Driving Without Car Insurance In NC Might Soon Cost You Your Car

A bill, recently introduced in the NC House of Representatives by Representative George Cleveland, referred to as house bill 602, proposes to confiscate uninsured vehicles operating on NC highways. Cleveland is frustrated with the number of uninsured drivers on our highways and wants to step up the costs of noncompliance to get drivers’ attention.  If passed into law, then these rules would take effect December 1 2013.

In NC car owners cannot renew their license plates without first proving insurance is in place on the car associated with that tag.  However, once past this hurdle, some insurance policies are later cancelled while the driver continues to operate that vehicle on the highways.  The NC State Highway Patrol issued 24,436 citations last year to drivers without insurance.  Some estimates put the number of uninsured drivers on our highways as high as 15% of the total of all vehicles on the road.

As an aside, when I first became an insurance agent in the early 1980’s, uninsured motorists insurance coverage cost the average driver about $3 per year per car.  Now, that number has skyrocketed to nearly $150 per vehicle.  Part of this explosive increase in costs has been related to the introduction in the mid 1980’s of underinsured motorists coverage, but there is no doubt that the costs of uninsured drivers in our state is something that everyone who buys insurance here has to bear. 

The bill says that the confiscated vehicle will be placed under the possession of the sheriff of the county in which the violation occurred.  It goes on further to state that the sheriff shall restore the motor vehicle to the owner, only after proof of insurance is obtained.  In addition, this bill would require the owner to pay the sheriff for costs actually incurred by the sheriff towing, processing, and storing the vehicle.  There is no mention of limitations on these fees and expenses so we could see widely differing costs for uninsured motorists from one county to the next.

One other area of consideration in this bill deals with the rights of the lienholders to a confiscated vehicle.  After all, they actually hold title to the car until the loan is paid off.  Section 3 says that the lienholder may petition the court to reclaim the vehicle for sale to satisfy the lien.  The allowance of this reclamation is up to the discretion of the court however and if the vehicle is returned to the lienholder then that party has to return to the state any proceeds of the sale over and above the balance remaining on the loan on that vehicle. 

This bill is a drastic measure and may seem a bit heavy handed but there are some additional provisions in the bill that will soften the blow for some violators.  There are exceptions that can be made for technical errors that may have led to a lapse in insurance coverage.  Also, there is a grace period that allows the driver to obtain insurance in order to avoid the vehicle being sold by the state though during that time they will not have access to their vehicle.  I think it is clear that the state of North Carolina would rather not get into the used car or car auction business so they will hope that most people will purchase insurance right away to get their car out of the impound lot.  But I think it is a useful consideration that a violator that has no insurance is not allowed to just drive off from the traffic stop and endanger others with no means of paying for the accident that he or she may cause.

You have to believe that if the bill does become law, and if its successfully force more uninsured drivers to purchase insurance on their vehicles, then over time the rest of us will see reduced uninsured motorists insurance rates.  And that is only fair.

At Clinard Insurance Group, located in Winston Salem, NC, we help thousands of families each year with their NC auto insurance.  We would love to help answer any questions you may have about this or your home insurance.  We can also help you with your life insurance and business insurance, so feel free to give us a call today at 877-687-7557.