A Breech in the Levee: Oklahoma Uninsured Motorists
Oklahoma motorists often wonder why they have to pay so much in automobile insurance premiums. Beyond the avarice of insurance carriers, one legitimate reason is that Oklahoma allows, indeed encourages uninsured motorists. Anyone who has been in a serious automobile accident, especially if the at-fault driver was uninsured, knows this trauma very well.
The following discussion is not news to the insurance industry. Because it also deprives them of income, it is astonishing that they, too, are not active in forcing change. The insurance industry lobby in Oklahoma is as powerful as it is in most states, but for some reason will not take on the used car dealers.
In Oklahoma, whenever a used car is purchased from a used car dealer, the used car dealer has the statutory authority, granted through their license to do business as a used car dealer, to “paper tag” the vehicle sold. The Oklahoma used car dealer can issue this paper tag without any insurance verification. An Oklahoma tag agent could not do so, but a used car dealer can do so. A new car dealer could not paper tag a new car without first verifying the existence of insurance, but a used car dealer can do so.
Oklahoma statutes (47 O.S. §7-602) specify that “at the time of registration” an insurance verification shall be required. Used car dealers do not, it seems, “register” vehicles. Oklahoma statutes (47 O.S. §1137.1(E)) require used car dealers to use a “fibrous” paper tag. They seem to get this right, because those paper tags seem to last forever. The law does not require the used car dealer to strip the used car of the old tag, which is why there are so many used cars running around with a plate that is actually expired as well as a yellowing, curling, hanging-by-a-piece-of-tape paper tag. Oklahoma statutes (47 O.S. §583(F)) require used car dealers to purchase $25,000 of liability insurance for each of their vehicles. But this duty and this coverage appear to cease when the used car is sold and “paper tagged” for the new owner. That means the used car can literally be tagged and go off the lot without any insurance.
Theoretically, it will only stay uninsured for 30 days, until the new owner purchases the tag for the used car, but that is a long 30 days. Also, if the used car owner does not have automobile insurance at the time of purchase, it is probably due to a reason that is not likely change within 30 days. Thus, many used cars remain uninsured.
The average citizen of Oklahoma can protect himself to an extent by purchasing uninsured/underinsured motorist coverage (also known as “UM” coverage). But every year I meet two or three people who did not purchase UM coverage. Some thought they were saving money. Some thought the coverage would not cover anything but medical bills because they confused it with another coverage called “Med-Pay” coverage. Some people confused it with comprehensive or collision, never realizing it would cover their own injuries and not just the injuries of the machinery. Insureds that forego the purchase of UM coverage are required to sign a form indicating they understand what they are doing and are doing it intentionally, and not by accident. Thus, it is difficult for the insurance purchaser who waives UM coverage to blame anyone for his error.
Nevertheless, UM coverage is not the sole solution, in part because it transfers the cost of insurance to the purchaser of insurance, when that cost should have been paid by the uninsured motorist. Used car dealers should be prohibited from paper tagging a car at sale unless they obtain an insurance verification from the purchaser. This breech in the levee of Oklahoma financial responsibility laws should not remain open.
If the Oklahoma insurance industry will not lobby for a change in the law, then the least the insurance industry can do is spend the money to educate the public about the need for uninsured motorist coverage. The insurance agent has trouble completely filling that role because the insurance agent has a perceived conflict of interest in attempting to educate consumers about the coverages they need to purchase.
Where is the elected Insurance Commissioner of the state of Oklahoma on all of this? The Insurance Commissioner should be lobbying for a change in the law, too. Never mind…he was impeached, convicted, sentenced to three years and fined $20,000 last month.
[Kim Holland, the new Oklahoma insurance commissioner, was appointed by the governor and has been in office for one month.]
