Getting a true handle on how many uninsured drivers are on the road is difficult. Nationally, about one in seven go without car insurance, according to data compiled over the past decade by the Insurance Research Council (IRC).
If you're wondering why you should care whether other drivers are buying auto insurance, consider this: When an uninsured driver causes an accident and can't pay for the damages, the injured shoulder the burden.
Central to lifting the burden from the rest of us is each state's system for rooting out these scofflaws.
Some states use random sampling, meaning they send a list of vehicles to car insurance companies and ask whether they are insured, says Loren McGlade, chair of the Insurance Industry Committee on Motor Vehicle Administration (IICMVA), a group of carriers and trade associations. Other states require car insurance companies to send over their entire "book of business" — meaning a giant list of current customers.
Still other states use databases that are updated weekly or monthly with insurance companies' customer lists.
"We had 26 states with some electronics methodology and 26 different ways of doing it," McGlade says. For car insurance companies, keeping up with all these different systems is a nightmare — and you can bet that policyholders pay the price for all this hassle through higher premiums.
Making matters worse: Tiny differences in customer information spark countless faulty red flags. For example, registration records pertaining to a car owned by "Charles Smith," "Eddie Smith," "Charles Eddie Smith" and "Mrs. Charles Eddie Smith" could be confused with one another, and may or may not relate to the same vehicle.
So when "Charles Smith" gets a letter from the state asking him why he doesn't have car insurance, he'll get angry and call up his insurance company to find out why it "messed up." Insurance companies end up fielding calls from angry customers — all because a state's database can't match up vehicle registrations to insurance records.
On an initial data load, at least 20 percent of the data will mismatch, says McGlade.
About half of states use no electronic reporting system to track who's driving uninsured, McGlade says.
| Uninsured drivers typically fall into three categories: Economic. Some just can't afford car insurance. If they have to choose between food and insurance, it's a pretty simple decision.Attitude. Some view compulsory insurance laws as another example of Big Brother.Oops. Some people don't realize they've let their insurance lapse. Source: Insurance Industry Committee on Motor Vehicle Administration |
Instead, they rely on insurance ID cards — which can be easily gamed, according to Alex Hageli, director of personal lines for the Property Casualty Insurers Association of America, a trade group. These people buy car insurance and then cancel it or let it lapse.
Among states that rely on electronics, most use databases. But such systems vary widely, and databases have proven problematic and expensive, critics say.
McGlade says these systems don't reduce the number of uninsured drivers because they tell a state who has insurance — not who doesn't.
"The insurance industry has no idea who's uninsured," he points out.
Uninsured drivers are a moving target, adding to the difficulty of identifying them. The number of "uninsured" fluctuates daily depending on when premium payments are due, vehicles that get traded, the issuance of new policies and the lapsing of old ones.
McGlade and Hageli both see potential in online verification, often referred to as "Web services." This would allow a police officer to find out whether a driver he has just pulled over is currently insured.
In a nutshell, Web services provide dynamic "event-based" queries rather than static libraries of names. McGlade draws an analogy to going to a restaurant and presenting a credit card to pay for your meal.
"There's no need for the restaurant to keep everyone's bank credit card information," McGlade says. "They look it up to see if it's valid."
A handful of states, including Montana, Oklahoma and Wyoming, have adopted legislation based on that credit-card model, and other states have pilots underway.
But no one has used Web services enough to measure any real difference in reducing uninsured drivers.
Florida officials say they experimented successfully with Web services on a limited, in-house basis (the program wasn't available to law-enforcement in the field) for about six months, but that was three years ago. They put the program on hold to work out accuracy issues, according to Laura Rogers, a program manager with the Florida Department of Highway Safety and Motor Vehicles.
