Welcome to the Age of Digital Proof of Insurance

Advancements in modern technology have changed many aspects of everyday life, which may soon include how we provide proof of auto insurance. As many motorists already know, vehicle owners in almost every state are required to purchase a minimum amount of coverage to legally drive. To demonstrate that they have met these requirements, drivers need to provide adequate policy verification. One common problem, however, is that people often forget to update their records or keep the necessary documents in their automobile.

If drivers are unable to prove that they are sufficiently insured, they may face a number of consequences. Most commonly, offending motorists could be assessed a fine, their vehicle could be impounded, or they could lose their driving privileges. One solution that several states have begun to pursue is to allow vehicle owners to get proof of insurance online and display it on a mobile electronic device. This includes increasingly popular smartphones and tablets.

States That Allow Digital Proof

One of the first states to allow electronic verification was Idaho, where SB 1319 was recently approved in March. The passing of this bill means that, starting July 1, 2012, residents will be able provide their mandatory proof of liability insurance either in paper form or digital format.

Around the same time, Arizona also passed HB 2677, which allows residents to make the same electronic verifications.

Other states, such as Louisiana and California, are working to pass legislation that would allow motorists to have the same conveniences. As of June 2012, legislators in Louisiana have passed HB 1130, which now awaits approval from Gov. Bobby Jindal. This would allow policyholders to present digitized images of their policy during traffic stops.

Electronic Proof of Insurance Not Accepted by Everyone

Although a handful of states have begun embracing technology and looking for ways to help motorists avoid the consequences of driving without policy verification, using a mobile electronic device will not work everywhere. For example, the Florida Department of Highway Safety and Motor Vehicles has announced that electronic notification will not be accepted by the Highway Patrol. However, like many other states, legislation may soon be on its way.

Are You Getting Your Antitheft Insurance Discount?

Auto insurance discounts can be an excellent way for policyholders to cut coverage costs, but are all drivers receiving the right reductions? On March 29, a federal court in Pennsylvania found that several insurers in the state had been wrongly withholding state-mandated discounts for motorists whose cars had been equipped passive antitheft devices. Other Pennsylvanians with such devices may want to review their policies to make sure they’re getting the proper premium breaks.

In the case, suing policyholders believed that they were wrongfully denied a mandated comprehensive insurance coverage discount of at least 10 percent for having a passive security system installed in their vehicle. The district court agreed with them, concluding that these rate reductions are to be applied even without a policyholder’s request, leaving little wiggle room for insurers. Fortunately, not all savings require a multicompany legal battle.

It’s common for insurance companies to reduce the cost of a motorist’s comprehensive coverage for a vehicle equipped with an antitheft device, because these tools help to protect the insurer’s investment. If a car is outfitted with a passive disabling system and a GPS tracking device, the automobile in question is much more likely to be recovered. Because of these advantages, some states require insurers to give antitheft discounts, while in others insurers offer them voluntarily.

When rate reductions are mandated, however, it’s important for residents to take advantage. Rhode Island is one of the many states that also requires auto insurance coverage providers to issue premium reductions for insured drivers who own vehicles equipped with antitheft devices. This reduction can vary depending on the type of device, which was a major point of contention in the Pennsylvania case.

Rhode Island regulations spell out which types of devices get what levels of discounts in that state, with the types broken down into four main categories:

​Alarm only​: Audible devices that sound for at least three minutes and can be heard from 300 feet away (minimum 5 percent discount)

​Active disabling: ​Devices that make the car’s starting system inoperative and must be activated by the driver manually (minimum 5 percent discount)

​Passive disabling: ​Same as active disabling, but does not require the driver to manually activate it (minimum 15 percent discount)

​Vehicle recovery system: Electronic device attached to the vehicle that is activated when the car’s stolen and provides information to law enforcement or a private party on the vehicle’s location (minimum 25 percent discount)

In Rhode Island, having more than one of these devices can get the policyholder savings on comprehensive coverage of at least up to 35 percent. Even though these are state requirements, individual insurers may choose to offer additional savings as well. Other states’ device descriptions and minimum discounts will vary from Rhode Island’s.

