illustration by idntimes.com

Is No Pay No Play Laws for Uninsured Drivers Justified?

Although it is not widely accepted by most states, some states restrict what an uninsured driver could claim from a guilty party after an accident. Some of these laws ban uninsured drivers from making liability claims against other drivers while they do not have valid liability cover themselves. Others enforce high deductibles before they can make a claim on third party policies.

In theory it might make sense that if a motorist did not pay any insurance premium he should not be allowed to dip into the insurance funds. In reality these laws might only increase litigations under many circumstances. By the way these restrictions do not apply if the faulty party was intoxicated or flees the scene.

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In that sense no fault state laws reduce the litigations and achieve the purpose of not awarding uninsured drivers as every driver cover their own personal injury. So it seems that there is an easier way of making sure that no insurance money is paid to undeserving party.

When an uninsured driver makes a claim and gets paid the result would be increased premiums for all the auto insurance policyholders. That is probably the basis of these laws and it is an effort to get most people buy insurance coverage.

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If we stand back and look at it fairly the whole thing might not be that fair. It might suggest a blame authority rather than solution finding authority. In other words, when state legislators start blaming uninsured drivers they might be taking their eyes of the real problem of why these drivers are not buying insurance.

It can’t be denied that there is a correlation between the cost of car insurance and number of uninsured motorists. It appears that in expensive vehicle insurance zones the percentage of uninsured drivers is pretty high.

Even more interestingly, some drivers register their cars at an address out of that zone although they live within. That indicates one thing; cost of vehicle insurance premiums is a serious burden especially for low income families. And they would probably get covered if they could find cheap auto insurance in their zip code.

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Nonetheless there might be few ignorant motorists out there who would see that they would not benefit from enforced liability coverage as it only covers third party damages. It would be very harsh to say that is in anyway an influential reason behind going without insurance. Furthermore you do not burn the house because you have seen a rat inside.

Saying that there is one strong argument for “no pay no play” laws. Essentially insurance is a pool of money accumulated from premium payments. All the damages and losses suffered and caused by policyholders are paid out of this pool. Naturally when you start driving you become a member of this pool since it is a legal requirement to buy insurance before you start driving. In that sense, you could see the argument that you would not be allowed to withdraw any money from this pool because you have not paid your dues.

It is not at all surprising that auto insurance companies would be supporting these legislations. They would be paying out less money when some of the injured parties in an accident are “legally” not allowed to make a claim.