As with all the other states in the union, Delaware has a financial responsibility law which regulates all the different ways in which people who operate vehicles and vessels must protect themselves and others from the possibility of loss. The majority of states continue to rely on the law of tort to decide which party carries the liability to pay compensation to the others suffering loss. These at-fault states require owners of vehicles and vessels to prove they have the financial resources with which to meet their liabilities. In most cases, this now means owners must produce evidence of a valid car insurance policy before they are allowed to register the vehicle or vessel for use.
In Delaware, buying insurance is the only way of proving you are financially responsible. The minimum liability cover required in Delaware is 15/30/10, i.e. $15,000 to cover the cost of treatment for one person injured; $30,000 to pay for treating multiple victims; and $10,000 to pay for the repair or replacement of any property damaged. These minimum amounts were set into the law years ago. There was no mechanism written into the law to keep these minimum amounts realistic as inflation eroded the value of the dollar. The result is that almost everyone who buys the minimum amount today is underinsured. If you own property or have assets, you should protect yourself by buying additional car insurance cover both against liabilities and against personal losses.
To register your vehicle, you need to be able to produce proof of insurance. Under normal circumstances, this requires you to produce the proof of insurance card issued by your company. If that has not arrived but you have a copy of the policy itself (usually downloadable and available for printing) that will be accepted by the Division of Motor Vehicles. Once you are driving, remember to carry the card with you at all times. If you are stopped by a police officer or involved in an accident, you must be in a position to prove a valid policy and supply details of your insurer to the interested parties. If you fail to produce evidence to a police officer, this is an offense and a fine is payable. Should a records search prove you have no insurance, there’s an automatic suspension of your driver’s license for six month and inevitable fines.
There’s a central database maintained by the car insurance companies and the Division of Motor Vehicles. This is updated by the insurers every time there’s a change, e.g. you fail to pay the premium installment and your policy is canceled. If you are actually changing insurers, get your new insurer to issue a replacement proof of insurance card as quickly as possible. The DMV itself routinely audits the database and randomly pulls out the names of drivers who seem to have allowed their cover to lapse without it being replaced. The procedure requires the DMV to send you a warning notice. At this point, you prove you do not own a motor vehicle which is driven on public roads, produce a valid policy, or pay the fine.
Comparing car insurance rates
The Insurance Commissioner for Delaware has produced an online premium comparison tool. This is a particularly effective tool because it draws on one of the most comprehensive databases of rates from the range of insurers licensed to sell policies in Delaware. Unlike the searches you make through the commercial websites, the Insurance Commissioner is not in the business of giving you car insurance quotes. The intention is to give you samples of the rates you can expect to pay, i.e. they are based on generalized customer profiles and not your particular circumstances. So you pick the basic minimum or standard cover, gender and marital status, age, mileage, your driving record, and one of three types of vehicle.
How much does it cost?
If you are a single male in your early 40s with a clean record, you would expect to pay between $942 and $2575 as you annual premium. A single female with exactly the same profile would expect to pay between $910 and $5415. The last indicative number is so far out of line that it does nothing more than show an insurer that prefers not to insure women.
It’s interesting the lowest quotes are reasonably similar. Whether this equality stands up when actual quotes come in is anyone’s guess. A recent survey of all states using a hypothetical forty-year-old male driver, found Delaware the 28th most expensive state with an average quote of $1,489 for 100/300/50 cover.
Delaware’s Insurance Commissioner runs a two-tier process for resolving disputes between you and the insurer. It starts with the “complaint”. This is a relatively informal step and invites the Commissioner to investigate the alleged lack of good faith or bad practice. In most cases, the insurer makes an offer of settlement to avoid upsetting the Commissioner who also acts as the regulator. But there are times when the insurer refuses to budge. The second step is a more formal reference to arbitration. This is quicker and cheaper than using the courts — the filing fee is only $30 for a car insurance dispute. The matter is then decided by a panel of three people who have no financial interest in the outcome.
Many consumer advocates consider the use of credit scores by the car insurance industry to be unfair. Although there may be a statistical inference that people with financial difficulties may spend less on car maintenance and so be more at risk of accidents, not placing the main emphasis on a driver’s safety record is inherently unfair. You only have to think of the millions of Americans who, for one reason or another, do not have access to credit. All these people automatically pay higher car insurance rates even though they may never have picked up a ticket or been involved in an accident. In 2007, the Delaware Assembly passed a new law. This is how the law works:
• check your credit score before you get car insurance quotes to renew — you have a right to a free credit report from each of the credit reporting bureaus per year;
• if your credit score has improved significantly over the year, the insurer must lower your rate — this encourages you to stay with the same insurer, but there’s no guarantee that the newly reduced rate will be less than that available from other companies (always do a comparison shop);
• if you are in doubt, you can ask your current insurer to check your score and tell you whether your premium rate will be reduced — asking does not entitle the insurer to increase your rate.