Imagine if your car insurance and registration were both in digital format on your smartphone.

California is beyond imagining such a scenario. In a bill that was recently passed unanimously by the state legislature, California drivers may be able to keep their vehicle registration and proof of auto insurance on their smartphones, allowing them to locate the vital documents more conveniently in addition to making the process more cost-effective for the State of California.

“I would venture that…anybody under the age of 60 would probably opt in to this,” Democratic Assemblyman and bill creator, Mike Gatto, stated in an interview with Capital Public Radio. “…that could save the DMV a significant amount of money when it comes to both printing and mailing registration forms.”

The DMV of California already has all of the necessary documentation available online via their website, as do most insurance companies; adding the “paperwork” to a smartphone wouldn’t be difficult to accomplish and could even notify vehicle owners when it’s time to renew their registration and insurance policies.

Once the system is in place, drivers won’t have to dig through their glove compartments looking for registration documentation and insurance coverage cards. They will simply call up the required information on their phones and present that as proof to a police officer when requested.

The program will not be a requirement; since this is relatively new technology, the state has agreed to an opt-in system that would allow licensed California drivers to make a choice between the old system and the new smartphone system. Those who do not wish to participate in the program or do not currently own a smartphone will still have the previous system available to them, allowing for flexibility and freedom of choice.

The only trick is, if you opt into this program, to keep your smartphone charged in case you get pulled over for a traffic violation or if you’re involved in a car accident. It wouldn’t be convenient for a driver to have no identification simply because the smartphone battery died during the last hour long texting session.

The way the bill would work is that the police officer would refer to an electronic database to verify a driver’s insurance. If the insurance shows up as cancelled or not renewed, the officer would have the right to have the car impounded. Rep. John Kavanagh (R-Fountain Hills), the bill’s author, says that the reason he wrote the bill is that under current Arizona law drivers without insurance can leave a traffic stop even if they are uninsured and lack a policy. He also said that the bill is meant to stop abuse by drivers who buy cheap insurance and cancel it immediately and wait until they are cited by police to get a new policy for proof of insurance in court.

A recent study found that approximately 12 percent of drivers in Arizona are uninsured. Kavanagh stated during the bill’s hearing that between 3 and 4 percent of records in the database are incorrect due to human typing errors. This would mean that around 200,000 innocent drivers could be victimized by the bill. This was the deciding factor for the members who voted against the bill.

Arizona already has some of the harshest penalties in the United States for uninsured drivers. A first offense comes with a three-month license plate and registration suspension and a fine of at least $500. Penalties for second and third offenses go up exponentially. Experts say that the best idea is to stay off the road until you can get insurance to avoid hefty fines and suspensions and try to stay up-to-date with premium payments in the future.

There are currently over 90,000 drivers who are considered high risk. These are drivers unable to find a company licensed to write auto insurance in New York that is willing to sell them an auto policy with their desired coverage terms.

Primarily, high-risk drivers are deemed so due to the number of accidents or traffic violations on their record. Additional reasons for coverage denial in the voluntary market include the age of the vehicle being insured or the age of the driver.

Because state law requires all drivers to have, at the least, a bodily injury and property damage liability insurance policy for themselves and their vehicle, the state of New York created an insurance facility to provide coverage for drivers unable to obtain a policy in the voluntary market.

The New York Automobile Insurance Plan (NYAIP), also known as the Assigned Risk Plan or Auto Plan, is therefore a last resort for drivers. While it is common practice for drivers with less than perfect records to pay higher premiums, high-risk drivers insured via NYAIP pay rates substantially higher than those insured through the voluntary market.

In New York, the average policy rate for the voluntary market is just under $1300 annually, while for NYAIP enrollees the average annual rate is $2283, an 80% rate difference.

Rates may be lower or higher depending on driver-specific factors such as the driver’s residential location, their driving record, age and vehicle type, and estimated annual driving mileage. Additionally, the depth of coverage will impact the rate.

The decision to raise NYAIP rates, which was made public when regulators released the rate filings, came after the administer of the state insurance program, AIPSO, reviewed the policy rates between 2007 and 2009 and determined the losses incurred over this period necessitated a rate increase.

