The Law Gets Tougher on Unisured Drivers, but Limits Still Too Low

Most of us are aware that the law requires us to have auto insurance in order to drive in Tennessee. Since 1977, the Tennessee Financial Responsibility Law has required drivers to have at least $25,000 per person in liability insurance coverage, up to $50,000 total per occurrence. What this means is that, if you cause a car collision and someone is injured, you must have insurance that provides at least $25,000 to compensate for the harms and losses to the victims of the collision.

In essence, however, the law has not been enforced prior to the collision. In other words, only after a collision does a driver need to prove they had the necessary insurance. Nobody was asking about insurance when someone got their license, bought their car or renewed their registration every year. As a result, Tennessee has a real problem of people driving without any insurance coverage at all. 1 of every 5 drivers (20%) on Tennessee roadways is completely uninsured.

Hopefully, that will change now that the General Assembly has passed, and the governor has signed the “James Lee Atwood Act.” The law, which went into effect on July 1 of this year, imposes stiffer penalties for those uninsured drivers. The law is named for a young man killed in a collision when his car was struck head on when a 24 year old man crossed the center line in his car.

Under the new law, if a driver fails to produce proof of insurance during a traffic stop, he or she will have 15 days to provide it. If they fail to provide proof of insurance within that timeframe, they will be fined $25. If the uninsured driver doesn’t promptly pay that fine, it will increase to $100. Tennessee drivers who fail to provide proof of insurance after two notices run the risk of having their registration revoked. Drivers will also be required to provide proof of insurance when they renew their vehicle registration. Under the old law, the maximum fine for driving uninsured was $100. Under the new law, the maximum fine is increased to $300 for multiple violations. The new law also allows law enforcement officers to impound the vehicles of repeat offenders.

Hopefully, the new law will encourage more drivers to get insurance before they get behind the wheel. One problem the legislature failed to resolve, however, is the woefully inadequate amount of minimum insurance required. The minimum limit of $25,000 has not been raised in almost 40 years! Let’s talk about present value of money:

$25,000 in 1980 is only worth $8,700 today. So, really, minimum coverage as envisioned by our legislators in 1977 has become almost worthless today.

The average cost of a hospital room in 1980 was $125 per day. Today, the average cost ranges from $1,421 to $1,892 per day. Outpatient medical costs have risen almost 500% since 1980. The average cost of vehicles has also substantially risen. And yet, discounted for inflation, our mandatory minimum auto insurance coverage in Tennessee has shrunk by 65%! In order to have the same level of coverage we had in 1980 in today’s dollars, our mandatory minimum insurance really should be $75,000.

So, though we might encounter fewer uninsured drivers on the roads with the passage of the James Lee Atwood Act, even responsible drivers who believe they have good auto insurance protection may come to learn that their coverages don’t fully protect them from personal liability in a collision. That is why it is so important to look at your own insurance coverage to make sure you are adequately covered.

Another reason to review your coverage is for your own protection, and the protection of your family. If they are hurt by someone without sufficient insurance coverage, will you still have resources available to help cover those harms and losses?

Uninsured Motorist Coverage protects you when another driver who is at fault in an automobile collision has no insurance at all. It covers lost wages, medical costs, and other harms and losses associated with injuries.

Underinsured Motorist Coverage safeguards you if you are injured by a careless driver who has only minimal insurance. For example, if you or a family member is injured by the fault of another driver, and your medical bills are $50,000, lost wages are $30,000 and you have a substantial impact on your future quality of life, a minimum limits policy of $25,000 will not properly pay for those harms and losses. If, however, you had the foresight to have underinsured motorist coverage of $100,000, you would have more insurance coverage available to pay for those harms and losses.

Now, I hear all the time that it isn’t fair that the responsible party only has to pay $25,000 and your own insurance company has to foot the bill for the rest. And you would be absolutely correct. However, I would point out a couple of things. First, you pay premiums for your insurance coverage as part of a bargain with your insurance company that they will step in when you need them to. Also, don’t think your insurance company won’t pursue the driver that caused your injuries to get their money back. They will. And they’re good at it. Let them do what they do best.

For you, your priority is protecting yourself and your family. Obtain sufficient auto coverage for all family drivers. Your insurance agent can outline the extent to which your uninsured and underinsured motorist coverages will safeguard your family. We recommend a minimum of $100,000 in uninsured/underinsured motorist coverage.