In 2016 Oklahoma enacted SB 359 creating the Uninsured Vehicle Enforcement Program. The new law allows district attorneys to contract with private companies for automated license plate readers to catch and send tickets to uninsured drivers. The company that won the contract, Gatso USA, will provide the equipment and in return will get a portion of the fine (initially about 43 percent). District attorneys will also get a cut of any fines collected – 20 percent.
Supporters of this program argue that it will reduce the number of uninsured drivers in Oklahoma. That number does need to be reduced – we lead the nation in the percentage of drivers that are uninsured at 26 percent. But using cameras to catch uninsured cars and automatically send tickets isn’t likely to actually solve the problem. That’s because most uninsured drivers are not opting out because they just don’t want insurance – they don’t have insurance because they can’t afford it. And that’s not because they’re bad drivers and are being charged more because they pose a bigger risk. It’s because your car insurance rate depends on some things that have nothing to do with your driving history… like your credit score.
How much you pay for car insurance depends on more than your driving record
When it comes to determining how much you pay for car insurance, of course your driving record matters – if you have a ticket or an accident in the recent past, you will pay more for your insurance. But other things matter as well, and your credit score is one of them. Most insurance companies use a credit-based insurance score along with your driving record and history of insurance claims to set your rate. Statistics show that drivers with higher credit scores tend to file fewer claims, and so they are considered lower risk by insurance companies. But they are not necessarily less likely to have an accident – just less likely to file a claim.
This practice ends up charging higher prices to the drivers that can least afford it. The use of credit-based insurance scores unfairly penalizes those who simply choose not to use credit cards or carry debt and low-income people (especially people of color) who have less access to credit products by requiring them to pay more – sometimes a lot more – for insurance.
According to Consumer Reports, a new customer in Oklahoma with a clean driving record and “excellent” credit will pay, on average, $1,358 per year for auto insurance. If your credit is just “good” your rate will increase by $250. If your credit is “poor” you’ll pay $3,872 per year for your insurance – $2,514 more than someone with excellent credit. And the only difference between these drivers is their credit history – they all have clean driving records.
The penalty for having poor credit is even more worrying when we look at how a traffic infraction affects insurance rates. A driver with excellent credit and a DWI (a very serious infraction) will pay, on average, $2,198 per year in Oklahoma – $840 more than they would pay without the DWI. But the driver with poor credit and clean record is still paying the most. In fact, they’re paying $1,674 more than a driver with a DWI and excellent credit. A driver with a DWI is clearly the greater risk to public safety, but will be charged less than a driver with a clean record and no demonstrated risk to public safety simply because they have better credit. All this means that low-income drivers are likely to be charged more, and with their budgets already tight, many of them are more likely to forgo buying insurance.
Issuing more tickets to uninsured drivers won’t help them get insurance
Most drivers without insurance simply can’t afford it – poverty is a barrier to purchasing insurance. People who are already struggling to pay for other necessities (like housing and food) will struggle to pay for insurance too. And since Oklahoma’s poverty rate is higher than the national average, it shouldn’t be surprising that we have a higher than average number of uninsured drivers as well.
But getting a ticket in the mail isn’t going to help a driver who can’t afford insurance to get insurance. In fact, it’s going to make getting insurance more difficult, because now there’s a $184 fine you’ll have to pay in addition to the cost of insurance. It will be especially difficult if you have a low credit score because insurance companies use that to determine whether you qualify for a payment plan that will allow you to pay your premium in monthly installments. Those with a low score may be required to pay a full 6-months upfront. For the customer with poor credit and a clean driving history that could be $1,936! Many Oklahomans simply don’t have that money available, and cameras generating tickets won’t change that.
If we are going to penalize drivers for not having insurance, then we also have a responsibility to make sure that insurance is attainable. It must be marketed and sold in a fair and transparent manner, at a price that is fair and reasonable. Your insurance rate should be based on your driving record and demonstrated risk, not your credit history. Three states (California, Massachusetts, and Hawaii) have banned the use of credit scores for auto insurance – Oklahoma should seriously consider adopting a similar policy.