Drivers who have equipped their cars with antitheft devices may want to check with their insurers to see if they are getting any appropriate discounts. And policyholders who are thinking about getting an antitheft device could maximize their savings by asking their insurer which type will yield the greatest premium break.

How Would TN Electronic Insurance Verification Affect You?

All motorists in Tennessee are required to purchase vehicle coverage to legally drive, but a lack of enforcement has helped make the state’s percentage of uninsured drivers one of the highest in the country. The Insurance Research Council estimates that in 2009 roughly 24 percent of motorists in the Volunteer State had not met the mandatory financial responsibility requirements. Based on these figures, nearly 1 out of every 4 drivers in the state are without protection.

In an attempt to rectify this problem, Senator Bo Watson has introduced SB 2292, which proposes the creation of an electronic insurance verification system in Tennessee, similar to systems found in Texas and Montana. If passed, coverage providers will work diligently with state departments and local authorities to create an electronic database where county clerks and law enforcement officers can quickly and easily verify whether or not a motorist is insured.

With this system in place, state officials would verify whether vehicle owners have purchased auto insurance in Tennessee in order to register or renew registration on their automobile. These digital records would be automatically updated by insurers whenever any changes are made to a person’s policy, which includes cancellation. Additionally, this system could be used by law enforcement officers in lieu of other types of policy verification, like an insurance card or binder.

What SB 2292 Could Mean for Tennessee Residents

State legislators who support SB 2292 hope that passing this bill would significantly decrease the number of uninsured drivers in Tennessee. For residents who insist on driving without sufficient protection, this system could mean stricter enforcement. If residents are caught driving without liability insurance, they could be convicted of a Class C misdemeanor and fined up to $100, they may lose their driving privileges, and a STOP will be placed on their automobile preventing registration renewal.

After the passing of HB 2466 in April 2012, convictions for driving while uninsured have also gotten harsher. This bill stipulates that any drivers who are involved in an accident that results in serious bodily injury or death, and who are unable to provide proof of insurance, are to be arrested instead of receiving a citation. If SB 2292 is passed, these two bills could make a significant blow to uninsured-driver statistics in Tennessee.

For the average law-abiding motorist, however, this system could translate into greater convenience and a lower chance of being involved in an accident with an uninsured driver. Additionally, one positive assumption made by the Tennessee General Assembly Fiscal Review Committee is that the introduction of this system would encourage over 400,000 uninsured motorists to purchase protection. If so, this could lead to an extra $3.36 million in annual tax revenue, based on the current 2.5 percent tax on gross premiums.

Gender Matters: Why Men Pay More for Car Insurance

People strive for gender equality in most facets of life, but in the auto insurance world, it’s a commonly known fact that men usually end up paying more. Data provided by California regulators, for example, shows men could expect to pay an average of about 13 percent more for the same coverage. Gender-based pricing differences are based on extensive statistical information that shows male drivers file more claims than female drivers. Although crash data usually comes out in a woman’s favor, gender can’t always be used to set rates.

Debates have raged for years between men and women over which sex has the best drivers. But as far as insurance companies are concerned, it’s all about numbers. Information in the National Highway Traffic Safety Administration’s 2008 National Motor Vehicle Causation Survey shows that almost 54 percent of drivers involved in automobile accidents between July 2005 and December 2007 were male.

Most insurance companies take this information very seriously when rating drivers because it influences the probability that they may have to pay out on a claim. Because insurers lose money when claims are paid, people who are at a higher accident risk are generally charged more for vehicle coverage.

Men Can Find Cheaper Rates by Shopping
The amount that a motorist is charged for car coverage is dependent on the individual company. Based on an analysis of rates given in the Auto Insurance and Shopper’s Guide provided by Kansas regulators, it’s apparent that gender-based price differences can vary significantly. Of the 28 companies that are listed, the premiums for a 21-year-old were on average 24 percent—or $204—higher when the driver is male. But at its largest, the pricing gap was 44 percent; at its lowest, it was 8 percent.

