Across U.S., New Year Brings New Auto Insurance Laws

After all the New Year’s pomp and circumstance, drivers in at least five states will see a new set of laws impacting their auto insurance as we begin 2013.

Here’s a coast-to-coast look at the laws that have recently gone into effect with the New Year:


Electronic Proof: California joined a growing minority of states that allow drivers to electronically display their insurance policy on a smartphone and have it be recognized as legal proof of coverage. It’s a useful measure that is active in states including Louisiana, Minnesota, Idaho and Arizona, the last two being the first states in the U.S. to approve such legislation.

After a strong showing of support from lawmakers this summer, Gov. Jerry Brown signed AB 1708 into law in September; it went into effect Jan. 1.

Industry representatives hailed the move as characteristically Californian.

“California has long been known as ground zero for innovation and development of high tech products,” Alex Hageli, a vice president at the Property Casualty Insurers Association of America (PCI), said in a statement. “Now policyholders can use their technology to show they carry auto insurance and avoid unnecessary fix-it tickets and a time-consuming trip to the court house. Under this bill, drivers will have a choice to use their smartphone or that little piece of paper in the glove box to demonstrate they are following the law and carrying auto insurance.”


Personal Injury Protection (PIP) Reform: Reform of Florida’s PIP system has been just as drawn out as the much-anticipated results of that reform expected by trade experts, insurers and policyholders throughout the state.

The state’s politicians had long argued over how to deal with rising costs of auto insurance in Florida that industry analysts linked to soaring numbers of illegitimate PIP claims, including staged accidents. Lawmakers responded by implementing stronger enforcement against such bogus claims that would reduce costs for the industry and, ultimately, drivers throughout the state.

The final package of changes included a major change to PIP benefit limits. Minimum policies still have to provide at least up to $10,000 in coverage, but only $2,500 of that can be used to treat conditions that are deemed “non-emergency.” Only if the condition is deemed one that is an emergency condition can the full $10,000 be used to treat it.

Also, a 14-day initial treatment deadline will be enforced for those seeking PIP-compensated treatment from crash-related injuries, a provision of the law that went into effect Jan. 1.

In October 2012, insurers’ rate filings under the new PIP rules trickled in and showed a mixed bag of results.

But the true impact of reform measures may not materialize until later this year. A report commissioned by state regulators and released in August stated that “for many policies the savings will not be realized until July 1, 2013, or later.”

New Jersey

PIP Reform: New Jersey, one of the more pricey states in the U.S. for auto coverage in recent years, is taking steps to shed that unfavorable label by instituting its own reforms of the state’s PIP system.

Escalating costs of the PIP system led to insurers’ losing 23 cents for every PIP dollar received between 2000 and 2009, according to the New Jersey Department of Banking and Insurance (DOBI), which added thousands of new codes that determine what types of procedures can receive PIP compensation.

The latest codes and fee schedules apply to treatment delivered on or after Jan. 4.

The DOBI blames long-increasing PIP premiums as a primary “cost driver” of overall auto coverage prices in the state, according to DOBI spokesman Marshall McKnight, who added that the latest codes should “close some loopholes used by some outliers that have run up [costs of] coverage.”

“We expect to see this impact the rising costs and normalize it a bit,” he said in an interview with Online Auto Insurance News.

Litigation from medical providers eliminated from PIP eligibility under the reformed system has been filed in court, according to McKnight, who added that the new regulations are still expected to progress because “there hasn’t been a move to have those regulations stayed.”

“So they’re set to go in Jan. 4,” he said.


Verification System: Alabama has been testing its Online Insurance Verification System (OIVS) throughout summer in several counties, but the state kicked off full statewide use of its database on Jan. 1.
OIVS allows for verification of any driver’s status of vehicle coverage in real time. So, whether it’s during traffic stops or license plate titling, authorities and county officials throughout the state can now instantly confirm whether or not you have the proper policy to be on the road.

It will be useful for Alabama, which the Insurance Research Council ranks as the state with the sixth-highest rate of uninsured drivers in the U.S. at almost 22 percent.


Verification System: There were also database-related developments on Jan. 1 in Montana, with county treasurers who issue license plates gaining access to the Montana Insurance Verification System (MTIVS). However, glitches with the database have forced officials to rely on a “short-term solution” that won’t immediately penalize motorists who show up in the database with unverifiable coverage.

About Charles Nguyen
Charles Nguyen is an enterprising journalist who reported for and the Desert Dispatch and was the editor in chief of the Guardian (the twice-weekly newspaper at the University of California, San Diego) before coming to Online Auto Insurance News.

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