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A Status Report on the Enforcement of Compulsory Automobile Insurance Laws
January 1999

REPORT (PDF)     SUMMARY (PDF)

State law requires that motor vehicles have liability insurance. In spite of this requirement, there are many uninsured motor vehicles. We reported, in 1997, that estimates of the number of uninsured motor vehicles in South Carolina ranged from 10% to 16%.

The State Reorganization Commission recommended, in June 1998, that the Department of Public Safety (DPS) develop a data system in which insurance companies would provide more complete information on their customers' insurance coverage. In conducting our current review, we focused on the detection of uninsured motor vehicles by the Department of Public Safety (DPS).

Our primary finding is that incomplete data continue to prevent efficient enforcement of the law. DPS has been working on the development of a reliable insurance customer database, however, its implementation date is not certain. This finding and others are summarized below.

  • State law required that uninsured motorist insurance taxes be transferred to DPS, for enforcing compulsory insurance laws, beginning in FY 95-96. In FY 95-96 and FY 96-97, however, after collecting these revenues, DPS deposited them in the state's general fund. The amount collected but not retained by the department was approximately $5.8 million.
  • DPS does not audit insurance company payments of uninsured motorist insurance taxes.
  • State law requires insurance companies to notify DPS of the insurance status of certain customers only after their policies have been canceled. This presents a problem, in that DPS does not have sufficient data to know initially whether the vehicles are uninsured or their owners have changed insurance companies, sold the vehicles, moved out-of-state, etc. DPS officials estimated that 86% of motorists reported to have canceled their insurance, to whom the department sent insurance verification forms in FY 96-97, had insurance coverage.
  • During the application process for a driver's license or vehicle registration, the Division of Motor Vehicles cannot verify information given by motorists about their insurance coverage. In addition, during traffic stops, state and local law enforcement officers cannot verify the information on insurance cards presented by motorists.
  • In FY 97-98, DPS spent almost 95% of uninsured motorist insurance tax revenues on the highway patrol, most of which were spent on salaries and benefits of "administrative" officers. It is therefore not clear whether DPS has identified the improvement and long-term maintenance of its insurance verification data system as a funding priority.
  • South Carolina law allows a newly acquired, insured motor vehicle to be driven without a license plate for 45 days. This grace period makes it easier for uninsured vehicles without license plates to avoid detection.