Despite the accident statistics surrounding the different genders, some insurers do not rely on this information when rating drivers and others are legally barred from using this data. A handful of states—including Massachusetts, Montana, North Carolina, Michigan, and Pennsylvania—ban the practice.

Vehicle owners’ best chance of finding affordable coverage that is priced in their favor is to shop around. Although men may encounter higher rates, generating online car insurance quotes from several sources can provide pricing options, and the possibility of finding an insurer that rates men more favorably.

The Cheapest States to Buy Auto Insurance

Almost every state requires motorists to be insured before driving, but each state has a unique range of prices for vehicle coverage. Insurance costs are dependent on many different things, like population density, crime rate, uninsured motorist percentage, required coverages, and many other facts that are unique for every location. As a result, there are some areas in the U.S. that are more affordable than others.

The average cost of vehicle coverage is likely to change every year, but several states have consistently remained among the cheapest. Data produced by the National Association of Insurance Commissioners and made available by the Insurance Information Institute show that in 2009 the typical expenditure in North Dakota was $510, which was the lowest in the country. Trailing closely behind were South Dakota and Iowa with average expenditures of $521 and $532, respectively. In comparison with a national average of $785, insurers in these states offer considerably cheaper rates.

The areas that boast some of the highest expenditures include Washington, D.C., with an average of $1,128, New Jersey at $1,101, and Louisiana at $1,099.

When comparing these two groups, there is a distinct difference in driver density. For example, North Dakota is home to over 245,000 licensed drivers occupying over 86,000 miles of public roads. In D.C., however, there are over 189,000 licensed drivers using only 1,400 miles of public roads. That means there are only 2.84 drivers per mile of public road in North Dakota, but 13.5 drivers per mile in D.C. Consequently, the accident potential in D.C. is significantly higher than in the Peace Garden State.

Driver, Coverage Options Matter When Looking for a Cheap Policy

While the area where a person lives will have an effect on rates, policy prices are also based on individual drivers. A person who lives in a state with some of the lowest coverage costs may not necessarily be able to locate inexpensive auto insurance more easily than someone living in D.C. if they have a bad driving history, have a long daily commute, are young, or have established a poor credit history; all those factors play important parts in policy pricing.

In addition to the driver’s personal details, the details of state insurance laws also contribute to pricing differences. Comparing expenditures between states is not what’s known as an “apples-to-apples” comparison, since the minimum amount of coverage required by law varies from state to state. In Alaska, for example, drivers are required to carry a total of $125,000 in liability coverage. The total liability coverage required of drivers in Ohio, on the other hand, is $32,500. That can make a big difference in coverage costs, which should drive home the necessity for consumers to consider their coverage levels and compare costs only for the same amounts of protection.

Some states, though, are exceptions that manage to maintain low average costs while having high minimums. Both Iowa and Maine are near the top the list of inexpensive states to find auto insurance, but each of these locations requires motorists to maintain different levels of protection. In Iowa, drivers only need to maintain a total of $55,000 in liability coverage to legally drive. In Maine, however, these limits are the same as Alaska’s, $125,000. Although Iowa boasts a slightly lower average expenditure, the average motorist in Maine may be significantly more prepared for an accident for only a few extra premium dollars.

Modern Technology That Can Cut Insurance Costs

Motorists around the world are in the middle of a technological renaissance focused on keeping drivers safe while they cruise the open road. But safer cars with futuristic features means more than fewer accidents and injuries behind the wheel: It can also translate into cheaper car insurance. Producers rate applicants based on their accident risk, so if people are less likely to file a claim because of highly regulated safety features, policy prices might be lower.

