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Minnesota begins search for uninsured drivers
by Dan Olson, Minnesota Public Radio
January 9, 2004

Check to make sure your have auto insurance. It's the law in Minnesota. Soon the state will send letters to 2 percent of Minnesota's drivers asking for proof of coverage. Vehicle owners who don't have insurance or who don't respond will lose their drivers license. It's an attempt to rein in Minnesota's rising rate of uninsured motorists.

St. Paul, Minn. — Officials estimate as many as one out of seven Minnesota drivers, or about 14 percent of the state's vehicle owners, don't have the legal minimum auto insurance required by law. In March, state officials will begin sending letters to 70,000 Minnesota drivers. Patricia McCormack, the acting director of the Division of Vehicle Services, says half have been selected at random, and the other half are drivers with past violatlions.

"They'll have to send back to us, in 30 days, information about the insurance company that they have insurance with on the date the letter was sent to them," McCormack says.

Drivers who don't respond or who don't show proof of insurance will have their drivers license suspended, she says.

Uninsured drivers who get the letter won't be able to comply with the law by rushing out and buying a policy. Insurance Institute of Minnesota spokeswoman Robyn Rowen says uninsured drivers will be sold a special policy that puts them on a watch list.

"If you cancel it, the insurance companies will immediately notify the state and the process begins again," Rowen says.

Peggy, who doesn't want her last name used, assumed the state already verified vehicle insurance coverage when drivers renew their annual vehicle registration. However, there are more than four million passenger vehicles registered in the state, and Minnesota officials say they don't have the resources to verify that each of those vehicles are covered.

Peggy had an expensive run-in with an uninsured motorist. Her car was damaged to the tune of $4,500 when another driver crashed into her car. They exchanged phone numbers and insurance company names. Peggy says she assumed it was a simple misunderstanding when the body shop called to say her insurance would be footing the bill, since the other driver wasn't insured.

"Nobody would answer or call me back. I called her number, I called her husband's number, I called every number they had given me," Peggy says.

Two years later, she's still waiting for the lawyers to sort it all out, so the driver who crashed into her pays the repair bill.

Cost is one reason some Minnesota motorists don't buy insurance. The most recent numbers show the average auto policy sold in Minnesota costs about $800 a year. Across the border in Wisconsin it's about $630, and in Iowa, about $500.

Rep. Andy Westerberg, R-Blaine, says the cost in Minnesota is higher because the state requires more coverage. Westerberg, who is also an insurance agent, authored the law requiring motorists to show proof of insurance.

"We have substantially more -- four times the medical coverage that they have in Wisconsin per vehicle. And we cover not only the injured party, we cover other passengers in the vehicle too," Westerberg says.

The number of uninsured motorists in Minnesota, about 14 percent of the state's drivers, is more than double that in Wisconsin and Iowa, where uninsured rates are among the lowest in the country.

Among all states, Minnesota's rate is midrange. Texas and Georgia are states with some of the highest rates, where up to 25 percent of the drivers lack coverage.

Minnesota's relatively expensive auto insurance costs, some argue, create a cycle.

High premiums discourage people from buying coverage, reducing the number of people paying into the insurance pool, thus driving up premium costs.

A fairer system, Robert Hunter argues, and one that would insure all drivers, is an idea called "pay at the pump." Hunter is an insurance analyst for the Consumer Federation of America and the former Texas insurance commissioner. He says there'd be a surcharge on fuel, and vehicle owners would pay for insurance when they fill their tanks.

"You pay your premium at the pump, and there'd be no uninsured motorists at that point because everyone would have at least a basic insurance," Hunter says.

The pay at the pump idea has been turned down in every state where it's been proposed. Critics argue it would require a new government bureaucracy to administer the plan.

Instead, Minnesota and other states are relying on punitive measures -- fines and license revocations -- to try to convince uninsured motorists it's in their interest to buy coverage.

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