Missouri lawmakers approved a bill (House Bill 339) that requires uninsured motorists to surrender certain rights to monetary compensation if they are involved in a car crash. This type of legislation is also beginning to be implemented in other states. Within 10 years, perhaps as many as half of all states will consider or approve similar legislation, which could reduce auto insurance rates.
Called “no pay, no play” in the insurance industry, the law bans an uninsured driver from collecting non-economic damages related to the crash if the other driver is at fault and insured. Pain and suffering also fall under the non-economic category. Residents of “no pay no play” usually enjoy lower premiums for uninsured motorists coverage. This can result in savings of thousands of dollars over a lifetime. With multiple-car and multiple-driver policies, the savings will be more significant. Thus, the cost of not driving with required coverage can also prevent drivers from recovering otherwise available funds.
The bill does allow for an uninsured driver to seek compensation for lost wages as well as property damage. HB 339 passed the Senate in its third reading by a vote of 32-1 and the House by 104-55. These two amounts can still result in a significant judgment, although not as high as in previous years under different legislation. Emotional distress and pain and suffering are no longer recoverable expenses. If you do not own a vehicle and borrow a car that is uninsured, the law still applies.
In several states, the "no pay, no play" concept has been legally challenged. In New Jersey and Louisiana, it has been upheld as constitutional (both state and federal). However, Oklahoma ruled that it is unconstitutional (Montgomery vs. Potter). One of the reasons that the statute was ruled unconstitutional was because it is a specific law that regulates "the practice of jurisdiction, or changes the rules of evidence in judicial proceedings or inquiry before the courts."
No Pay No Play Reduces Premiums
According to a study by the Insurance Research Council “no pay, no play” laws typically reduce the number of uninsured motorists on the road by up to 1.6 percent in states that enforce them. And this translates into savings for all motorists. It's expected that that number could increase to as much as 2.5% percent within a short period of time.
The same study discovered that the financial cost of uninsured drivers without a “no pay, no play” law totaled more than $682 million. This total included all the non-economic damages insurers paid to uninsured drivers. Incidentally, for additional information on uninsured motorist coverage, you can view the page highlighted in this sentence. We realize, it can be quite confusing, especially since each state has a different requirement. Also, in some states, uninsured motorist and underinsured motorist protection is not required to own or operate a vehicle.
Data shows that 13.7 percent of drivers in Missouri do not have the required car insurance, making it the state with the 18th highest rate in the United States. This rate mirrors the national average. Of course, states with the toughest laws for drivers without coverage will typically have some of the lowest prices in the US. Often, the prices are 20% lower than neighboring states.
The bill allows an uninsured motorist to collect damages if the other driver was found to be driving under the influence or they are convicted of involuntary manslaughter due to the accident. Passengers riding in a car with an insured driver do not give up their rights to sue for compensation. In fact, often they do recover money to compensate them for actual damages along with pain and suffering. Recently, several states (including Pennsylvania) have changed from "no-fault" to "fault" states.
Other states that currently have “no pay, no play” laws include:
· New Jersey
· North Dakota
The enforcement of these laws vary depending on the state. In North Dakota the law does not impose recovery restrictions until after a driver has been convicted two times for driving without the proper insurance coverage. While other states are more lenient, there are also other jurisdictions that have much stricter legislation.
In California, non-economic losses for pain, suffering and disfigurement can not be recovered. In Kansas, if PIP benefits are not maintained, non-economic losses also can not be recovered. In New Jersey, medical expense coverage must be kept to recover any money. In Oregon, liability coverage must be active to receive a judgement. In Louisiana, the first $15,000 of judgements is forfeited if minimum limits are not retained.
While other states introduced “no pay no play” laws this year, Missouri is the only state that managed to get it passed in the state legislature. It was a positive example of both political parties effectively passing legislation that helps all consumers.
Texas HB 1774
Texas, for example, previously introduced HB 1774. This tort reform legislation is designed to reduce the number of property owners that sue insurance companies for claims directly related to weather. If a final vote is favorable, the Governor will determine its fate. Oklahoma lawmakers are beefing up their “no pay no play” which went into effect back in 2011. They are hoping to prevent uninsured drivers from being able to seek any kind of compensation after being involved in a car crash. Passing this legislation, however, will be quite a challenge.
HB 1774 has some very direct language, including limiting recoverable damages by intoxicated drivers, persons who are guilty of gross neglect, drivers who flee the scene of an accident, and any person involved in the accident that was in the act of committing a felony.
Louisiana has been a leader in the "No Pay No Play" movement. In their own state, legislative changes now prohibit drivers that had no coverage from recovering the initial $15,000 of injury claims, and the first $25,000 of property damage claims. Passengers are not impacted, and a DUI, DWI, Hit And Run, or intentionally causing the accident will void the provision. Driving without car insurance continues to become more costly in many different ways.
"No fault" auto insurance laws may not be as popular as they were a decade ago. For instance, in Michigan, more than 70% of the state's drivers would like to change or reform the existing laws. Car insurance rates have been steadily increasing, and Michigan premiums are typically among the highest in the US. Average premiums for Michigan drivers are about twice as high as the average premium of all other states. Medical expenses from accidents and claims are often 200%-300% higher than typical healthcare expenses since carriers are prohibited from negotiating the costs. Also, the high number of uncovered drivers raises rates of all other insured drivers.