An additional reason for a rate increase to mitigate losses over the past few years is the fact that NYAIP enrollment has been steadily falling over the past few years. in 2006 the NYAIP insured 181,900 drivers. Compared to today’s 90,000, that’s a 50% drop.

The rate increase is a 21.4% jump for incumbent policyholders, which translates into an average of $403 more for each policyholder annually. The increase comes after a 15% increase one year ago.

The increase, however, is not across the board for all types of coverage. In fact, according to the rate filings, comprehensive coverage policyholders will see a drop in their rates. For those holding policies for personal injury protection, bodily injury liability and property damage liability, and supplemental uninsured motorist coverage, however, rates will be increased.

Since the state of New York requires bodily injury and property damage liability insurance by law, and comprehensive coverage is an optional addition to any plan, all NYAIP policyholders will experience a rate increase.

The NYAIP, by law, is required to insure high-risk drivers for a period of at least 3 years before they can “nonrenew” a policy. However, drivers during this time have the right to shop for better rates in the voluntary market and may, at any time, terminate their policy with the NYAIP for one with a new insurer.

Since the NYAIP is an insurance facility of last resort, as mandated by state law, policyholders who cancel in this manner are not obligated to pay the standard cancellation fee.

With a projected 100,000 electric vehicles expected to be sold in 2012, The Hartford seeks to offer discount auto insurance to any driver who purchases a new electric car this year in Texas, California, Arizona, Alabama, Oklahoma, Illinois, Kansas and Minnesota. By the end of 2012, this insurance discount will be available nationwide to all electric car purchasers.

Additionally, anyone already insured through The Hartford who is already driving an electric car will receive a 5% discount upon renewal of their policy. Since 2007, The Hartford has offered their customers a 5% discount for driving energy efficient, hybrid vehicles and plan to continue this practice.

The Hartford has been dedicated to environmental protection and awareness for many years and seeks to make it easier for working class families to make the switch. Green energy, while the clear moral choice for many, is more expensive than other forms of energy which add to the planet’s pollution. With discounts and other incentives offered by the government through tax deductions and insurance providers through discounts, green energy can become the cost-effective route for many Americans.

“The Hartford is committed to environmental protection and we are delighted to encourage others to engage in the effort,” said President of Consumer Markets, Andy Napoli, representing The Hartford.”This financial incentive is a small way we can thank our customers for helping to foster a greener environment…[and] contribute to a more sustainable future.”

A History of Environmental Awareness

The Hartford started its environmental journey in 2007 when it set a goal to reduce emissions and track climate change. By 2010, they met their goal of reducing emissions by 15%. In 2011, they set a new goal: reduce emissions by an additional 20% by 2017. That same year, The Hartford partnered up with environmental groups and non-profits to offer their members and supporters discounted home and auto insurance rates as a thank you for their efforts to protect the environment.

Electric cars are available for purchase at major car dealerships nationwide.

Governor Scott said when he receives a bill from the state legislature that would abolish mandated coverage; he will instead keep the required government coverage that costs $2 billion. The mandated coverage is supported by insurance and hospital lobbyists. He said he will support other portions of the law that would affect acupuncturists and massage therapists.

Bill Newton, executive director of the Florida Consumer Action Network, said the law would not prevent “true fraud.” He said the bill instead provides big financial benefits to the “the pockets” of large insurance companies. He added that the bill, on the other hand, removes benefits and choices for consumers.

Republican and Democratic legislators had tried unsuccessfully to persuade colleagues to support an alternative which would force drivers to pay twice for medical insurance they have now.

According to news reports insurance rates went down 35 percent when Colorado got rid of its no-fault system in 2003. That was reported by a consultant in 2008 for the governor of the state. That is even despite a slight rise in rates for bodily-injury insurance. Drivers saved an average of $322 annually.

Robert Ferm, an attorney for American Insurance Association said he was “surprised” the Colorado system works. He said it was not the anticipated “catastrophe.”

A Florida group found that its state system has produced huge increases in insurance rates. Only nine other states besides Florida have a no-fault system. Some families pay as much as $3,000 annually and receive only $10,000 in coverage.

Florida’s system began in the 1970′s in an effort to reduce lawsuits and get money payments quickly for minor car injuries. Instead there were numerous lawsuits after the law was passed. According to news reports many Florida citizens have complained often about the law. Attempts to reform the law have not succeeded.

