LAPSES in car insurance coverage can be incredibly costly, but one state takes it to the extreme with how it punishes drivers for the mistake.
Excessive fines are only the tip of the iceberg, and can serve as the biggest roadblock for residents looking to get their licenses back after an insurance slipup.
Drivers hand over more than just their licenses when hit with suspensions due to lapses in insurance coverage (stock)[/caption]
The state charges fees upwards of $500 to reinstate licenses suspended or revoked due to insurance coverage issues (stock)[/caption]
More than 80% of the fines collected by Louisiana’s Office of Motor Vehicles come from drivers attempting to reinstate their licenses after having them suspended or revoked due to a lapse in insurance coverage.
These fees range from $150 to $525, the latter being the highest fee in the nation aside from Delaware, which has no cap on its fee scale.
These insurance cancellation fees generated $103.8 million last fiscal year, accounting for 83.2% of the license reinstatement fees collected by the OMV.
92% of the OMV’s $74.4 million budget last fiscal year was generated by these fees. Effectively, the OMV uses these fees to fund itself.
These fees can climb even higher if sent to the state’s Office of Debt Recovery, which adds a 15% processing charge to the balance owed.
This additional charge forced drivers to pay $11.6 million to the Office of Debt Recovery in the 2024 fiscal year in addition to the insurance cancellation fees themselves, per a report from the Louisiana Legislative Auditor.
The office can leverage tactics like wage garnishing, placing a levy on the driver’s bank, or even pulling from their tax refund to collect the debt.
These fees have proven to generally be the biggest roadblock in residents getting their licenses reinstated, and are the only unpaid fees sent to the Office of Debt Recovery by Louisiana’s OMV.
58% of licenses suspended or revoked as of June 2022 were still inactive two years later, per the report, which concluded that half of drivers could not resolve their violations, likely due to the fees.
“The secondary requirement of paying reinstatement fees can therefore become the primary obstacle that delays compliant drivers from regaining an active license,” it said.
9.1% of the state’s 2.81 million licenses were suspended and/or revoked as of June 2024, with lapses in insurance coverage being the cause for roughly 80% of the suspensions/revocations.
While this practice does generate significant revenue for the state, additional research shows suspending the licenses of safe drivers has a negative impact on communities.
Examples include higher insurance costs, higher unemployment, and fewer hiring choices due to locals’ lack of reliable transportation, and lower wages, per a 2021 report from the American Association of Motor Vehicle Administrators.
In 2024, over 25 states approved laws which eliminated or limited license suspensions and the loss of driving privileges for unpaid fines and fees.
Would you suffer through the DMV for a loved one?
More than half of Americans would suffer through going to the DMV (53%) for the sake of their loved ones, according to new research.
To understand how far people are willing to go to help others, a recent survey of 2,000 U.S. adults explored the concept of loyalty in terms of friends, family and even brands.
The DMV’s line is not the only sacrifice. Two in five Americans said they’d happily donate an organ to their family and friends, showcasing the depth of loyalty in interpersonal relationships.
According to the results, Americans would also act as a reference for an apartment or job (62%).
Partners (35%) and best friends (27%) were ranked as the top two most likely people respondents would start a business with.
And if $100,000 were to suddenly fall in their lap 82% of respondents are even likely to share their winnings with family and friends.
Conducted by Talker Research for Circle K’s Inner Circle Rewards Program, results also found that brands and businesses also pull a similar type of loyalty.
Almost three in five (57%) have certain items or services where they prefer one brand over another, including shoes (52%), technology, such as phones or computers (51%), hair products (50%) and clothing (44%).
Seven in 10 (71%) have loyalty to their grocery store, and 59% feel loyal to certain restaurants and food services, while others prefer certain gas stations (39%) and convenience stores (27%).
In fact, the average American has remained loyal to their favorite brands and products for 13 years, while 35% indicated that two decades have passed.
Nearly three-quarters (74%) even agreed that they can tell the difference between the same products made by different brands.
“Loyalty is fundamental to our relationships with family, friends, businesses and brands. The more loyalty you give, the more you get — and it deserves to be recognized,” said Rick Rasor, Vice President of Loyalty at Circle K.
“That is why we are dedicated to rewarding customers for continually making us a part of their daily life.”
Some states, like Georgia and Ohio, also offer amnesty for specific drivers, even waiving fees completely in some cases.
Louisiana created a Reinstatement Relief Program for insurance cancellation fees in 2024. This allowed drivers to have their fees lowered based on their income, financial obligations, and other limiting financial factors.
Louisiana’s license fees were last updated in 2014, when the state chose to increase the insurance cancellation reinstatement fee to its current range.
INSURANCE INSIGHT
A major cause for lapses in car insurance coverage can be high prices, but there are some tips and tricks for new and longtime drivers alike that can lower monthly premiums by a significant amount.
Additional discounts can come via inquiring with specific providers about discounts they may offer for vehicles equipped with certain advanced driver assistance systems.
State legislature can also force auto insurers who make too much in a fiscal year to give customers refunds, as a major provider was forced to do in Florida earlier this month.
