Secured with SHA-256 Encryption

Select Page

Insurers Not Fans of Mandatory Car Insurance

Home » Auto Insurance » Insurers Not Fans of Mandatory Car Insurance

FREE Car Insurance Comparison

Compare quotes from the top car insurance companies and save!

 Secured with SHA-256 Encryption

Shuman Roy is an entrepreneur, business owner, and musician. He started RoysNoys, LLC in 2013 as a music production and education service company. He also offers small business consulting and advisory services to help businesses get from start-up mode to turn-key operations. Shuman earned his M.B.A from the Stern School of Business in 2001...

Full Bio →

Written by

Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency...

Full Bio →

Reviewed byJoel Ohman
Founder, CFP®https://res.cloudinary.com/quotellc/image/upload/insurance-site-images/truthaboutins-live/2020/03/joel-ohman.jpg

UPDATED: Mar 13, 2020

Advertiser Disclosure

It’s all about you. We want to help you make the right coverage choices.

Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We partner with top insurance providers. This doesn't influence our content. Our opinions are our own.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about insurance. Our goal is to be an objective, third-party resource for everything insurance related. We update our site regularly, and all content is reviewed by insurance experts.

mandatory

Yes, you read that correctly. Insurance companies apparently have a problem with a law that says you have to buy their product…and pigs have been spotted flying.

Apparently there is “broad insurer opposition to state laws that require drivers to buy car insurance,” according to a recent piece on Insurance.com.

How could this be?

Basically, car insurance companies believe laws that require drivers to purchase mandatory minimum car insurance coverage don’t work.

This is evidenced by the sheer number of uninsured motorists still present on U.S. roadways.

In fact, 17 percent of drivers admitted to driving without insurance at one point or another.

What are the complaints?

Paperwork and regulation…two common results of the government getting involved in the business.

Insurers are caught in the middle, acting as babysitters for the government, keeping track of which policies are “in-force” for who and on what day.

If an insured’s policy cancels, insurers have to notify the state. In some states, insurers have to determine if an insurance policy was in-force at the time of an accident.

Doesn’t sound like much work, but repeat the task thousands of times a day for individuals who allow their policy to cancel several times during a term and you can see where the headaches begin.

The article also quotes David Snyder, vice president and associate general counsel for the American Insurance Association, who said mandatory car insurance laws are “used as a justification for a lot of intrusive regulations that limit your ability to price for risk.”

This means the government forces drivers to obtain insurance, and as a result, get the keys to the insurer’s house.

And insurance companies have to present their proposed rating structure to the state department of insurance for approval before releasing the products to the public.

In short, car insurance rates that don’t satisfy the regulators don’t “hit the street.”

Tip: Do yourself a favor and opt for both uninsured motorist and underinsured motorist coverage on your auto insurance policy.

At the end of the day, the article highlights the fact that there are tons of people out there driving without car insurance.

FREE Car Insurance Comparison

Compare quotes from the top car insurance companies and save!

 Secured with SHA-256 Encryption