‘No pay, no play’ auto insurance laws target uninsured drivers
Over the past two decades, several states have enacted “no pay/no play” auto insurance laws — and more states are considering the same course of action. These laws prohibit uninsured drivers from receiving certain privileges, like pain and suffering awards in lawsuits, after an accident that was not their fault.
In other words, no pay/no play laws make it so that a driver who neglects to purchase insurance cannot then collect certain damages from the insurer of anyone who hits them. Drivers in no pay/no play states can, however, receive compensation for things like property damage, medical bills and lost wages.
As of 2011, no pay/no play legislation was pending in Oklahoma, Montana and Minnesota. According to the Property Casualty Insurers Association of America (PCI), no pay/no play auto insurance laws already are in place in Alaska, California, Iowa, Louisiana, Michigan, New Jersey, North Dakota and Oregon.
Why were these laws put in place?
No pay/no play laws can help coax uninsured drivers into complying with state laws and purchasing auto insurance. Moreover, these laws are more practical than fines, impounding uninsured vehicles and revoking driver’s licenses when it comes to reducing uninsured motorist rates, according to PCI, the American Insurance Association and the National Association of Mutual Insurance Companies (NAMIC).
No pay/no play laws also are necessary in the name of fairness, according to PCI, because drivers who don’t pay into the system should not be able to get insurance payouts. In a statement that communicates its support for Montana’s no pay/no play legislation, PCI argues that uninsured motorists shouldn’t be able to benefit from law-abiding drivers’ insurance, while denying that same privilege to any drivers they themselves happen to hit.
How do state laws differ?
The provisions of no pay/no play laws differ from state to state, according to PCI. California and Michigan were the first states to pass no pay/no play laws, withholding all awards of pain and suffering damages for uninsured drivers. Iowa withholds such awards only if they were incurred while the claimant was committing a felony.
Meanwhile, North Dakota’s law targets only drivers who have received two previous convictions for driving uninsured. Louisiana’s no pay/no play law is unique in that it prevents uninsured drivers from collecting the first $15,000 of bodily injury awards and the first $25,000 of property damage awards; this law was enacted in 2008.
Oklahoma’s pending legislation prohibits pain and suffering awards, but allows payments for medical bills, lost income and vehicle damage, according to the American Insurance Association. It also makes exceptions for uninsured drivers hit by drunken drivers and for the passengers of cars driven by people who are uninsured.
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