Monday, May 24, 2004

State Auto Insurance/Financial Responsibility Laws

Students of state auto insurance mandates have got to read this fabulous article from the Insurance Information Institute:

Compulsory Auto Insurance


Most states require drivers to have auto liability insurance before they can legally drive a car. (Liability insurance pays the other driverÂ?s medical, car repair and other costs when the policyholder is at fault in an auto accident.) All states have laws that set the minimum amounts of insurance or other financial security drivers must have to pay for the harm caused by their negligence behind the wheel if an accident occurs. The public generally supports compulsory auto insurance and wants these laws enforced.

Laws in most states have proven ineffective in reducing the number of drivers who are uninsured. There are many reasons for this. Some drivers canÂ?t afford insurance and some drivers with surcharges for accidents or serious traffic violations donÂ?t want to pay the high premiums that result from a poor driving record. With the percentage of uninsured motorists as high as 30 percent in some states, it is costly to track down violators of compulsory insurance laws. And unless the odds of getting caught are high and the penalties severe, drivers will continue to flout the law.


Liability insurance is compulsory in 47 states and the District of Columbia. Only New Hampshire, Tennessee and Wisconsin do not have compulsory auto insurance liability laws.

About 14 percent of drivers in the United States are uninsured, despite laws that prohibit it.

More than 20 states have considered Â?no pay, no playÂ? legislation, a concept which sets limits on the amount of compensation uninsured motorists can receive in an accident.


Ineffectiveness of Compulsory Auto Insurance Laws: Over the long term, compulsory auto insurance laws have not reduced the uninsured driver population in the United States. Although the number of uninsured drivers in a state declines when a compulsory law first goes into effect, some drivers allow the coverage to expire and gradually the uninsured driver levels increase, according to the National Association of Independent Insurers, an organization representing property/casualty insurance companies now known as the Property Casualty Insurers Association of America (PCI) (see Background).

Then there's this comment:

Compulsory auto liability insurance is not necessarily the most effective solution. A 1994 study by the National Association of Independent Insurers (now known as PCI) found that New Hampshire, a state that does not have compulsory insurance laws, had a smaller percentage of uninsured drivers than the nearby states of Rhode Island, Vermont and Connecticut. Only 10 other states had fewer uninsured drivers. The state had the lowest percentage of uninsured drivers -- 9.5 percent -- of all the states without compulsory laws.

Be sure to also check out the great chart at the end of the article.

Don't Believe That Social Insecurity is Voluntary?

Read it and weep:


The Privacy Act of 1974 requires us to give each person the following notice when applying for a Social Security number.

Sections 205(c) and 702 of the Social Security Act allow us to collect the facts we ask for on this form.

We use the facts you provide on this form to assign you a Social Security number and to issue you a Social Security card. You do not have to give us these facts, however, without them we cannot issue you a Social Security number or a card. Without a number, you may not be able to get a job and could lose Social Security benefits in the future.