Under the new law, car insurers can take up to 120 days to resolve claims, rather than the previous 30.

The law would not allow payments for acupuncture or massage therapy. The injured will have only 14 days to get treatment. Payments for medical treatments will be limited to $2,500, except for those in an emergency medical condition. Such injured people could receive $10,000.

Under the new bill, motorists would still have to pay for the government mandated insurance, regardless how much private insurance they may have, or even if they have Medicare or other government sponsored insurance.

Governor Scott said he wants the current system fixed to punish people who abuse the system. He said if it is not fixed, Florida citizens will want it abolished.

Some who are opposed to the current law said the system could be changed to require only people without health insurance to buy the government mandated insurance.

Three weeks ago, Police Chief Charlie Beck signed Special Order 7 that would allow unlicensed and uninsured drivers to escape impoundment of their vehicles if they were caught driving without an operator’s license or auto insurance.

Advocates for illegal aliens applauded the order, saying that the order protected undocumented aliens who could not legally obtain a driver’s license or auto insurance. Victim right’s groups were furious at the police chief and Mayor Antonio Villaraigosa. The order was scheduled to go into effect this weekend.

The Los Angeles Police Protective League filed the lawsuit to challenge the order after consulting with legal experts.

According to the police union, the order could open police officers to civil liability suits if an unlicensed or uninsured driver is given back a vehicle and there is an accident afterwards. The league consulted with the district attorney’s office and the state legislative council. Both organizations had serious concerns about the chief’s order, opining that it violated state vehicle laws.

League President Tyler Izen said that the lawsuit is designed to protect the working conditions of officers in the LAPD. Izen said that officers are legally committed to enforce the law. That includes all state traffic laws, regardless of a person’s immigration status, Izen said.

The league is not seeking a temporary injunction against the order. The union is leaving that decision up to the Los Angeles Superior Court. The League is asking the court for an opinion to ascertain if the order violates state law.

With this order, a vehicle driven by an unlicensed driver could be impounded for a day if the driver had not caused an accident and the vehicle had legal insurance. Other requirements included some kind of valid and legal identification and no previous charges for unlicensed driving. An exception in the order allows for the vehicle to be driven away if another person shows up carrying a valid operator’s license.

At present, unlicensed and uninsured vehicles can be impounded for 30 days. The cost to a driver is about $1,400. One day of impoundment will cost about $268.

Groups that represent victims of uninsured drivers were outraged by the order. They accused the mayor and chief of pandering to illegal aliens.

Don Rosenberg, whose son was killed by an unlicensed and uninsured driver, called the order clearly illegal. State law, he said, can’t be trumped by the police chief.

Beck wrote the order with the assent of the mayor who is a strong supporter of illegal immigrants.

After Beck wrote the order a few weeks back, he defended his policy and said criticism was unwarranted. Critics had charged that Beck wrote the order to use as a stepping stone to achieve a higher political office.

The purpose of the order is to make the city safe to drive in, he said. Beck cited an inspector general’s report that showed some vehicles are impounded for 30 days, while other vehicles are released immediately. The LAPD impounded about 30,000 vehicles last year.

It’s estimated that about 250,000 drivers in Los Angeles have no operator’s license or insurance. The chief favors a provisional driver’s license for illegals.

The Committee for Humane Immigrant Rights applauded the order and said it would protect good drivers from being punished. Joseph Billela, an advocate for the group, said the order will help build trust between immigrants and police.

A spokesman for the Southern California Immigration Coalition said the solution is to give everyone a driver’s license.

The accused scam artists allegedly ran an auto insurance rate-evasion operation that cost insurance companies millions of dollars. It’s believed that the racketeering ring earned more than a half million dollars in the scam.

According to the complaint, this crime ring allegedly helped thousands of drivers to get cheap insurance by using fake Pennsylvania addresses to qualify for greatly reduced car insurance payments. By helping residents of other states qualify for insurance coverage in Pennsylvania, the drivers saved money. Doing so, though, is against numerous fraud laws.

This scam is attractive to drivers in other states. By comparing insurance rates in other states, drivers can realize significant savings by claiming a false address in another state that has lower rates.

