No Pay, No Play Laws Affect Uninsured Motorist Claims
Just because something is the law does not mean that everyone chooses to obey. In the United States, drivers are required to have a minimum form of liability insurance everywhere except New Hampshire, yet there are
a number of drivers. According to a study conducted in 2011 the Insurance Research Council, a non-profit , estimates that at least one in
Not everyone year looking not shimmery
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seven drivers is uninsured, accounting for 13.8 percent of the driving population. This does not make some people happy and new laws have been introduced to try to discourage people from driving around uninsured. Read how your insurance policy might be affected.
What is No Pay, No Play?
Several states in the U.S. have begun to implement the ‘No Pay, No Play’ laws which essentially block any uninsured motorist from collecting any type of compensation if he or she has specific damages from an accident. These laws were introduced in the legislature as a way of discouraging those that choose to drive without insurance. It also was developed to ensure that those who are properly insured do not have to pay for non-economic damages to those operating a vehicle illegally. This means that insurance companies will be able to decrease their losses paid out to illegal drivers and help protect low premiums for those that choose to be insured. By enacting such laws as this, it is hopeful that uninsured motorist will choose to be insured at the risk of not having a pay out when involved in an accident.
Who is Participating in No Pay, No Play?
According to the Property Casualty Insurers Association of America, the current states have implemented ‘No Pay, No
Play’ laws: Alaska, California, Iowa, Kansas, Louisiana, Michigan, New Jersey, North Dakota, Oklahoma, and Oregon. Each states has different variants of the law so it is important to check if the states in which you reside first, has a ‘No Pay, No Play’ law and what the stipulation are. For example, in North Dakota, uninsured motorist found to be driving without insurance coverage are not allowed to recover non-economic damages. This means that the uninsured cannot seek damages related to pain and suffering, mental anguish or loss of life enjoyment. Louisiana places a cap on the law, stating that uninsured motorist cannot collect the first $10,000 in bodily injury damages or the first $10,000 in property damage. Exceptions have been built in to protect individuals if the at fault driver was intoxicated or fled the scene. North Dakota limits recovery for those drivers who have been convicted of habitually driving without insurance.
Why Were These Laws Developed?
These laws were enacted to discourage people from driving without insurance. The idea behind it is that if uninsured motorists are not allowed to collect compensation when in an accident, it will force them to seek insurance, which will provide coverage and reimbursement for damages depending on the type of policy that is purchased. Uninsured drivers are expensive and often, it is the responsible citizen’s insurance that picks up the tab. As an overall effect, this causes insurance claims costs to be higher than if everyone on the road were insured. Many states are tired of footing the bill and its citizens have voiced the need for lower insurance rates. Although only a handful of states have implemented this law currently, there are several others that are considering it. Using 2007 data, the International Risk Management Institute found that within the 39 states that were studied, the average non-economic damages paid out to uninsured drivers totaled around $17.5 million per state.
What These Laws Mean For Your Insurance?
The first and most important task for any driver is get some form
of auto insurance. The market is competitive and consumers have the ability to shop around for the best rates. Policies can be tailored to an individual’s needs and budget while ensuring that the correct amount of coverage is provided. The main point is: Do not drive without insurance. It is illegal. Being responsible and paying for insurance can provide peace of mind and financial coverage when the unexpected happens. Also, if the idea that no damages can awarded if you are uninsured and in accident should force one to start the insurance research immediately, even if it is the minimum coverage.
With the passage of these laws, states hope to see a decrease in uninsured motorists. If uninsured motorist are covered, that reduces the number of claims paid out by insurance companies, overall reducing the premiums paid by those that possess that particular insurance coverage. What these laws are doing is basically incentivizing buying car insurance so that the whole can benefit. The Insurance Research Council reports that states which have enacted these type of laws could see a drop in uninsured motorist by close 1.6 percent. While this seems like a small number, in proportion to the small percentage that are actually uninsured, it could make a difference. With such new legislation, further research needs to be conducted, which is precisely what the Insurance Research Council is working on. Elizabeth Sprinkel, Senior Vice President of IRC commented on their recent study, saying, “With this study, we now have more information on how these laws affect the population of motorists driving uninsured. This report, which also develops cost estimates for states that do not have no pay, no play laws on the books, highlights the benefits a strict law may provide to the average insured consumer.”
As an average insured consumer, be sure to check your policy and find out if premiums could increase due to an accident with an uninsured driver and which policies can protect your rates from increasing.
