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Nebraska Bill Could Affect Car Insurance

In the Nebraska state Senate, legislators are working on a bill that would change the state's automobile insurance laws. The purpose of the bill is to reduce the number of uninsured drivers on state roads. Uninsured motorists have become a larger problem in the state and across the country in recent years as economic conditions have made auto insurance coverage more difficult to afford for some drivers. Others simply try to avoid paying these fees for their own reasons. If this bill passes into law, it will change the way the state auto insurance law is applied.

Overview of NE LB 807

The bill is called LB 807. It is being touted as a way for the state to fight the growing issue of uninsured motorists driving their cars in the state. This makes Nebraska the latest in a growing group of states taking on this problem. Different legislatures have used different pieces of legislation to combat the problem, and time will tell which ones are the most successful. For the time being, it is instructive to keep an eye on developments in Nebraska where passage of this legislation is uncertain. Growing public sentiment supports these measures nationwide, and lawmakers are working to bow to their constituents wishes to get law changes done. But a certain level of bipartisan cooperation and support from the governor's desk is needed for these measures to succeed.

As mentioned previously, the main purpose for the development of LB 807 is to try to cut down on the uninsured motorist rate in the state of Nebraska. Successfully making a substantial improvement in this area could lead to an improvement in uninsured motorist coverage premiums for state policy holders.

LB 807 if it were to pass into law would serve to amend the Property and Casualty Insurance Rate and Form Act. The changes would require Nebraska drivers to buy at least six month long policies when they renew their auto coverage. Currently in the state, some insurers offer motorists month to month policies. There have been numerous complaints that drivers have been able to get their Nebraska vehicles registered without actually having current auto insurance. They simply buy a month to month policy and then allow the coverage to lapse. While they are covered they go ahead and get registered allowing them another year on the road with no insurance if they do not get caught.

The change in the Property and Casualty Insurance Rate and Form Act would eliminate the availability of these monthly policies or any short term policy less than six months in length. An important note to highlight is that this requirement for drivers to carry at least a six month policy would not prevent insurance providers from canceling these policies if needed. For example, if a driver were to contract a six month policy and fail to make payments on it or violate some other terms of the insurance contract, the provider would still have the cancelation option. The changes have been discussed in the Senate's Banking, Commerce, and Insurance Committee [1].

Effectiveness of Proposed LB 807

It remains to be seen whether the proposed changes to Nebraska state auto insurance laws will pass the state legislature and ever make their way to the governor's desk. One of the reasons its passage is uncertain is that as with any newly introduced piece of legislation, its potential effect on the state law and its effectiveness in achieving its stated purpose are still being analyzed. There is a lot of work to be done by the legislature in working out the details of the bill. But for the time being, taking a look at its general tenets can be useful in assessing how effective it might be in achieving its goal of working to reduce the number of uninsured drivers on the roads in the state of Nebraska.

Increasing the minimum length of an auto insurance policy a consumer in the state of Nebraska would restrict a driver's ability to buy a policy strictly for the purposes of getting registered. Drivers who attempt to do something along these lines would be compelled to buy a much more substantial policy than they could buy today. However, it is unclear whether the new change in the law would require any driver to pay for a six month policy in full at the outset of a coverage period. If you had to pay for six months of insurance to even get a proof of insurance, that would effectively end the ruse of buying a plan to get registered and them canceling it or letting it lapse.

But if multiple payment options were left open between insurers and customers in Nebraska, there would still be an opportunity for the same sort of scenario to play out. For example, some auto insurance providers sell no deposit policies that are actually six months or even twelve months in length, giving customers the chance to get a long term policy with the month to month payment advantage of a short term plan. If a consumer in Nebraska wished to flout the system even after this bill passed, one could certainly buy this sort of policy if it was available and get registered at little or no cost.

Factors Left to Consider

On the other hand, if the six month policies stipulated as a minimum in the state by the bill also required full or even significant partial prepayment, it would deter drivers from enlisting in a policy just to get a car registered and get a license plate tag. At the same time, adding this type of detail to the bill could prove unfair to law abiding drivers who have kept up their auto insurance all along and would then have fewer choices to get insured if they had cash flow problems at the time of enrollment. Clearly, the state legislature has its work cut out for it. Trying to navigate between the rights of consumers and the desire to protect the state and insurance companies who are being taken advantage by the minority will be a challenge. There is no telling whether this bill will wind up passing into law, or whether it will undergo any significant changes on its way to passage. But it is clear that there is much room for debate and a lot to think about for the time being.

LB 807 in the state of Nebraska is the latest in a long line of recent legislative efforts from chambers at state levels across the country to try to address the issue of the uninsured motorist problem in the U.S. This problem is one that has existed for many years. But uninsured rates have become more of an important issue here recently for a few important reasons. One reason is that the rates historically climb during bad economic times, something that is going on right now. And another is the fact that this economic crunch causes huge financial troubles at the state governmental level as the states draw in less money to help them operate. These bills try to recover some of that lost money and in the long run help honest consumers save money on car insurance.

[1] http://www.wowt.com/home/headlines/83256217.html Retrieved 2010-02-21.

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