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Reducing number of ‘uninsured’ drivers requires lowering car insurance rates, not raising penalties

February 9, 2017 by Steven M. Gursten

House Bill 4041 ignores root cause of our ‘uninsured’ crisis in cities like Detroit and Flint: Excessive profit margins and auto insurance companies charging higher and higher prices

Rep. Peter Lucido (R-Shelby Township) reintroduced House Bill 4041 from the last session in an effort the increase the penalties for driving uninsured.

The problem is that the penalties are already incredibly harsh – even draconian – in terms of what happens to an uninsured driver who is involved in any automobile accident. The unfair ways in which uninsured auto accident victims are already treated under Michigan law include losing their constitutional right to a jury trial and being able to bring a lawsuit if they are completely innocent and injured by another driver (even one who is drunk or under the influence of illegal drugs).

Rep. Lucido wants to make the penalties even greater, instead of focusing on Insurance Company profit margins

 Through his proposal in House Bill 4041, Rep. Peter Lucido wants harsher punishments for uninsured motorists.

As for HB 4041, which would require auto insurance companies to notify the Secretary of State of policy non-renewals, terminations and cancellations, I believe the bill’s method for transforming the 1.5 million “uninsureds” into fully-insured drivers is flawed in practice.

As I’ve argued many times on the pages of this auto lawyers blog, there is no reason why Michigan’s auto insurance companies should make significantly higher profit margins than insurance companies in other states.

Regulators should target insurers to quickly reduce the price of auto insurance.  The focus should be on making insurance more affordable.  These companies make billions, yet auto insurance premiums continue to rise and that makes it harder for many people to afford No Fault coverage.

For lawmakers who wish to tackle the “uninsured” driver problem in cities like Detroit by addressing the root cause – ballooning rates – rather than heaping more punishments on drivers who are likely driven to break the law because, financially, they have no other choice, may I suggest reviewing my “2017 No Fault reform guide for new lawmakers on how to lower car insurance rates and preserve No Fault benefits.”

Canceled, lapsed car insurance coverage

Below, I’ve outlined a portion of Rep. Lucido’s HB 4041 below, which has been described as requiring “insurance companies to electronically communicate to the Michigan Secretary of State when a driver’s insurance policy is purchased, canceled, renewed, or lapses”:

  • “An insurer or insurance producer shall notify the Secretary of State in an automobile insurance policy expires without being renewed or is terminated or if a policyholder cancels his or her automotive insurance policy. The notice must be transmitted electronically immediately on expiration, termination, or cancellation of the policy. The notice must contain all of the following information: The vehicle identification number; The name and address of the policy holder; The insurance policy number; and, The time and date of the expiration, termination, or cancellation.”

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