Still, based on the first phase, Rogers says, "the results proved the system provided greater accuracy than the current [database] system, and faster." She says there's a good chance Florida will resume its pilot as soon as next year.
| According to the IRC, California has an uninsured motorist rate of 18 percent. To help cut that number, state officials plan to roll out a voluntary Web services program in November, according to DMV spokesperson Mike Marando. "We have over 30 million vehicles in California," he says. "You can imagine the enormity." Because it will be voluntary, the program's success will hinge on how many carriers and customers choose to participate. One advantage for customers, Marando notes, is that the Web-based system will give people the chance to update their coverage status "on their time and at their convenience instead of on DMV's time. We're hopeful this will be a major first step" toward plugging holes in the existing system. |
States have their own financial incentive for putting a good system in place: Fines issued to offenders can be a lucrative source of revenue.
McGlade and Hageli view auto insurance verification much like the NRA views gun control: Existing laws are sufficient. The problem is lack of enforcement.
Hageli did not mince words. "Trying to identify who's uninsured accomplishes nothing unless a state is willing to enforce the law. Over the past three decades, the states have shown no inclination to make this any kind of priority. . . . We want firm, mandatory fines that cannot be lowered by a judge based on some sob story."
Part of a crackdown, he adds, should be mandatory rechecks of any person convicted of driving without insurance, because odds are these violators will re-offend.
The National Association of Insurance Commissioners noted in a 2006 white paper that "without enforcement of compulsory auto insurance and financial responsibility laws, states will not be able to reduce the number of uninsured motorists."
Penalties for driving without car insurance vary by state and run the gamut from a small fine to a criminal offense, especially if you cause an accident while uninsured.
According to the Insurance Information Institute, penalties can include fines of as much as $5,000 (for a subsequent offense), license or registration suspension or revocation, jail time, confiscation of license plates and impounding of vehicles.
| According to IRC's rankings, New York State has an uninsured motorist rate of only 5 percent — an eyebrow-raising statistic as far as Hageli is concerned. "My gut feeling is that each state has at least 10 percent uninsured," he says. But New York DMV spokesperson Ken Brown credits a program called the Insurance Information Enforcement System (IIES and pronounced "eyes") that's been in effect since 2002. It electronically connects regulators with carriers across the state. Carriers are obligated to subscribe, and the moment a customer adds or deletes coverage, the state is notified, Brown says. If the state cannot confirm that a new insurance company has picked up coverage for a dropped vehicle, the system automatically generates a letter to the registered owner. "I'd say we have a system that clearly validates that an individual does or does not have insurance," Brown says. |
In addition, you may be required to file an SR-22 form for the foreseeable future to prove to your state that you are carrying liability insurance.
In New York, for example, if you are caught driving without insurance your registration is suspended. If you've been driving without insurance for more than 90 days, your license is also suspended.
If California finds you've been driving without insurance, your registration is suspended.
Texas launched a statewide database program last fall to combat its relatively high rate of uninsured drivers — 20 percent, or as many as 4 million vehicles.
Melissa Burkhart, coordinator of TexasSure, says the program requires car insurance companies to report their full book of business every week. When the state has identified vehicles that have not had insurance policies associated with them for nine weeks or longer, it sends letters to the registered owners. But those letters won't start going out until early next year, she says.
But here's a problem: Four million of Texas's 21 million registered vehicles do not match up with car insurance policies. It's unclear how many have no insurance and how many may be insured through commercial policies. For now, she said, it's too soon to judge the effectiveness of TexasSure.
But some uninsured drivers try to game the system even after they've been caught. Instead of going out and buying cheap car insurance, some people show up in court with fake insurance ID cards, claiming they forgot to keep the cards in their vehicles. Hageli says that prosecutors and judges have little recourse but to eyeball the cards — courts have no insurance verification systems.
Another common tactic, Hageli says, is that an uninsured driver will call to get coverage the same day he is pulled over, receive his insurance ID card, then immediately cancel the coverage. That way he has an insurance card to present when asked. When that card "expires," he repeats the process.
About the author: Peter Lewis was a Seattle Times staff reporter for many years and now writes for regional and national publications.
