Junk Car Insurance Policies Should Not Be Legal

How Texans Are Harmed 

You assume that other drivers next to you are covered by liability insurance, right?

Not necessarily. We have 2.6 million uninsured drivers in Texas. And Texas insurance companies are allowed to sell “junk policies” that eliminate coverage to anyone who is not listed. As a result, many people buy them so they can exclude their reckless 16-year-old sons and spouses with histories of DWI’s and car accidents.

This means you won’t be able to collect any money for your medical bills, lost wages, and damages if one of these uninsured drivers crashes into you. Does that sound fair to you?

When the 1.2 million drivers with these junk policies are added to all those without insurance, there’s a 30% chance you won’t get paid back.

I’ve had to deal with this situation more often than I’d like as an injury lawyer for the past 37 years and I’m concerned that people are often placed in this unjust position.

Everyone loses: the injured driver who must file a claim with his own company and pay a big deductible (assuming he paid for uninsured motorist coverage), the at-fault driver left open to being sued, and doctors who are not repaid.

Since Texans are the worst drivers in the U.S., we need all the protection we can get on our roads.

I’ve advocated that our state leaders meeting in Austin keep motorists safer by passing laws which will ban texting while driving, lower the DWI limit, and preserve our economical way to prove medical services and bills that are needed for trials.

Requiring that ALL drivers be covered by liability insurance is another easy and sensible way our legislators should be safeguarding our rights.

How Did This Problem Start?

Before 2005 Texas law required that policies cover the policyholder’s household members and anybody else with permission to use the policyholder’s automobile.

But insurance lobbyists entered the picture and convinced the Texas legislature to drop this important regulation. With deregulation, insurance companies claimed, they could tailor policies to the needs of consumers. They also employed the classic argument that this would lead to lower prices. Predictably, these promises were false.

While junk policy premiums may have declined, those costs were merely shifted away from the insurance company. First, responsible drivers who inadvertently purchased these junk policies get stuck holding the bag when an accident occurs. But worse, a driver or pedestrian may have no reasonable way to recover damages from the at-fault driver.

The family member or friend of the junk policyholder is essentially an uninsured driver. And you have to spend money buying insurance coverage, not them.

New Law Would Stop This From Happening

A bill before the Texas House would eliminate these phantom policies.It comes as no surprise that the powerful insurance lobby opposes the proposed law. Insurance companies have prospered from a system that pays them premiums with a minimum likelihood of having to ever pay on a claim. That’s one of the reasons that State Farm’s net assets are over $76 billion and how it made a staggering $6 billion in 2015.

A previous bill that sought to end the named policy practice passed the House but died in the Senate in past legislative sessions. Lawmakers finally succeeded in forcing the insurance companies to disclose more in 2013.

Insurance companies are now required to disclose the limitations on the policy and to clearly state the covered drivers on the insurance ID forms they issue to the policyholders. But a lot of good that does you when you find out that “Tom Smith, Jr.” isn’t included on his father’s policy and you are on the hook for thousands of dollars of medical bills.

Transparency rules alone are not enough. Texans are harmed by these junk policies and they should be eliminated.

Please contact your state representative and senator about these four important ways your rights should be protected.

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