The state of Louisiana will now collect fines from residents it believes to be driving without valid insurance, in an effort to minimize the number of uninsured motorists.
The new tactic was covered in a current ClaimsJournal.com article titled, “Louisiana Using New Tactics to Collect Fines for Insurance Lapses.”
The recently enacted Act 399 of the Regular Session established by the Office of Debt Recovery (“ODR”) to serve as the centralized debt collection agency within the Louisiana Department of Revenue. The Act states in part that “it shall be the public policy of this state to aggressively pursue the collection of accounts or claims due and payable to the state of Louisiana through all reasonable means.”
According to the Louisiana Office of Motor Vehicles (“OMV”) website, Act 399, along with Act 414 of the 2015 Regular Legislative Session (authorizing reinstatement fees for insurance cancellations and lapses), serves to administer the previously enacted Compulsory Motor Vehicle Liability Security law of 1977.
That law mandated that “all registered vehicles required to maintain minimum liability insurance must maintain the coverage at all times as long as the vehicle is registered in Louisiana and the plate has not been surrendered”. Failure to do so would result in a reinstatement fee for the owner based upon the number of days the vehicle remained uninsured.
Residents will have approximately 45 days to reinstate or initiate a new insurance policy from the date the notice of cancellation is sent by their insurance company to the OMV. Once the reinstatement period lapses, the OMV will issue its first notice of non-compliance, and up to a total of three.
If a vehicle owner receives the third and final notice and does not act to come into compliance within the time allotted, the debt will be increased to the maximum of $525, in addition to a 25% collection fee charged and retained by the ODR.
After the 60th day, the OMV can forward the delinquent debt to the ODR, which is authorized to extract money from an individual’s bank account, recommend suspension of their state-issued professional license, and offset the debt with the individual’s income tax refund.
Although acknowledging that receiving such a notice could be “unnerving,” the OMV commissioner notes that the agency is only following the law by collecting the debt. Of the projected $444 million owed to the agency, the OMV has collected roughly $22.5 million to date.