obtain or renew a license or registration. Once a registration has been revoked, the owner must obtain insurance and pay a revocation fee of $251.50.
The American Civil Liberties Union has received a court injunction to delay the implementation of this law pending the establishment of guidelines and controls to restrict what information is being released and how it is being controlled. This initially seemed an extreme measure on the part of the ACLU to protect that 25-30% of uninsured drivers. It is actually intended to protect all of us from improper use of our vital information which is in the hands of the DMV.
So who’s protecting you and me until they get a handle on these uninsured drivers? If hit by someone out insurance, who takes care of your loss?
Although RI has a higher number of uninsured drivers than most states, this has been a longstanding issue throughout the country. The insurance industry years ago established a coverage to protect you when you are in an accident involving an Uninsured and Under Insured vehicle. Uninsured Motorists coverage protects you. It pays if you are injured by a hit-and-run driver or a driver who does not have auto insurance. This coverage, when in effect, takes the place of what the other driver should have purchased but did not.
Coverage is also provided for under-insured drivers – those who have insurance, but not enough to cover your entire claim. This coverage, too, has policy limits. It covers your bodily injury and property damage (property damage is subject to a deductible of $200 or more) losses above that other operator’s policy limits.
For both coverages, after making payment to you for damages, your insurance company will likely sue the other driver for the money paid because of the other driver’s negligence. I’ve seen a person’s future income, homes, cars and other personal assets attached as a means of settling the resulting shortfall.
The biggest reason for the 65-75% who currently have insurance to strongly support the efforts of this legislation are the cost to us. The Uninsured and Underinsured insurance coverages are an expensive part of your insurance policy. It is expensive because you have a 25-30% chance that you’re not at fault accident is going to result in your insurance company stuck paying for your loss. If we reduce the number of uninsured drivers, we reduce the likelihood that your insurance company will have to pay out. If we lower their uninsured motorist pay outs, the RI Department of Business Regulation will require rate adjustments reflect lower payouts. That means savings to the average policy holder.