Why You Have to Show Proof of Insurance Just to Renew Your Tabs

Many of you have heard about the new law requiring anyone renewing tabs on a car or transferring the title of a vehicle to provide proof of insurance in order to do so. This law went into effect here in Minnesota on January 1st, 2016, and it has caught more than a few people by surprise when they got to the counter at the DMV.

Over the past month, I have heard some folks who have complained loudly and publicly about this requirement saying that it is an un-needed and inconvenient. While it may prove to be a minor inconvenience, the case for why we need this law and more like it, is undeniable.

Estimates at the state level for the last several years have wavered between 11% and 25% of cars on the road being uninsured, with the distribution being spread unevenly throughout the state. Minneapolis Police Chief Janet Harteau made a bit of a splash in the local media by disclosing a 25% uninsured rate in Minneapolis this past year, and several incidents involving uninsured vehicles ranging from minor traffic stops to deadly accidents have made the news over the past couple of years. Ultimately, the consistency of the data from the past several years lead legislators to enact this law in an attempt to bring the percentage of uninsured vehicles back down to our pre-2003 levels.

Many of us remember that this is not a new requirement here in Minnesota, that everyone was required to show proof of insurance up until 2003 when the DMV lobbied to have the requirement removed on the grounds that they had neither the manpower nor the storage space for all of those evidence of insurance certificates. The primary method of storage at the time being file cabinets, this was a legitimate issue in every DMV office. Fast forward 13 years and the technology to electronically file and store this information has made it fast, easy, and cheap to manage the records which has enabled the DMV to accommodate this requirement again.

Where the rubber really meets the road for most of us though, is what this costs us. It’s hard to calculate a total cost, but on the whole, about 10% of your annual premiums are due to uninsured motorists. For the average household with 2 cars, that is around $200 to $400 per year. For the growing family with multiple cars, that can quickly expand over $1K per year. However, as soon as you are involved in an accident with an uninsured motorist, this cost to you personally goes up considerably. While the uninsured motorist coverage on your policy will take care of you and provide coverage, you are still going to be responsible for your deductible to get your car fixed, an average of $750. These incidents also become significantly more time consuming as well, which may be a more precious resource to all of us than money, and infinitely harder to place a dollar value on.

For those of us who believe strongly that this was a great step in the right direction, there is also hope that the legislature will move ahead with additional steps in the near future. Some of the options that exist to further strengthen the laws and requirements to reduce the number of uninsured motorists range from stricter enforcement and increased penalties to better use of technology to confirm coverage. Georgia has had great success the past two years with linking the insurance database which shows everyone’s up to the day insurance status, with individual squad cars which allows for drivers to skip the proof of insurance requirement because the police officer will already know if that car is insured before they walk up to the door.

Whatever your feeling on this new law, it appears that it is here to stay and so the best advice that I can offer is to take advantage of the electronic proof of insurance options that many insurance companies offer that allows you to carry your insurance card on your phone…..it’s the best way to make sure that you’re prepared when you reach the counter.


This post was written by Aaron Nicklay, Agent with Farmer’s Insurance. For more information on this topic and more and how Aaron can help protect you or your business, email him at anicklay@farmersagent.com or call (952) 229-5155.

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