In these hard economic times, saving a few hundred dollars is enough to make drivers find a touch of larceny in their hearts and list a false address.

Scam artists prey on this desire to save money by offering drivers an opportunity to claim a fake address in another state.

Comparative studies by the National Association of Insurance Commissioners show that the average driver in Pennsylvania paid $811 in insurance premiums in 2009. For Maryland, the cost of a similar policy was $928. In Delaware, drivers paid $1,021. New York state charges $1,057. Finally, drivers in New Jersey paid the highest rate at $1,101.

These numbers show that a significant savings is possible. For example, if a New Jersey driver illegally claims a Pennsylvania address, that driver can realize a 25 percent premium break in car insurance. That’s about $300 that a New Jersey driver can keep in his pocket.

The reason Pennsylvania has lower rates is because of lower claim rates. In addition, the state doesn’t require certain coverages in policies.

Drivers who register a false address, though, could face serious problems down the road. The odds are high that the insurance company wouldn’t cover a driver who listed a false address. That means the driver wouldn’t be paid for a claim if an accident happened.

Listing a false address to claim a lower insurance rate is against the law. Insurance companies could cancel a policy for this act. A company could also deny any claim if a driver engages in misrepresentation of any facts.

Pennsylvania’s attorney general identified the ring leader as Clifford McCoy from New Jersey.

According to the Pennsylvania grand jury that investigated this case, McCoy and his associates allegedly engaged in racketeering by creating a network of companies that supplied nonresident vehicle owners with fake registration papers.

The group allegedly wrote up thousands of auto insurance policies to nonresidents using fake addresses in order to avoid the higher premiums charged in surrounding states.

The scheme also involved presenting fake information and giving it to insurance companies and PennDOT. They also misused access codes that are available only to insurance agents.

The gang also sold computer-generated counterfeit operator’s permits.

Numerous charges have been filed against the defendants, including theft by deception, operating a corrupt organization, fraudulent business practices, false swearing, insurance fraud and other miscellaneous charges.

The defendants allegedly set up numerous front companies to pull off the operation.

A listing of the defendants and charges can be viewed at the web site of the Pennsylvania Attorney General’s office.

Auto Insurance Companies Complain of Salvage Dealers Monopoly

The auto insurance companies have long lobbied to have these restrictions removed. They believe that restricting sales lowers the value of the salvage cars in their inventory, by creating a monopoly situation. In Ohio, there are 100,000 cars involved annually.

The salvage dealers say that this promotes safe dismantling of cars before they are sold for parts. The smaller dealers fear that increased competition will raise the price of salvage cars above what they can afford and drive them out of business.

Salvage dealers also predict a proliferation of small neighborhood junkyards, as individuals buy junk cars. Many areas have lax code enforcement.

Salvage Bill Passes State Senate

The Ohio State Senate has just passed a bill by a vote of 80-3 changing the situation to a certain extent. Licenses are retained for dealers, but businesses without a license may buy seven per year. Unlicensed individuals may purchase five. This is far from the market flexibility allowed in most other states, but broadens the market considerably. It may result in more backyard mechanics who will purchase a few cars and restore them to driving condition. These cars are required to pass a state safety inspection before being declared roadworthy.

Consumer Protection is Strengthened

In some respects, the restrictions are tighter. A database of cars sold for salvage would be created, and a warning to consumers would be placed on the salvage title.

Citing concerns about proper disposal of antifreeze, oil and toxic materials, environmentalists are opposed to the bill.

Bill Prospects are Bright

The bill would still need to be passed by the house and signed by the governor. Given the large plurality for the senate bill, that prospect seems quite likely. Several other states have allowed a freer salvage car market, so the trend is in that direction. The mood of the nation seems to be in favor of a free market philosophy and less government regulation.

Consequently, vehicle insurance policy underwriters like Progressive, Allstate and State Farm have noted poorer underwriting effects in no-fault states like Michigan, New Jersey, Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New York, North Dakota, Pennsylvania, Utah and Puerto Rico.

Fitch Ratings also reported that this past year, the state of Michigan had the greatest direct loss ratio in the nation with loss ratios increasing from 115% in 2010 to 148% in 2011. State Farm’s portion of auto insurance plans in the state of Michigan was 18% for 2011. Progressive had a 8% share of the market and Allstate followed with a 7% share.

