Interesting letter on car insurance act

By Joe McAdory

Published: February 26, 2008

Received a letter from Opelika resident Buddy Goolsby the other day. In that letter, Buddy brings up some very interesting points. I thought I’d share them with you in this forum:

This letter is in reference to the Mandatory Liability Insurance Act for Vehicles #2000-554, P1005 S1 and the inequities with the insurance companies, the State of Alabama, and the public.

I have had full coverage auto insurance with Alfa Insurance since 1982 with only one claim, which was for windshield breakage. Recently, I let my insurance lapse for several months due to me not being able to drive because of a medical condition. When I tried to reinstate my insurance for the $296 premium on my last notice, I was informed my premium would now be $476 for the next six months because I had not renewed my policy within the 30 to 60 day grace period; therefore, I would have to be covered with risk insurance!

I obtained a copy of the act and discovered the act only protects the cost of your coverage for thirty days from the date your insurance lapses. In addition, the act does not regulate what the insurance companies can charge other than the reinstatement fee. When I questioned the reinstatement fee, I was told by a representative that this fee goes to the state. The act allows insurance companies unrestricted power concerning the premiums they charge after the 30 to 60 day grace period, thus it fails to protect the cost to the driving public. The insurance companies are allowed to “gouge” the public because the state hasn’t passed any mandates to control the insurance companies.

If a person cannot afford to pay their insurance premium on time, then most assuredly they would not be able to afford to pay the extra premium the state allows the insurance companies to charge. This penalty in premiums follows you for one to three years depending on which insurance company you use. In addition, the insurance companies will not give you a quote unless you provide them with your social security number and your driver’s license number. The insurance companies have no need for your social security number except for a credit rating. They charge a higher premium for a low credit rating but tell me why, since you pay in advance for your insurance coverage.”

The driver’s license number gives the insurance companies the ability to check your driving record, which is needed to determine your risk as a driver and therefore adjust the premium accordingly. Your driver’s license number also allows them to check your insurance coverage record. They then can determine if your insurance has lapsed and for how long it has been lapsed. Any quote you receive for auto insurance coverage from any insurance company will reflect the penalty for lapsed auto insurance. I called several insurance companies and I received approximately the same quote from each of them.

It is time for our Alabama legislature to act to protect the driving public. The legislature has mandated that all drivers have liability insurance but they have failed to protect the public from unreasonable insurance premiums. There must be some compromise between the driver and the insurance company when a driver is unable to drive a vehicle.
Furthermore, if a person is unable to afford the regular premium, then they surely cannot afford the higher premium penalty charged for lapsed insurance. The insurance companies must be held accountable too.