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Proof of Insurance on Your iPhone?

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Joel Ohman
Founder, CFP®

UPDATED: Mar 13, 2020

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Smartphones are being used for any number of reasons nowadays. Mostly to play Angry Birds, but we’ll pretend the uses are ultra important to justify the fact that they cost more to purchase and operate than our annual insurance budgets.

Heck, there’s even iPhone Insurance…but we digress.

The latest development is getting proof of insurance sent directly to your smartphone in the event you’re pulled over and asked to show it to a police officer. That sounds pretty sweet.

No more rummaging through McDonalds napkins and wrinkled oil and lube receipts in a panic looking for your most recent auto insurance liability ID cards.

Often times, simply forgetting to place your new insurance ID card in the glove box can result in a costly ticket and a trip to the courthouse to show you actually did have insurance at the time of the traffic stop – court fees still included by the way.

What’s the Deal?

Mike Gatto, a California Assemblyman, has proposed a piece of legislation that would require insurers to provide evidence of insurance coverage directly to the smartphones of their insured any time it’s requested.

Specifically, Bill 1708, if passed, would force insurers to electronically deliver proof of coverage to any “small, hand-held computing and communication device that has a display screen with touch input or a miniature keyboard.”

That sounds like pretty much any cell phone in operation these days.

Is This a Good Idea?

Well, it’s obviously more convenient, and who doesn’t like that? However, convenience always comes at a price. And it would cost us here as well. How?

It’s simple. The cost of any good or service is passed on to the consumer any time you force a company to increase research and development costs to adapt new technology, which is exactly what would happen here if this bill becomes law.

The bottom-line is your insurance premium will undoubtedly increase if your insurance company is forced to spend any amount of money instituting these changes.

Insurance companies are already adapting to and using new technology regularly without government involvement. Just take a look at Progressive’s Snapshot program or State Farm’s Driver Feedback app.

What do Snapshot and Driver Feedback have in common? They are designed to LOWER car insurance premiums for those who deserve it…not INCREASE everyone’s insurance premiums to accommodate a few forgetful drivers.

What Are the Alternatives?

We’re glad you asked. States such as Georgia and Texas have electronic insurance compliance systems that allow police, the State Department of Motor Vehicles, and insurers to communicate in real time via large databases.

Car insurance can also be verified easily during a traffic stop or in court (or any other time it is necessary to show evidence of auto insurance) by any party that has access to the database.

But as always, the best practice is to store proof of insurance in your glove compartment and leave it there in case you ever need it.

After all, a smartphone could be out of juice the one time you happen to get pulled over…

Tip: How to lower your car insurance premium.

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