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Idaho Allows Insurers To Not Renew Policies On Vehicles Registered Out Of State

A recent bill in Idaho which will allow insurers to deny renewal to cars that are registered out of state has made it through the state legislature by a big margin. The bill, HB 11 cleared the state House with a 65-0 vote last month and the Senate passed it by a 34-0 vote on the first of March. State House leader Scott Bedke (R-Oakley) signed it and sent it back to the Senate where it will be sent on to Gov. C.L. “Butch” Otter.

HB 11 allows an insurer to choose not to renew a customer policy if “the insured automobile is registered in a jurisdiction other than Idaho.” The new law will address the issue of policyholders that have moved out of state but keep their policies in Idaho due to the reasonable rates in the state. The National Association of Insurance Commissioners (NAIC) says that Idaho has the fourth lowest rates in the U.S for auto insurance coverage.

Insurance executives claim that some customers had moved to a state where their insurance company was not licensed to write policies and if the new state was expensive for car insurance, some policyholders were hanging onto their Idaho coverage to save money.

It should come as no surprise that the bill was heavily supported by the insurers writing policies in Idaho. Insurers brought the bill to the House Business Committee earlier in the year and worked tirelessly to get it passed. According to the National Association of Mutual Insurance Companies (NAMIC) the bill is a “reasonable and consumer-protection oriented” measure for Idaho insurers. 

HB 11 does not allow an insurer to cancel a policy mid-term just because the car is not registered in the state of Idaho or is re-registered in another state during the term of the policy. Insurers do have the option of waiting till the policy term ends and then refusing to renew the policy. Insurance experts feel that the bill was written to be lenient on drivers to a certain extent but giving insurers an option to eventually cancel the policy of customers not playing by the rules.

Experts say that HB 11 was simply a clean up of some of the insurance code that regards the cancellation of policies. According to the bill, policyholders will be on their own in keeping track of customers that move out of the state.

New Jersey Considering a Similar Bill

New Jersey has a similar problem, only a bit in reverse. New Jersey consistently has some of the most expensive insurance rates in the country so drivers often misrepresent their residency in order to lower their car insurance costs.

In order to address the problem Assemblyman Wayne DeAngelo (D-Hamilton) has sponsored a bill that classifies “reverse rate evasion” as a crime. He hopes this will stop drivers from buying auto insurance coverage in states like Pennsylvania and North Carolina in order to lower their premiums.

In a recent statement DeAngelo said, “Vehicle owners who misrepresent their residence are looking to reduce their own insurance premiums, but this instead results in a loss of revenue to the state, higher premiums for those who properly register their vehicles and reduced revenue for New Jersey insurers.”

Idaho recently passed a bill giving insurers the right to not renew policies on vehicles that are registered out of state. New Jersey is considering similar legislation to cut down on fraud.