Bum Deal on Car Insurance

State Insurance Commissioner Chuck Quackenbush has proposed regulations that would expand the right of insurance companies to cancel or refuse to renew auto policies. He says his intent is to target drunk drivers, but his proposed regulations are far broader than that.

The commissioner needs to narrow the scope of the regulations before submitting them to the Office of Administrative Law. Otherwise he is overstepping his stated goal of raising penalties for those caught drunk behind the wheel.

The proposed regulations would make it easier for insurers to refuse to renew or to cancel policies when drivers were involved in alcohol-related traffic offenses or solo accidents or if they altered or modified their vehicles to go faster. Quackenbush and insurance companies maintain that the changes are needed because drunks and other dangerous drivers push up the premiums of good drivers.

Current regulations already allow insurers to cancel or refuse to renew the policy of any convicted drunk driver. But alcohol-related offenses range from the very grave violations of driving under the influence and drinking while driving to the lesser violation of having in a vehicle an open container of alcohol not necessarily being consumed by the driver. Quackenbush’s new regulations make no distinction--any of seven alcohol-related offenses would be grounds for non-renewal or cancellation.

Driving under the influence of drugs or alcohol and the separate charge of driving while drinking both pose documented risks that insurers should be able to take into account in assessing policyholders. Evidence on the other offenses is less clear. And to the extent that these offenses reflect a pattern of poor driving habits, the accumulation of traffic violations already is grounds for higher premiums or non-renewal.

Quackenbush’s regulations would also subject a driver in a one-car accident to non-renewal or cancellation if the insurer determined that willful and/or reckless driving was involved. The concern is that a driver who, for instance, swerves to avoid a deer and hits a utility pole would be deemed reckless by an insurance company. There’s just too much discretion allowed insurers.

The commissioner’s proposed regulations extend well beyond the most egregiously risky drivers. If they are implemented as proposed, an unknown number of insured drivers could lose coverage as a result of perhaps just one mishap.

The proposed regulations would no doubt save the insurance companies scads of money, but they do nothing to guarantee affordable basic coverage to the thousands of uninsured motorists in the state. This badly needed protection would help cut rates across the board. And of the people who would lose their insurance under the Quackenbush plan, how many would pay for or could afford the huge premiums demanded by less choosy insurers or the state-mandated “high-risk” pool? Adding to the ranks of the uninsured would make a big problem even worse.