Use of Mont., Ala. Insurance Databases to Broaden in 2013

The new year will bring new ways for officials to verify insurance coverage in Montana and Alabama, where laws will be going into effect Jan. 1 that give authorities access to state databases containing vehicle policy information.

Officials say such databases, which give officials access to real-time information regarding whether or not a vehicle is covered by insurance, are necessary because some motorists purchase a policy, obtain documentation of that policy, and then cancel coverage soon after. That leaves authorities without access to insurance databases no way to verify whether the policy is in fact valid.

Ultimately, officials hope the use of such databases can cut into the rate of uninsured drivers.

According to 2009 data from the Insurance Research Council (IRC), Montana sports a lower-than-average rate of uninsured motorists: 11.4 percent.

However, Alabama has a one of the highest uninsured rates nationwide, with nearly 22 percent of drivers lacking coverage. That makes it the state with the fifth-highest uninsured rate in the U.S., according to IRC data.

In 2009, the nationwide uninsured rate was estimated at 13.8 percent.

On Jan. 1, both Alabama and Montana will begin using their respective insurance verification systems to verify coverage when motorists are issued license plates and registration.

Montana Leans on Stopgap Until ‘Longer-Term’ Solution

The Montana Highway Patrol began using the Montana Insurance Verification System (MTIVS) this past summer, but access was limited to the law enforcement agency.

County treasurers, who issue license plates to the state’s motorists, and the Motor Vehicle Division (MVD), which issues registration titles, will gain access to MTIVS and will notify those who are not verified through the database starting Jan. 1, 2013.

The state has had problems implementing MTIVS, with information provided by insurers clashing with how the database is used and leading some vehicles to be labeled as “unverified” in the system, according to the Montana Association of Counties (MACo).

Most of those “unverified” policies are linked to commercial, fleet and out-of-state vehicles, according to MACo.

Authorities have come up with a “short-term solution” for the Jan. 1 implementation date. Instead of immediately denying vehicle titling and licensing to drivers who show up as unverified in the database, officials will give drivers with an unverified coverage status a notice with the following statement:

“The new insurance verification system is not able to verify that you have insurance on this vehicle. It is not a problem right now and I can still register/renew your vehicle license,” the statement reads. “If that is not the situation, you may want to check with your insurance provider, because at some point, not showing up in the system may cause you problem.”

MACo also said that the notices are a stopgap while a “longer-term solution” is being planned with MVD officials, according to the agency.

In Montana, drivers found to be on the road without coverage face a fine ranging between $250 and $500 on their first offense. That fine ramps up to $350 for those with two violations, while offenders face a $500 fine on a third offense.

After four convictions, an offenders’ license is suspended until they can provide proof of car coverage.

Offenders who violate the law two times or more face registration suspension, with two-time offenders getting their registration suspended for up to 90 days and those violating the law more times than that for up to 180 days.

Jail time is also possible for violators, ranging between 10 days and six months.

After Pilot Testing, Alabama System Goes Online

Beginning Jan. 1, Alabama’s Online Insurance Verification System (OIVS) will be used by county officials who issue license plates in addition to state law enforcement officers, who will be able to verify coverage during traffic stops and crashes. The state had spent the summer pilot-testing OIVS in 10 counties.

Like similar systems in other states, OIVS is a database populated with policy information provided by insurers and returns “confirmed” and “unconfirmed” responses to queries from authorities.

Hoping to avoid an influx of violators, Alabama began a public awareness campaign, including a brochure encouraging that drivers “Be Sure to Insure!” and advertisements on social media, radio and television, according to a presentation provided by the Alabama Department of Revenue. The campaign began in August, with plans to run advertising until October 2013.

In Alabama, first-time offenders face a maximum fine of $500, registration suspension and a $200 fee to reinstate the registration once coverage can be proved. For multiple offenses, an uninsured motorist faces a $1,000 fine, six-month license suspension and minimum four-month registration suspension.

About Charles Nguyen
Charles Nguyen is an enterprising journalist who reported for Patch.com 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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