Its (Finally) Time to Modernize Proof of Insurance Coverage Laws

“Where is that ID Card? I know Its in Here Somewhere…”

Have you ever received a traffic ticket because you couldn’t find your insurance ID card in your glove compartment box? Or the card you did find was expired and only now, with the police officer standing next to your car, do you realize you forgot to put the new card you just got in the mail in your car? Now you will have to take time off of work just to show up for court with that little piece of paper showing you did in fact have insurance.

But wait. If you can use your smart phone to get through airport security and board an airplane, and video chat with loved ones across the country, why can’t you use that same phone to prove you have auto insurance?

There IS an app for that!

State legislatures and regulators are finally catching up with technology and considering legislation and new regulations that give insurance companies the flexibility to offer policyholders a variety of ways to show proof of coverage. That little piece of paper will still count, but it will no longer be the only option motorists have when it comes to proving they carry insurance. Under these changes, some of which have already been adopted, motorists will be able to prove coverage by simply showing a DMV official or law enforcement officer his or her policy information on a phone or any other electronic device you can think of.

Electronic display of proof of insurance will save insurance companies the cost of printing and mailing ID cards to policyholders. It will also save law enforcement and court personnel time and money because they will no longer need to process tickets written to drivers who had coverage but not that little piece of paper.

Alabama – The Alabama Department of Revenue will soon promulgate a regulation that, effective January 1, 2013,allows motorists to prove they have insurance to both DMV officials (for purposes of vehicle registration and renewal) and law enforcement officers in pretty much any format you can think of.

Arizona – The Arizona Legislature will consider legislation (AB 2677) during the 2012 session which will allow proof of automobile insurance to be shown electronically on a wireless communication device.

California – The California Legislature will consider AB 1708, legislation allowing insurers to provide proof of insurance to a mobile electronic device.

Colorado –Coloradolaw requires state officials to verify insurance coverage prior to registering a new vehicle. For purposes of satisfying this requirement, Colorado Department of Revenue regulations allow motorists to present proof of coverage in myriad formats, including computer printout, fax and electronic image/proof on applicant’s cellular phone, lap top or other portable type of electronic device. Unfortunately, Colorado law still requires motorists to maintain that little paper ID card in their vehicle at all times.

Idaho – In 2012, the Idaho Legislature will consider legislation amending the law that requires drivers to keep a paper ID card in their vehicle at all times. The amendment simply provides the proof of insurance required to be carried by that law may be produced by the motorist in either paper or electronic format.

Mississippi – The Mississippi Legislature is expected to consider legislation that would adopt a program designed to verify insurance coverage. PCI is seeking to add language to that legislation that allows motorists to display proof of insurance coverage in either paper or electronic format.

The Wave of the Future

Five states currently use a system called “web services” that allows their DMV officials and law enforcement officers to instantly verify whether or not a motorist is carrying valid car insurance. The system works by using a vehicle’s license plate number to look up their insurance information and then sends that information to the insurance company for confirmation that it is still valid.

State officials know all too well that many drivers purchase insurance to in order to register their vehicle but then cancel that coverage once they get their ID card. Web services solves this problem by allowing the state to instantly verify whether the policy information a motorist provides is still current. Given the ability to instantly verify coverage, there simply is no need for insurers to continue to print and mail cards to their policyholders.