State and federal government has made it a priority to ensure that all vehicle owners are as safe as possible while driving. To do this, legislation has been passed that requires all new motor vehicles to be equipped with certain safety features. For example, as of Sept. 1, 2011, all new light cars must be equipped with electronic stability controls (ESC). This feature detects and reduces loss of traction to help prevent drivers from losing control of their vehicles.

Once all light vehicles on the road are equipped with ESC systems, the National Highway Traffic Safety Administration estimates (based on extensive research) that between 156,000 and 238,000 automobile accident-related injuries could be prevented annually. In addition to having ESC systems, many modern cars also contain other advanced safety features, including lane-departure warnings, forward-collision warning, advanced air-bag systems, and many other features that can significantly reduce accident risk.

New Technology Translates into Lower Insurance Rates

A vehicle owner who is surrounded by advanced safety features is better equipped to avoid car accidents than a low-tech driver. This increased level of protection can often lead to significant auto insurance saving. Often producers will give special discounts to people who insure automobiles that are equipped with technology designed to reduce collision probability and accident damage. Cars and drivers that are well protected often translates into fewer or smaller claims that companies are obligated to pay, which are savings that producers are happy to pass on to policyholders. These technologies, however, have to be proved to statistically lower crash risks before warranting a discount.

Coverage costs may also be indirectly affected by modern safety equipment. If vehicle owners are able to avoid accidents and claims, they are also likely to maintain a clean driving record. Because policy prices are largely based on claims history, a driver who avoids accidents and moving violations is more likely to make an auto insurance quote comparison that produces inexpensive results.

Before taking off to buy an expensive new car loaded with exciting equipment, drivers should check with their insurer to see how much a specific vehicle will cost to insure. Buying a new automobile almost always results in higher coverage costs because of their increased value. Luckily, as many new safety features become standard in the marketplace, it will become more and more common to find cheaper (or slightly used) automobiles that are adequately equipped to keep drivers safe on the open road.

The Three Stages of Auto Insurance Needs

As people drive down the road of life, they need auto insurance to cover their assets. But over time a person’s priorities change, and often the same policy won’t always offer the best protection. Consumers should review their policies on an annual basis, but, at the very least, there are three distinct moments when coverage needs drastically change, and drivers need to stop and shop for a new plan.

Young, First-Time Buyers: The first time that the thought of car coverage enters a person’s mind is when they get their license. Ambitions are high, assets are low, and the best insurance policy appears to be the cheapest one they can find. Unfortunately for teenagers and other inexperienced drivers, being young also translates into steeper rates. Producers base prices off of accident risk, and teens have a long history of taking unnecessary risks while behind the wheel, making automobile accidents the leading cause of death for youthful motorists in the U.S.

Many companies interpret risk differently, so by comparing car insurance policies it may be possible to find an affordable plan. Although it may be tempting to get the lowest amount of coverage necessary to legally drive, young drivers are urged to consider higher liability limits to adequately cover other people’s damages that they may cause.

Family-Friendly Motorists: When it comes time to settle down and start a family, a motorist’s priorities often take a drastic turn toward safety. Old junky cars are traded in for minivans and spacious sedans equipped with safety features designed to keep both driver and passengers safe from harm. Insurance needs change as well. Drivers start to consider purchasing umbrella policies and bumping up liability limits to better protect their assets, which are now more important than ever.

When looking for a new insurer, these shoppers should compare policies that include as much protection as possible for the lowest price. To offset the cost of more extensive protection, motorists can usually find discounts for insuring cars with advanced safety features or for belonging to certain auto clubs.

If they haven’t done so already, insured families also should merge separate auto policies into one in order to possibly save on coverage.

The Experienced Driver: Retirement and a home free of children ushers in a new set of auto insurance considerations for many people. These drivers are likely to have more assets that they need to adequately protect, but they also know what coverage they are looking for and frequently spend less time driving than younger motorists.

When shopping for coverage, drivers who are 55 and older can usually end up saving money by taking advantage of special discounts. Many states promote safer driving for mature drivers by offering rate reductions for taking a state-approved training course. They also can get discounts for having reduced mileage.