Car insurance laws vary from one state to the next. The minimum requirements for liability insurance differ, and some states require all drivers to carry first-party medical coverage while others do not. While all states require drivers to maintain insurance, Louisiana is unique in that drivers without their own auto insurance cannot receive a settlement from another person’s insurance policy. Known as the “no pay, no play” law, this is the state’s way of cutting the high cost of uninsured motorists. If you live in Louisiana or are considering moving there, it’s important to understand this law and how it applies to you and your vehicles.
The Cost of Uninsured Motorists
States with a high number of uninsured drivers also have high insurance costs. This occurs because accidents caused by drivers without insurance cause insurance companies to lose money. Normally, the person who is at fault for an auto accident is responsible for paying the cost of repairs to the not-at-fault driver. If the at-fault driver does not have insurance, however, these costs may go unpaid and the resulting lawsuit can be time-consuming and expensive for everyone involved.
Whenever a person files a claim, the insurance company pursues the other party’s carrier through a process called subrogation. This allows the company to be reimbursed for the settlement costs. If the at-fault driver does not have insurance, the insurance company will attempt to collect the funds from the driver directly, but this is not always successful. In turn, the insurance company must increase the premiums for its customers in order to off-set the lost money spent on claims.
No Pay, No Play
Louisiana is the second most expensive state for auto insurance in the country, trailing just behind Michigan. Approximately 13% of all Louisiana drivers are uninsured. In an effort to reduce the cost of insurance and lower the uninsured motorist population, Louisiana enacted the no pay, no play law.
Under this law, an individual can only pursue damage from another insurance company if they have an auto insurance policy of their own. If a person does not have insurance, they cannot file a claim against another person’s auto insurance policy, even if the accident is not their fault.
Additionally, an individual’s ability to pursue legal action against another driver is diminished if they do not have insurance. In other words, if you have no insurance, you cannot sue for damage when your car is hit. This also means that two uninsured motorists that collide cannot pursue legal action against each other.
This law does have a few limitations:
— You only need liability insurance, not full coverage. In other words, as long as you carry the state-required liability coverage on your vehicle, you will be able to file a claim against another person’s insurance if they hit your car. You do not need to file a claim with your own insurance company first.
— The law does not apply to parked vehicles. If your car was parked at the time of the collision, you can file a claim against the other person’s policy whether or not you have liability insurance on your car.
— The law does not apply to people from other states. If you’re passing through Louisiana in a vehicle without auto insurance and you get involved in an accident, you can file a claim for that damage. You may still be cited for driving without insurance, however, and could face a suspended license.
— The no pay, no play law does not apply if the at-fault driver was intoxicated or fled the scene of the accident. Therefore, even if your vehicle does not carry insurance, you can still file a claim against the other person’s policy after a hit-and-run or drunk driving accident.
Bear in mind that even if you are not involved in a collision, driving without insurance can still have a negative impact whether in Louisiana or another state. Insurance is required by law, and if you are caught driving without proper insurance you will be cited and your license will be revoked until insurance is purchased on the vehicle and you submit an SR-22 form to the DMV.
Auto insurance laws can be complicated, and it’s your responsibility to ensure that you carry the appropriate amount of coverage at all times. If you already have auto insurance, be sure to notify your insurer about any changes of address so that they can update your policy. If you don’t have insurance yet, you can obtain an affordable policy by comparison shopping online. This will allow you to get a free quote from multiple insurers and pick the company that will best suit your needs.