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DMV giving notice to motorists with lapsed policies

Inside Bay Area (California)

Motorists who thought they could pull a fast one by getting insurance to register their car and then canceling it better put the brakes on that strategy.

A new law requires insurers to provide electronic notification to the state Department of Motor Vehicles when customers cancel their insurance.

Starting today, the DMV plans to start sending notices to motorists who have let their insurance lapse.

The notice will inform them that they have 45 days to reinstate their insurance or face having their car registration suspended.

The legislation was authored by state Sen. Jackie Speier, D-San Mateo.

Speier also authored a law that requires motorists to provide proof of insurance when registering their vehicles or when pulled over by police.

Since that law took effect in 1997, the percentage of vehicle accidents involving an uninsured vehicle in California dropped from 24 percent in 1996 to 14 percent in 2003.

"It's been a resounding success," Speier said. "The one loophole is that people could buy insurance and then cancel it after three months. This is going to close that loophole."

"A lot of people buy the insurance and get the car registered, and then they cancel it," said DMV spokesman Armando Botello. "There was no way for the DMV to know the insurance was canceled until they get stopped by an (law enforcement) officer or were involved in an accident or the next time their registration came up."

There are no excuses for motorists to be without insurance given the existence of the low-cost auto insurance program, said Speier.

Speier and consumer advocates are hoping that SB 1500 will prompt more uninsured motorists to consider low-cost auto insurance.

"Now people are going to be getting reminded by the DMV that they've got a problem with their registration because of an insurance lapse. I think that will spur people to get it," said Doug Heller, executive director of the Foundation for Taxpayer and Consumer Rights.

"Prospectively, the DMV is going to become the biggest promoter" of low-cost insurance, Speier said.

Heller and Speier would like to see the DMV include information about the low-cost auto insurance program in the notices that are sent out.