Connecticut has a slightly unusual claim to fame. In 1925, it was the first state to pass a financial responsibility law. This was based on the Uniform Vehicle Code of 1924. Instead of requiring all drivers to carry liability car insurance which would have been the more logical approach, this law required drivers to prove they had the financial resources to compensate all those they injured in traffic accidents. It was a form of guarantee based on the driver’s track record. The problem with this approach is that it made the driver and not the vehicle the party responsible. Yet many family members or friends might have the privilege of driving the family vehicle and title to vehicles could quickly and easily be moved from one person to another. The law was abandoned in the 1930’s and an approach more in line with current law was introduced.
Connecticut is in the majority as one of the at-fault states. This applies the usual law of tort and the test of negligence to determine which driver is most to blame for the accident. That driver is then held liable to pay for all the loss and damage which flows naturally from the breach of the duty of care. Most drivers prove they are financially responsible and able to meet their obligations to pay this compensation by buying a car insurance policy. The current mandatory minimum amounts of cover are 20/40/10. Given these are the maximum amounts an insurer will pay if one, or more, people are injured, or property is damaged, it should be obvious these amounts are on the low side. It’s easy for a hospital to spend $20,000 on the treatment of a person with only moderate injuries. Prudent drivers who have personal assets and savings to protect, therefore buy more than the minimum.
As an alternative to car insurance, anyone wishing to drive can apply to the Connecticut Department of Motor Vehicles under sec. 14-112 for the right to self-insure. This requires the driver to produce evidence of sufficient financial resources to match the legal responsibilities of a commercial insurer. This not only requires proof of available funds, but also evidence any claims can be handled in a quick and efficient way. The DVM usually requires a non-cancelable bond secured on the individual’s property or that the individual actually deposit cash with the DMV. Anyone self-insuring must give notice to the DMV if proceedings are issued to make a claim and confirm any judgment has been satisfied within thirty days of its issue. Failure to pay entitles the judgment creditor to enforce the bond and the lien on the self-insured’s property.
Repairing your vehicle after an accident
One of the worst things that can happen to you is losing your vehicle in the repair shop. That’s why it’s always worth looking at the terms of the car insurance policy to see whether there’s a provision for a rental vehicle to keep wheels on the road. If not, it’s worth planning for the worst. Although the auto insurance industry usually supplies a list of “approved” repair shops, there’s no obligation to use one of them. You can get your vehicle repaired anywhere. You should also recognize that there’s no obligation to use the repair shop your vehicle is towed to immediately after the accident.
Always get your insurer to sign off on the quote for the work before you authorize the work to begin. You do not want to be faced with a gap between the repair shop’s bill and what the insurer is prepared to pay. If you experience problems, you can file a complaint against your insurer with the Insurance Commissioner.
How much does it cost?
The car insurance industry sets rates to reflect what it claims are the risks of a claim. Unfortunately, in those states where there’s lax regulation, the local insurers interpret this to give themselves the most profit. Unlike health insurers who must ask the Insurance Commissioner before they raise rates, auto insurance rates are set by the insurers and the state has the right to object (which it rarely does — the rates have risen 12% in the last five years). In a recent survey asking for quotes from multiple insurers across America, Connecticut came out with the twelfth most expensive rates at $1,786 for a 40-year old man with 100/300/50 cover. The Insurance Commissioner defends these higher than average rates by pointing to:
• a high proportion of the population living in urban area where the risks of an accident are higher — Massachusetts has a similar density and its rates are significantly lower;
• the wealth of the average citizen, i.e. more people can afford to pay these higher rates more easily than in other states with a lower average annual pay and they tend to buy more coverage which drives up the average cost of insurance;
• the wealthy buy vehicles that are more expensive to repair, and when they are damaged, the average amount claimed is higher in this state;
• medical costs for emergency treatment are higher in this state.
If this justification is correct, the effect is that the wealthy do not notice the higher premium rates charged and the poor are hit hard. The only thing our average 40 year old man can do to reduce his car insurance rates is to run the make and model with the lowest rating, get married, buy less cover, and gamble with the highest deductible. Politically, the voters should follow California’s example and introduce the equivalent of the Golden State’s Proposition 103 which has created an elected Insurance Commissioner who is directly accountable if rate increases are not properly certified as necessary before being approved. That’s why the average Californian has seen the rates fall in real terms from 1989 to 2010 (the last year for which there are figures).