Accidents with Uninsured Drivers

Although part of the costs of enforcement of compulsory insurance laws are recovered from fines and penalties collected from uninsured drivers, this kind of expensive, paper-laden bureaucracy puts an added burden on both the state and the taxpayers when both are trying to cut costs.

What are compulsory insurance laws?

Critics of compulsory insurance laws also argue that these laws cause rates to go up for responsible drivers. A pail of this increase is attributable to the higher operating costs of insurance companies, which must issue state-mandated identification to all their policyholders and in many states have to notify the state whenever a policyholder cancels, fails to renew, or fails to pay a premium installment.

Still another criticism of compulsory insurance laws is that they are inconvenient for consumers. After a state enacts compulsory laws, all drivers in that state (most of whom have insurance) face the yearly duties of obtaining proof of coverage; notifying appropriate government officials whenever they register or re-register a vehicle, change insurance companies, or change policy details; carrying an additional form of identification with them whenever they drive; and in general dealing with the intrusion of an added level of government bureaucracy in their lives. This runs counter to current public feeling about the extent of government regulation. Compare sr22 insurance rates in your area.

In West Virginia, in 1982 the Motor Vehicles Department mailed 196,000 notices of driver registration cancellations due to lack of insurance. Nearly 2,500 orders to the state police were issued mistakenly because cancellation notices and policyholder premium payments crossed in the mail.

Communications among the public, the insurance industry and regulators become entangled in a confusing attempt to identify insurance registrants. With each additional transaction, the probability that a form will be issued by mistake increases, and it is the responsible motorist who often bears the brunt of such administrative problems.

In addition to the cost of enforcing compulsory auto insurance laws and the relatively high number of drivers who remain uninsured despite such programs, the passage of compulsory insurance laws has other repercussions.

Once a state has a compulsory auto liability law on the books, legislators feel an obligation to make sure insurance is available and can be purchased at a reasonable price.

Efforts to achieve such goals often result in programs that force insurers to provide policies at prices below cost. To limit their losses, insurers react by placing restrictions on the amount of insurance they will provide, which in turn forces more drivers into the involuntary market.

Compulsory insurance laws are a blanket approach to the problem of uninsured motorists. These laws burden taxpayers with extra costs of enforcement and administration, and burden drivers with higher insurance rates and extra red tape. While they may get some uninsured drivers off the roads, many more continue to drive.

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