oklahoma municipal judges association april 23, 2015 1 buddy combs director of public policy...
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Oklahoma Municipal Judges Association
April 23, 2015
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Buddy CombsDirector of Public Policy
Assistant General Counsel
Topics• Auto insurance without a license
– State law– Standard policy review– “Insurable Interest” & named driver exclusions– Other state efforts– Oklahoma legislation
• Uninsured Motorists– Scope of the problem– Law enforcement tools– Possible future solutions
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Insurance without a licenseCan an individual obtain auto insurance without possessing a valid driver license?
Generally, no. But . . . .
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State law• No Oklahoma law requiring a current DL to
purchase auto insurance.
• Insurance carriers free to determine how to handle license status when issuing policies.
• One state—South Carolina—requires current DL to purchase coverage.
• Some states allow the use of foreign ID and/or will issue a driver license to certain individuals.
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Standard policy review
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• What does your insurance policy actually say about who or what is covered?
• Portions taken directly from the filed policy of one of Oklahoma’s largest carriers.
Standard policy review
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Standard policy review
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• Most auto policies will cancel the policy if the DL of a possible driver is suspended or revoked.
Standard policy review
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• No coverage under the policy in the event of concealment or fraud.
• Recall:
Named driver exclusions
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Named driver exclusions• Most carriers deem certain drivers ineligible to be
listed as a driver on a policy.
• Drivers can be specifically excluded from coverage:– Unlicensed
– Multiple moving violations
– Suspended license
– Bad MVR
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Options• If most carriers specifically exclude unlicensed
drivers from coverage, can they get insurance at all?– If they want to drive the car, almost certainly not
– If they want to insure the car while it sits, maybe
– If they want to insure the car for the benefit of someone else, maybe
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“Insurable Interest”
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“Insurable Interest”36 O.S. § 3605
A. No insurance contract on property or of any interest therein or arising therefrom shall be enforceable as to the insurance except for the benefit of persons having an insurable interest in the things insured.
B. "Insurable interest" as used in this section means any actual, lawful, and substantial economic interest in the safety or preservation of the subject of the insurance free from loss, destruction, or pecuniary damage or impairment.
C. The measure of an insurable interest in property is the extent to which the insured might be damnified by loss, injury, or impairment thereof.
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Comp and Collision Coverage
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Comp and Collision Coverage
• Even if not driving the car, someone may want comp and collision coverage:
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Unlicensed Individuals• Who might not have a license but want
insurance?– Suspended or revoked license
– Elderly
– Disabled
– Illegal immigrant
– Wealthy
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Other State Action• Most states, including OK, do not allow for the
issuance of a driver license to illegal immigrants. 47 O.S. § 6-103(A)(9).
• 11 states do grant driving privileges.
• Some niche insurance carriers allow international driver licenses. Some will ignore the DL issue (rare).
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Oklahoma Action• HB 1835, Rep. Seneca Scott, 2015:
47 O.S. § 6-106(B)(12):
B. Every applicant for a driver license shall state upon the application the following information:
. . .
12. Social security number.
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Oklahoma Action• HB 1835, Rep. Seneca Scott, 2015:
47 O.S. § 6-106(B)(12):
B. Every applicant for a driver license shall state upon the application the following information:
. . .
12. Social security number or Federal Individual Tax Identification Number (ITIN).
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Underwriting Considerations
• Assuming an individual can get past all the other issues, it’s highly likely they will run into trouble during underwriting.
• OK law: rates cannot be excessive or unfairly discriminatory. Must be actuarially justified.
• Unlicensed status will increase premium significantly, especially if the individual has been uninsured for a period of time.
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Recap• No specific Oklahoma law. Left to the carrier.
• Most carriers will not issue policies to unlicensed individuals or will use named driver exclusions.
• Still possible to get insurance, but likely limited to very specific coverage.
• Underwriting guidelines will make coverage expensive.
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Uninsured Motorists• OK uninsured motorist rate: 26.9%
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Uninsured Motorists• OK uninsured motorist total:
721,137
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Law enforcement tools
• Until 2013, 3 options for law enforcement:
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Law enforcement tools
• Until 2013, 3 options for law enforcement:– Warning– Ticket– Towing
• All options present specific challenges, and none provide insurance to the driver quickly.
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Law enforcement tools• HB 1792 (2013)
• LEO can remove the license plate from the vehicle.
• Sheriff’s office holds the tag until the owner:– Buys insurance, and – Pays all fines and fees
• Vehicle is automatically covered with minimum liability coverage for up to 10 days.
• Owner pays premium when they retrieve their tag
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Law enforcement tools• Removal of the plate remains discretionary
• If the driver can prove they had insurance at the time of the stop, entitled to dismissal of the charge and court costs.
• No tag can be seized if the driver produces an apparently valid security form and officer is unable to confirm compliance through OCIVS.
• Sheriff may dispose of the plate after 90 days.
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Temporary Motorist Liability Plan
• Vehicle covered for up to 10 days.
• Premium paid upon plate retrieval.
• Premium is $12/day with $60 minimum.
• Payment of $125 administrative fee – $70 to agency pulling the plate
– $20 to Sheriff
– $10 to plan administrator (Oklahoma Sheriffs Association)
– $25 to Temporary Insurance Premium Pool28
Plan Loophole• Early discovery that many plates not retrieved
• No uptick in stolen plates or cars without plates
• No communication between Tax Commission and Plan Administrator. Replacement plates are cheap.
• SB 503 (2014):“The county sheriff’s office shall provide the plan administrator with the seized license plate number. The plan administrator shall maintain a database including all seized license plates and shall submit such information to the Oklahoma Tax Commission.”
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Impact through January ‘15• 1,895 license plates seized
• 282 prior proof of insurance—dismissed
• 919 conditions met—insurance purchased, fine and fees paid
• Numbers are without highway patrol participation
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Possible Future Solutions• OCIVS overhaul
– Texas model?
– $$
• Uninsured status as a primary stop– Real time information?
– Privacy concerns
• InsuredLight– Cost/privacy
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