Contrary to what you might think, collecting from drivers without insurance is not impossible – it’s just very difficult.
By Steve Steinberg, CEI Manager of Loss Recovery
Recovering damages from at-fault third party drivers is one of the most powerful ways that fleets can reduce the net cost of accidents. At CEI, we’ve seen subrogation recover an amount equal to as much as 50% of a fleet’s total original repair estimates.
It’s one thing when you demand payment from a driver who’s insured, but it’s another thing altogether when it comes to collecting from drivers who are or claim to be uninsured. According to the Insurance Research Council (IRC), there are some 30 million uninsured drivers in the U.S., and if you’re in a collision with another vehicle, there’s about a one in eight chance the other driver won’t be covered.
The odds vary by state, however. The IRC says the five states with the highest percentage of drivers who are uninsured as of 2012 were Oklahoma (25.9%), Florida (23.8%), Mississippi (22.9%), New Mexico (21.6%), and Michigan (21.0%). The five states with the smallest percentage of uninsured drivers were Massachusetts (3.9%), Maine (4.7%), New York (5.3%), Utah (5.8%), and North Dakota (5.9%).
Contrary to what you might think, collecting from drivers without insurance is not impossible – it’s just very difficult. What it takes are two things: knowing how to do it and, perhaps even more important, spending the often considerable extra time it takes.
In 2015, CEI collected on behalf of our fleet customers almost $1 million from at-fault drivers who didn’t have – or claimed not to have – insurance. In line with national statistics, 13% of the demands we launch to recover fleet damages are targeted at the uninsured. For all of our recovery demands, it takes an average of less than 60 days for us to get recovered funds into our customers’ hands. For uninsured drivers, the process can take three, four, six or more months, and we’ve even successfully pursued a $12,500 claim that took a year and half to collect. Here’s how we do it:
After determining from police reports who’s responsible for the accident, we start with making direct contact with the at-fault driver. We call and send up to three letters with a bill. Sometimes – but rarely — the driver will agree and pay in full with a check, money order or through an installment plan.
If that doesn’t work, our next step is to verify, through online consumer information systems, that the driver actually is without insurance, because sometimes the real issue is that the driver just doesn’t want to report the accident. If we find out they are covered, we send the demand to the insurance company, and usually the only issue is how much they’ll pay.
Our next resort is to turn the demand over to a collection agency. Even though the funds we’re seeking aren’t a debt, at this point some uninsured motorists will take the collection agency’s calls more seriously, and will make payment.
If the driver still doesn’t pay, we or the collection agency engage the drivers’ state motor vehicle agency to threaten suspending his or her license for driving without insurance, unless the driver makes payment and secures coverage. Payment can be by installment plan, and if the driver misses a payment, we can notify the state to suspend the license. In most states, suspension requires a judge to issue an order to suspend, but in 24 states a judge’s ruling isn’t required.
Our final option is to sue the driver. A guilty verdict against the driver results in an order to pay, which can remain in effect for up to 10 years and in some states can be renewed for another 10. Since the fleet incurs legal expenses to bring the case to trial, it has to decide whether the amount being demanded is worth it compared to how likely the driver will ever have the means to pay.
All of this takes time and special expertise that very few fleets have. And even though the total percentage of drivers without insurance has inched down over the last 25 years, we find collecting from them increasingly difficult as the cost of repairs keeps rising. But it’s important to remember that just because a driver doesn’t have insurance doesn’t mean you can’t collect – you just might need the right partner to help.