Attempting to Drive Up Coverage

Insurance companies, state take measures to increase number of insured drivers

There’s pay-as-you-go cell-phone service, pay-as-you-go Wi-Fi and even pay-as-you-go budget rules for Congress in a bill recently signed by President Obama. And now, Progressive and AAA of Nevada have begun offering drivers the option of pay-as-you-go auto insurance coverage.

There’s also the just-implemented Nevada DMV online service to ensure drivers are covered, and lawmakers ruminating over intersection cameras scanning license plates to check that drivers are insured.

Needless to say, the state and insurance companies want to increase the number of drivers with coverage.

But for many drivers still feeling the effects of the struggling economy, auto insurance has moved down the budgeting priority list, much like a morning latte or an annual vacation. And with unemployment at 13 percent in the Valley and Nevada insurance rates ranking eighth highest in the nation, this trend is distinctly evident on local roads.

The Nevada Insurance Council estimates about 20 percent of Valley drivers—or 460,000 vehicles—are uninsured, compared to about 15 percent in 2007. For every 1 percent increase in unemployment, the uninsured driver rate typically increases half a percent, says Bob Feldman, secretary-treasurer of the Nevada Insurance Council.

The good news, however, is that auto insurance rates have dropped in the last few years, says Feldman, who’s also president of Nevada General Insurance Co. and Auto Insurance America. This decline is due to fewer drivers on the roads and, consequently, less accidents, as well as companies competing for customers to make up for cancelled policies or nonrenewals.

And pay-as-you-go is just another player in the game. Drivers place a device in their car that tracks mileage. Participants receive a small discount on their premium, which is based on the number of miles they drive and time of day on the road, among other factors.

As another way of increasing the number of insured drivers on the roads, the Nevada DMV recently implemented a system called Nevada LIVE, or Nevada Liability Insurance Validation Electronically. It’s an online system that verifies insurance coverage on more than 80 percent of policies written in Nevada. This is an update to the previous system that required insurance companies and the DMV to cross-reference registration and coverage for all vehicles in the state through the U.S. Postal Service. Doreen Rigsby, supervisor of Nevada LIVE, says the program includes notifying drivers that they’re on the radar as being uninsured. If the driver does nothing, his vehicle registration is revoked. Rigsby says the tool has eliminated previous margins of error, which is good news for law-abiding drivers. “The fact that there are fewer errors means we can concentrate staff on people who really are uninsured,” she says.

Typical auto insurance rates are determined by a person’s driving record, type of car and even ZIP code. In the Valley, rates vary by ZIP code based upon accident probability, density and even assumed generalizations about certain areas. “It could be that drivers who rent are not as responsible as homeowners are in the surrounding areas,” Feldman says. “Renters are not quite as good of an insurance risk, generally speaking.”

On a statewide comparison, Las Vegas drivers, who average an accident almost every eight years, generally have higher insurance rates than Reno residents, who might have a collision about every 12 years, according to Allstate Insurance.

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