No Pay, No Play Has Modest Effect on Uninsured

Enactment of no pay, no play law has only a modest effect on the percentage of uninsured motorists within a state, says a study from the Insurance Research Council.

The Malvern, Pa.-based research group says it has developed a statistical model that estimates that the uninsured motorist rate can fall by as much as 1.6 percent after a state adopts a no pay, no play law.

The law prohibits uninsured drivers from collecting certain damages from negligent insured drivers, says the International Risk Management Institute. Typically, the uninsured cannot collect noneconomic damages and they are required to pay a large deductible before they can sue for property damage.

IRC says that at the present time ten states have no pay, no play laws on the books: Alaska, California, Iowa, Kansas, Louisiana, Michigan, New Jersey, North Dakota, Oklahoma and Oregon.

For states without a no pay, no play law in effect, IRC says it developed a mathematical model to estimate the compensation for noneconomic loss paid to uninsured third-party liability claimants in a given year.

Across all of the 39 states studied using 2007 data, the average noneconomic loss paid to uninsured claimants per state was $17.5 million. These findings suggest the average insured driver in 2007 paid an additional $4.69 ($5.10 in 2012 dollars) to address the average $17.5 million in noneconomic loss ($19.3 million on average in 2012 dollars) that was awarded to uninsured claimants in each state.

“The original intent of these laws was to relieve at-fault drivers who comply with state insurance requirements from having to compensate uninsured drivers for noneconomic damages. Yet, little research had been conducted analyzing the effect of no pay, no play laws on the overall insurance market,” said Elizabeth Sprinkel, senior vice president of IRC. “With this study, we now have more information on how these laws affect the population of motorists driving uninsured. This report, which also develops cost estimates for states that do not have no pay, no play laws on the books, highlights the benefits a strict law may provide to the average insured consumer.”

Copies of the study are available through the IRC’s website for $300 for an electronic version or $400 for a printed copy.

Comments

Resource Center

View All »

Contractors General Liability Coverage 102

What is a prior work exclusion? Which option is right for my client? Why do...

Guide: 5 Steps to Selling Cyber

Cyber risk and data security is on the agenda of every business owner and executive....

Citation Correlation

Do rigger and signalperson qualifications correlate with the cause of crane and rigging accidents? ...

Complete Guide to Electronic Signatures in Property & Casualty Insurance...

In property and casualty insurance, closing new business quickly is key. Learn how to leverage...

INSTANT ACCESS: Complimentary Sales Closer Questionnaires

Help property owners or managers compare your commercial residential property insurance coverage vs. the competition....

Determining Vacant Property Perils and Valuations

Are your clients fully covered for Vacant Properties? In this economic climate, your insureds may...

Risk Management for Law Firms

This package of 3 concise risk management articles offers straightforward content and practical suggestions law...

Guide: Top 15 E&O Risks-And How To Avoid Them

Accidents happen. But when it's an errors and omissions oversight, that accident can open your...

We'll Show You How to Reach Your Sales Goals

Whether you work alone or have a team of agents working for you, we can...

Get The Most From Your Book Of Business

Turn your existing book into an exclusive program or roll your book. Learn about the...

PropertyCasualty360 Daily eNews

Get P&C insurance news to stay ahead of the competition in one concise format - FREE. Sign Up Now!

Advertisement. Closing in 15 seconds.