Douglas Pawlowski, a Fitch Ratings Insurance Analyst, told Insurance Networking News, “In tracking loss ratios over five years, these states have a higher loss ratio, which indicate that car insurers are paying higher claims in no-fault states than in other states. Reform of no-fault systems may lower the amount of money that large car insurers pay out in those no-fault states.”

In no-fault states, customers are reimbursed for motor vehicle collisions by their insurance providers with no evidence of fault and are generally barred from asking for compensation in court from other parties.

“In no-fault states, rather than pursuing litigation, insurers pay claims. No-fault is a convenient vehicle for fraud claim because they’re not going to court, so it’s easier for fraud claims to succeed in no-fault states. Many no-fault states are looking into their no-fault insurance systems and changing the laws so that they are stricter,” said Pawlowski.

The reform legislation proposed by Michigan deals with increasing premiums by limiting no-fault benefits and presenting fee schedules for professional medical services. At the moment, unlimited lifetime health-related fees are handled by insurance companies along with the Michigan Catastrophic Claims Association, which compensates major insurance providers for health-related claims in excess of $500,000. Michigan motorists finance the Michigan Catastrophic Claims Association via compulsory annual premiums, which have increased from $145 to $175 for each motor vehicle per year.

Florida also had a very high direct loss ratio of 72.7%. Several weeks ago, the Florida Legislature approved a bill that curbs personal injury protection claims and covered health-related treatment as a result of a car accident with the intention of minimizing fraud under their no-fault system. The New York State Senate is considering a similar anti-fraud bill as well.

According to this investigation, insurance companies are paying out $1.25 under the Personal Injury Protection clause for every dollar collected. The result is increased insurance rates for New Jersey drivers.

Investigators estimate that about $100 million in false claims are filed in New Jersey every year. The State Fraud Prosecutor’s office sees about 2,000 auto insurance fraud cases come through its office. More are handled through local courts and police agencies. Across the nation, insurance fraud adds up to more than $2.5 billion annually.

The unwitting victims are mostly senior citizens and immigrants with poor English language skills. These groups serve as the impetus to file false auto insurance claims.

The president of the Insurance Council of New Jersey, Deanna Lykins, laid out a typical scenario of how an auto insurance fraud takes place.

The mechanism to start insurance fraud begins immediately after an auto accident. The injuries from the accident are inconsequential and require little or no medical care.

A day or two later, a big white van pulls up in front of the driver’s house. A stranger knocks on the door and offers to take the mark to a doctor or lawyer. The stranger may say this: “I’m a representative of the insurance company, and you must come with me now.” The stranger may also claim to be a representative of the state. In the scam vernacular, these people are called runners.

This person may act officious and even offer a wad of cash to the mark to get in the van and see a doctor. This runner may promise more money later.

The state or insurance company will never send a person to a house, Lykins said.

In one case, the insured found himself in an office with three chiropractors. Even though the insured insisted he felt no pain and wasn’t injured, the chiropractor treated him. After the treatment, the insured was urged to speak to an attorney next door.

Insurance companies warn their policy holders to be wary of anyone contacting them after an accident.

In a statement issued by Plymouth Rock Assurance, the company warned its 500,000 policy holders that health care practitioners are colluding with others to scam patients. They’ve set up sophisticated scams to evade regulations made by the state, regulations that are promulgated to keep the cost of insurance down and care for injured people.

Plymouth CEO Gerry Wilson said that certain professionals create entities that are designed to defraud insurance companies. Wilson said these scam artists will lure people in by offering them big cash payments. This money rarely is paid, Wilson said.

In addition, these people become victims because they may be given medical treatments that are not necessary, and these medical procedures may be painful. In addition, these treatments may cost five to ten times as much as normal.

That means that any payments the victim received from the scam artists will go toward paying excessive medical bills. So the accident victim not only may have suffered painful and needless medical treatments, he may also end up paying money out of his pocket because the dollar limit for medical care on the insurance policy has been exceeded.

Insurance companies urge accident victims to see their own doctor, and never go with a person who claims to be an insurance representative. If a stranger knocks on the door, call the police.