Editorial: The cost of uninsured motorists

Sunday, June 10, 2018

Last week, in a letter to the editor, a reader in Penacook who was still suffering physically after being seriously injured in an accident with a motorist who had “no money and no insurance,” said her family was still struggling financially, too. Though insured, their expenses exceeded their coverage. Why, she asked, does New Hampshire allow people to get behind the wheel without purchasing liability insurance that would compensate those they harm when they are at fault?

Good question. What the writer didn’t say is that New Hampshire is the only state that does not require that motorists be insured. Opponents of mandatory auto insurance have killed all past attempts to institute it. Why does the state tolerate free-riders? Whatever happened to personal responsibility?

On first glance, we thought that the state should require that all drivers purchase minimum coverage, which in New Hampshire, as in most states, means 25-50-25; $25,000 per person for bodily injury, up to $50,000 if two or more people are hurt, and $25,000 for property damage. Since the average cost of a hospital stay caused by an auto accident, according to insurance industry estimates, is $60,000, that coverage seems totally inadequate. Double it was our first thought. Then statistics and grim economic realities kicked in.

Nationally, despite mandatory insurance laws, 13 percent of all drivers are uninsured, according to the Insurance Research Council. Many drivers, primarily for economic reasons, choose to violate the law and take their chances. In most states, when they’re caught, the fine is less than the cost of insurance. In New Hampshire, the council estimates that 9.9 percent of all drivers are uninsured. In some states, Florida being one of the worst, one in every four or five motorists are uninsured.

States that mandate coverage have tried many measures to force compliance: bigger fines, jail sentences, vehicle impoundment and the need to show proof of insurance to register a vehicle. None have led to a permanent, significant increase in the insured.

Auto insurance is expensive. Quotewizard, an online site that surveys auto insurance costs, estimates the average price of coverage at $775 per year in New Hampshire and $889 nationally. Raise coverage limits to reflect the increased cost of health care and even fewer people will buy insurance.

To make insurance more affordable for low-income drivers, California, using a surcharge on policies, offered subsidized insurance with minimal coverage. A tiny fraction of that state’s half-million low-income uninsured drivers bought it.

So what can be done? In New Hampshire, every auto insurance policy sold must include coverage for uninsured and underinsured drivers. The rules governing payments are too complicated to discuss here, but every motorist with the means to do so can, for a small surcharge, increase uninsured motorist coverage, say to $100,000 per person and $300,000 per accident. But what about everyone else? If tougher laws don’t work, what will? The subject requires legislative attention.

Some states, Michigan being one, using fees charged insurers that are passed on to customers, established a catastrophic claim fund to help compensate victims of uninsured motorists. New Hampshire should do something similar, but not at the expense of those who already buy insurance. A surcharge on the driver’s license fee (now $50) of, say, $20 means everyone, including the uninsured, would contribute.

There are, according to the Federal Highway Administration, more than 1.1 million licensed drivers in New Hampshire. Another source reported 1.3 million licensees. Curious. The U.S. Census Bureau pegged New Hampshire’s population at 1,342,795 last year. Could it be that, because New Hampshire doesn’t require coverage, out-of-state residents are obtaining licenses here?

If the estimates are accurate, about 200,000 drivers renew their licenses every year. That means $4 million for a claims fund. It won’t make those harmed by an uninsured motorist whole, but it would help.