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Insurance Backtrack

Jun 17, 2007

It sounded like a good idea when legislators passed the law in 2004: Motorists who canceled their insurance would get a letter from the secretary of state's office notifying them that driving without insurance is against the law. Instead of cracking down on uninsured motorists, however, the law meant hundreds of thousands of law- abiding citizens got the letters, often simply because they had switched insurance carriers or traded their vehicle. Finally, the Legislature is poised to correct the situation by repealing the 2004 law.

In an effort to cut down on the number of uninsured motorists in Maine, a law was enacted requiring insurance companies to notify the state when drivers canceled their car insurance. When the Bureau of Motor Vehicles receives notice of the cancellation, it sends out a letter warning that the driver's registration and license plates will be suspended unless corrective action is taken. This includes filling out a form on the secretary of state's Web page or mailing, faxing or presenting to the BMV proof of active insurance.

The problem is that people cancel insurance policies for a variety of valid reasons. Maybe they sold or traded in an old car and canceled the insurance on it. The BMV knows this, but doesn't know they immediately purchased insurance for a new vehicle. A harshly worded letter is sent out. Maybe they canceled their car insurance with one company to buy a less expensive policy from another. The BMV sees the cancellation; it doesn't see the new policy. Out goes the letter.

Secretary of State Matthew Dunlap estimates that about 280,000 such letters are sent out each year, about 80 percent of them unnecessarily because the state's computer system is not set up to match up insurance cancellations with insurance purchases or transfers. Eliminating the letters will save about $300,000.

Not only do the letters waste money and unnecessarily anger people - Secretary Dunlap keeps a framed, obscenity-laden letter on his desk to remind him of the problem - it hasn't cut down on uninsured motorists. When the law was passed, about 4.5 percent of Maine drivers didn't have insurance. Now, it is 5 percent.

Last month, the Transportation Committee unanimously agreed that the law should be repealed. To do so quickly - to immediately book the savings - repeal language has been added to the highway bill that is currently before the Senate. When the bill is signed by the governor, the insurance notification law would be repealed.

Government often works slowly, but as this case shows, bad laws can be fixed.

(c) 2007 Bangor Daily News. Provided by ProQuest Information and Learning. All rights Reserved.

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