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Auto Insurance Laws


NMA Position On Auto Insurance Laws

We oppose mandatory automobile insurance for seven reasons.

  1. It increases the cost of auto insurance.
  2. It increases the regulation of auto insurance.
  3. It adds more punitive sanctions to be applied against motorists, even if they have auto insurance.
  4. It reduces the number of companies offering coverage in a given state.
  5. It does not necessarily increase the number of insured vehicles.
  6. It does not guarantee coverage of catastrophic losses.
  7. There are better ways to protect responsible motorists from serious losses attributable to uninsured motorists.

The principal reason vehicle owners do not have auto insurance is the cost of insurance. Passing a law that increases the cost to administer, sell, and buy auto insurance does not constructively address the main reason people aren't buying insurance in the first place, cost.

Because the mandate is counter-productive, the typical legislative response is to ladle on increasingly punitive measures to coerce compliance. This leads to financial sanctions being applied against persons who do not have the means to pay the sanctions, just as they did not have the means to pay for the insurance in the first place.

Subsequently this population is subjected to license suspension, and they are now driving, often out of necessity, without insurance or a drivers license. If they are apprehended, driving without a license and without insurance, a given, the hole just gets deeper.

Vehicle owners who can only afford the mandatory minimum could have purchased more and better coverage, if the price had not been driven higher by the mandatory insurance law. Consequently, their liability coverage may not be adequate to cover catastrophic losses.

The State Legislature continues to tinker, adjust, mandate, and regulate to address unintended consequences that emanate from the original law.

Fines and penalties are instituted, and then increased (if it didn't work the first time around just do more of it). Premiums are controlled, insurance policies are regimented, pools are created to insure those who can't find insurance in the open market, surcharges are instituted, and tracking and surveillance measures are employed to find the uninsured.

All these maneuvers increase costs and premiums go up, meaning fewer people can afford good coverage. There has to be a better way!

There is, just scrap the mandatory insurance law and everything that followed. Replace it with a requirement that any liability policy sold in the state must also include uninsured and underinsured coverage equal to the limits on the basic liability policy.

In this way the insured motorist is guaranteed payment even if the other vehicle owner is not insured. The only scenario where a person would not be covered by insurance is if he did not have insurance and the vehicle operator responsible for the accident did not have insurance.

However, the likelihood of this happening would be less because with lower insurance rates more people could afford good insurance. Also, the absence of insurance never absolves the party at fault of financial responsibility.

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