How fleets can collect from uninsured drivers
When fleet vehicles are involved in an accident, recovering damages from at-fault third-party drivers is a powerful way to reduce the net cost. We’ve seen subrogation recover as much as 40% of a fleet’s total original repair spend for all accidents.
It’s one thing when you demand payment from a driver who’s insured, but it’s another thing altogether when it comes to collecting from uninsured drivers or those who claim to be uninsured. According to the Insurance Research Council (IRC), 14.2% of drivers in the U.S. are uninsured. If you’re in a collision with another vehicle, there’s about a one in seven chance the other driver won’t be covered.
The odds vary by state, however. The IRC says the five states with the highest percentage of drivers who are uninsured as of 2022 were District of Columbia (25.2%), New Mexico (24.9%), Mississippi (22.2%), Tennessee (20.9%), and Michigan (19.6). The five states with the smallest percentage of uninsured drivers were Wyoming (5.9%), Maine (6.2%), Idaho (6.2%), Utah (7.3%) and New Hampshire (7.8%).
Contrary to what you might think, collecting from drivers without insurance is not impossible – it’s just very difficult. What it takes are two things: knowing how to do it and, perhaps even more important, spending the often-considerable extra time it takes.
In 2023, on behalf of our clients, we collected almost $2.2 million from at-fault drivers who didn’t have – or claimed not to have – insurance. In line with national statistics, 16% of the demands we launch to recover fleet damages are targeted at the uninsured.
For all our recovery demands, it takes an average of less than 98 days for us to get recovered funds into our clients’ hands. For an uninsured motorist claim, the process can take three, six, or more months.
Our loss recovery process
- Determine responsibility: After determining from police reports who’s responsible for the accident, we start with making direct contact with the at-fault driver. We call and send up to three letters with a bill. Sometimes – but rarely – the driver will agree and pay in full by check, money order, credit card, or through an installment plan.
- Verify insurance: If that doesn’t work, our next step is to verify, through online consumer information systems, that the driver actually is without insurance, because sometimes the real issue is that the driver just doesn’t want to report the accident. If we find out they are covered, we send the demand to the insurance company, and usually the only issue is how much they’ll pay.
- Engage a collections agency: Our next resort is to turn the demand over to a collection agency. Even though the funds we’re seeking aren’t a debt, at this point some uninsured motorists will take the collection agency’s calls more seriously to prompt payment.
- Involve the state motor vehicle agency: If the driver still doesn’t pay, we or the collection agency engage the driver’s state motor vehicle agency to threaten to suspend his or her license for driving without insurance, unless the driver makes payment and secures coverage. Payment can be by installment plan, and if the driver misses a payment, we can notify the state to suspend the license. In most states, suspension requires a judge to issue an order to suspend, but in several states, a judge’s ruling isn’t required.
- Sue the driver: Our final option is to sue the driver. A guilty verdict against the driver results in an order to pay, which can remain in effect for up to ten years, and in some states can be renewed for another ten. Since the fleet incurs legal expenses to bring the case to trial, we have to decide whether the amount being demanded is worth it compared to how likely they will ever have the means to pay.
All of this takes time and special expertise that very few fleets have. The total percentage of drivers without insurance has increased since Covid, and we find collecting from them increasingly difficult as the cost of repairs keeps rising. But it’s important to remember that just because a driver doesn’t have insurance doesn’t mean you can’t collect – you just might need the right fleet management partner to help.
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