Dallas Uninsured Auto Impounding Draws A Caution From Trades

The city of Dallas' new program to tow and impound the cars of uninsured drivers is being greeted with caution by insurance trade organization representatives, who caution against red-tape foul-ups.

Dallas since 2006 has been towing uninsured vehicles involved in motor vehicle accidents, but two weeks ago police there began enforcing an ordinance that calls for the impounding of cars when an uninsured driver is pulled over, in addition to being involved in an accident.

Bob Passmore, director of personal lines for the Property Casualty Insurers Association of America (PCI), said he is supportive of Dallas' efforts to combat uninsured drivers, but he is concerned that towing companies may abuse the system and complicate drivers' efforts to get their cars back.

Mr. Passmore said the initiative helps combat uninsured drivers and also provides an opportunity for revenue for the municipality. He said other cash-strapped states and cities may consider similar tactics in the near future.

"It certainly prevents [drivers] from driving uninsured, so it's a mission accomplished there," Mr. Passmore said.

But he noted car owners should receive proper notification of where their vehicles are and how to get them back. He said there "have always been stories of towing abuse in different places around the country," which concern PCI.

Dallas police department senior corporal Kevin Janse said unscrupulous towing operators are not a concern for Dallas since vehicles are towed to the same city lot, rather than to private lots. Drivers, he said, are told where to retrieve their cars upon proof of insurance and payment of a storage fee.

Dave Snyder, vice president and assistant general counsel of the American Insurance Association (AIA), said he worries whether there is a proper system in place in Dallas to verify whether a vehicle is insured or not.

He said how states or municipalities enforce uninsured driver requirements is ultimately a decision for government, "but if a measure such as impoundment, which is severe, is to be used, it should only be used where there is an effective way to determine whether the vehicle is insured or not, and creating such systems for insurance verification has been a two-decade long effort by both states and insurers."

He said he knows that Texas has worked "for the better part of three years" on an insurance verification system, but he noted that system is still being worked on and may not be fool-proof enough to use for towing.

The danger, he noted, is that insured drivers may have their vehicles towed and then have to go through an expensive and time-consuming process to get their cars back.

Mr. Janse said police officers do everything they can to determine whether a driver is insured.

First, he said, the officer asks to see an insurance card. If the driver does not have proof of liability, Mr. Janse said the officer will check the state database. He said insured drivers should be listed in the database unless the insurance company did not provide the necessary information to the Department of Public Safety. Officers will also attempt to contact the driver's insurance company or agent to verify coverage.

Mr. Janse said fines for no insurance are around $240 in addition to the storage fee, which is based on how many days the towed vehicle sits in the impound lot. The cost could be "another couple hundred dollars," he said.

"It would be a whole lot cheaper just to get insurance," Mr. Janse said.

About the Author
Phil Gusman, PropertyCasualty360.com

Phil Gusman, PropertyCasualty360.com

Phil Gusman is Managing Editor of PropertyCasualty360.com. Prior to joining National Underwriter in 2008, he was Editor of Insurance Advocate. Gusman has also served as Associate Editor of Crackdown!, an insurance fraud publication, and Assistant Editor of Empire State Report, which covers New York politics. He graduated in 2002 from Plattsburgh State University in New York. Gusman may be reached at pgusman@summitpronets.com. Follow him on Twitter: pgusman and PC360_Markets

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