Car insurers in Nevada and elsewhere can expect an influx of new drivers seeking coverage with several states passing laws recently that open up pathways for undocumented immigrants to obtain driver’s licenses and auto insurance.
Nevada Gov. Brian Sandoval recently signed SB 303 into law, allowing state residents lacking legal status to obtain a driver privilege card if they meet typical requirements for motorists, including passing permit and driving tests and acquiring auto coverage.
Neighboring Utah has had a similar program in place for years, and similar proposals are currently being considered in Colorado and Connecticut, the latter of which is nearly ensured to finalize its driver’s license plan after it was fully approved in the state Legislature last week with support from Gov. Dannel Malloy.
Laws Will Bring New Drivers, Insurance Implications
Although such pieces of legislation have differed in how contentious they were to lawmakers, one common thread has run through them all: previously undocumented motorists will have to get insurance on their way to full legal driving status.
Though estimates vary on how many motorists that would mean in each state coming into the auto insurance market, they number in the tens of thousands at a minimum. Nevada legislators crafting SB 303 estimate 60,000 applicants for its “driver privilege cards.” A local report from Oregon pegged the estimate at 110,000 drivers seeking “driver cards” under SB 833.
With more state laws granting driving rights to this population of motorists—who are new to licenses and insurance—there are several obstacles and questions facing those motorists and the insurers that cover them.
Elianne Gonzalez, Hispanic press officer for the Insurance Information Institute (III), said in an interview with Online Auto Insurance News (OAIN) that the main hurdles for previously undocumented drivers often involve “language barriers and where to obtain reliable information.”
The Institute offers resources online with Spanish-language versions of those resources available here, said Gonzalez, who added that information is also available at state regulatory offices, where consumers can also submit complaints about insurers.
“[These drivers] should be aware of the laws and rules that apply in their states, not only in respect to insurance but also driving laws,” she said.
Previously undocumented drivers can also expect to be priced by car insurers as new drivers, even if they have had years of experience on the road without a license.
“We should think of a previously undocumented driver as a novice driver,” Gonzalez said, comparing them to teen drivers who typically see higher-than-average prices when they first get behind the wheel. “Most insurance companies will use the previous driving history to assess the risk of a driver. The lack of a driving history makes coverage more expensive because there is no way to evaluate how good—or bad—a driver is.”
Jim Perucca, executive vice president of the Independent Insurance Agents & Brokers of Oregon, similarly told OAIN in an interview after the driver’s license law was finalized in Oregon that “it would seem that if there was no license there couldn’t be any history.”
“It may be difficult for these new drivers to validate that they are also ‘good’ drivers,” he said.
But those drivers shouldn’t fret, according to Gonzalez, who said that they have a chance to establish good driving history to qualify for lower premiums just like newly licensed, teen drivers can.
“Newly licensed drivers should be very careful and not to engage in dangerous driving, speeding and should try to avoid accidents,” in orer to avoid even higher premiums, she said.
According to Gonzalez, such drivers should go back and compare auto coverage quotes after keeping a clean record between six months and a year.
Also, she said, those drivers should know that after establishing several good years of driving background, “it never hurts to ask the insurance company” if their good record can net them cheaper premiums.
“At the beginning, the choices of companies might be limited, but with time and more experience at the wheel, the choices will expand,” Gonzalez told OAIN.
Legislation Expected to Generate Revenue, Improve Public Safety
The recently finalized proposal in Nevada is expected to generate revenue for the state through fees for the privilege cards, which will be available on Jan. 1, 2014, that are expected to total $3.4 million over the next two years. Lawmakers expect to spend more than $1.5 million to staff and maintain the program.
In Oregon, an estimated $5.3 million in card-fee revenue will be partly offset by $4.7 million to implement its program through two years, with millions more expected in annual fees after that.
But the main benefit of such plans, according to lawmakers who back them, is improvement to public safety.
Gov. Malloy called public safety the issue promoted “first and foremost” by the Connecticut bill, which was cleared by a 19-16 vote in the Senate on Thursday, only one more than the 18 votes needed for passage.
Malloy has signaled that he will sign off on HB 6495, issuing a statement the same day that senators passed the bill in which he said “similar common-sense steps” are being taken in other states because they “benefit everyone taking a car out onto our roads and highways.”
“It’s about knowing who is driving on our roads, and doing everything we can to make sure those drivers are safe and that they’re operating registered, insured vehicles,” Malloy said.
In Nevada, Gov. Sandoval said in a statement that he was “proud” to approve SB 303.
“Allowing undocumented immigrants to obtain a driver’s privilege card will increase the number of drivers on Nevada’s roads that are insured and aware of traffic rules and regulations,” he said Friday after signing the bill.