Vehicle Insurance Verification Programs: How They Work

According to the U.S. Bureau of Transit Statistics, there were more than nearly 251 million registered passenger vehicles on the road in 2006. Out of these 250 million vehicles, 34 million are uninsured. This means, 13.6 percent of all drivers do so without insurance and it’s costing each state and its taxpayers millions of dollars. In fact, in the state of Washington alone, uninsured drivers cost taxpayers more than $80 million in 2008.

In an effort to reduce the number of uninsured drivers on the road, and in turn reduce the financial burden on its government and citizens, more than 30 states have implemented insurance verification programs (IVP). Arizona, Arkansas, California, Colorado, Connecticut, District of Columbia, Florida, Georgia, Illinois, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Nevada, Texas, Virginia, and Washington are just of the few states that have IVP’s in place. Some states use a random sample method, while others verify insurance after a transaction has been made, such as vehicle registration. The random sample method is simple. The department of motor vehicles sends letters to randomly selected owners of registered vehicles asking them to verify insurance.

While no two states programs are alike, many are similar to TexasSure. TexasSure is the state of Texas’s vehicle insurance verification system. It allows law enforcement officials, county tax officials and vehicle inspectors to confirm whether a vehicle in the state of Texas has the mandatory auto liability insurance coverage. Like most other IVP states, the state of Texas, the Texas Departments of Insurance, Transportation, Public Safety, and the Texas Department of Information Resources (DIR) work together to keep the TexasSure vehicle insurance database up to date.

Most states that instituted some type of IVP have seen a reduction in the number of uninsured vehicles (see figures below). Nationally, the percentage of uninsured motorists declined from 14.9 percent in 2003 to 13.8 percent in 2007 according to The Insurance Research Council (IRC)’s Uninsured Motorists 2008 Edition, released in January 2009.

Estimated Percentage of Uninsured Motorists by State in 2004

Estimated Percentage of Uninsured Motorists by State in 2007

Most vehicle insurance verification programs are funded by taking a small portion of the fees DMV’s collect from motorists applying for or renewing their motor vehicle registration. This amount is usually equal to $1 or less. So, the cost to taxpayers is minimal compared to the millions of dollars it costs to support uninsured motorists.