Arizona Insurance Group Worried Bill May Lead to Towing Innocents’ Vehicles

By | March 20, 2012

A bill to change Arizona’s mandatory auto insurance laws to allow law enforcement officials to tow and impound vehicles without liability insurance is raising concerns that it could lead to the towing of a small number of vehicles of drivers who are actually insured and that it could create a liability issue for insurance agents.

The Independent Insurance Agents and Brokers of Arizona Inc. said Senate Bill 1165, authored by state Rep. John Kavanagh, R-Fountain Hills, exposes drivers whose vehicles have had the wrong vehicle identification number reported to Arizona’s motor vehicle department.

According to IIABA there are an estimated 200,000 vehicles in Arizona with inaccurate VIN numbers. That’s the small percentage of the state’s estimated 4.8 million vehicles, but IIABA believes it’s large enough to create problems if the bill is passed.

The bill is set to be heard in the House Appropriation Committee on Wednesday.

While IIABA in Arizona supports enforcing required liability for motorists, a problem has been created by a massive number of inaccurate VINs in Arizona, said Russell Reiten, a government affairs representative for IIABA.

According to IIABA, the 17-digit alphanumeric mix often gets misreported by auto insurance customers to their agents, and it’s not unheard of for agents to get the number wrong when giving the information to the motor vehicle department.

In the latter case, if that happens and a motorist has his vehicle towed, the insured may be legally empowered to take their agent to court for the expense of being towed and impounded, according to Reiten.

While proof of insurance cards are issued to drivers, they won’t be issued, or could be issued with the wrong expiration date, if there is a problem with the VIN, he added.

“You could technically still get towed,” he said.

As the law stands now, those with the wrong VIN face a citation and merely have to show proof they were indeed insured when the citation was issued. However, Kavanagh’s bill would enable law enforcement to tow and impound vehicles, and there is no mechanism for drivers, even those who can prove they were insured, to recoup those expenses, Reiten said.

But Kavanagh doesn’t see that as a large enough issue to derail what he views as an important piece of legislation.

He put language in the bill stating that if a driver has any written document of insurance that dates after the motor vehicle department’s database showing the driver has no insurance, the vehicle will not be towed.

So only those without up to date proof of insurance cards are at risk, he said.

“The only people who are going to get caught up are a very small number of individuals whose paperwork has a typo in the VIN,” he said, noting that the motor vehicle department looks for VIN typos and sends out notifications regularly to drivers about such errors.

He added, those drivers “would only be exposed for like 60 days. You have a small number of people who have a small window of vulnerability.”

And even then their vehicle would only be towed if a law enforcement officer decides to run a radio check despite being provided an up-to-date insurance card by the driver.

“The amount of good the bill does far outweighs the small negativity,” he added.

Kavanagh said a main target of the bill is people who “game the system” by buying short-term, minimum coverage liability to enable them to get their vehicls registered and then cancel their policy and get a refund and drive around uninsured.

“Right now if they’re stopped they get a summons and that’s it,” he said. “The police officer watches the uninsured driver drive away in an uninsured vehicle.”

But Reiten said the exposure to drivers who do have insurance, and the legal exposure to insurance agents, is enough of a concern to raise a red flag.

“Our concern is it could still affect some people,” Reiten added.

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