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A Good Law With a Flaw

Legislature should fill gap in proof-of-auto-insurance statute

September 07, 1997

After years of struggle, California finally has a law that requires motorists to prove they carry liability insurance that covers damages to others if they cause an accident. The legislation was passed last year and went into effect Jan. 1. A car owner now must submit proof of insurance when registering an auto with the Department of Motor Vehicles each year.

Unfortunately, the law lacks the enforcement punch it was meant to have. The idea was to require insurance companies to notify the DMV by computer of the status of their customers' policies. But the insurance companies fought that provision and it was dropped from the bill.

Now is the time to correct that gap. Assemblyman Ted Lempert (D-San Carlos) is sponsoring AB 651, which would provide that the companies voluntarily file the information electronically beginning next July 1 and on a mandatory basis one year later. The bill also would extend the life of the proof-of-insurance program from the present 2000 to 2003.

In the interim, the insurance companies are sending their clients a wallet-size card verifying that they are covered by paid-up liability insurance. The cards, or copies, then are sent in with the annual vehicle registration. But DMV officials suspect many vehicle owners are buying the insurance, re-registering their vehicles and then canceling the insurance and collecting a refund.

Some members of the Legislature oppose the Lempert bill because the proof-of-insurance program has not been accompanied by a program of affordable insurance. That is indeed a crying need and should be addressed by the Legislature in the next session.

Enforcement of the current law is a different matter, however. The Legislature should override insurance industry opposition and pass AB 651, which the industry claims would cost companies millions in new computer equipment. Furthermore, they say, the DMV's recent $50-million computer fiasco is evidence the department would not be able to handle the influx of data. Millions of motorists might be told they could not register their autos because DMV computers erroneously failed to confirm their insurance coverage, they say.

DMV officials say that the companies would only have to purchase new software and that the DMV computers are capable of absorbing the information accurately, as they do now in regard to smog certificate data transmitted electronically from smog check stations.

The bill now is before the Senate Appropriations Committee and will face a tough vote on the Senate floor. There are bound to be some glitches in this program, but the computer transfer of insurance data would save millions over handling the information with paperwork, a process far more subject to human error. Delay would only serve the scofflaws, not the general motoring public.

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