The Modern Day Slavery of Insurance

The concept of insurance can be traced back to the ancient Chinese. In 3000 B.C., Chinese merchants and their investors wanted to ensure that they would see a profit from the goods that they shipped overseas. In the event that a ship was lost at sea or pirated, an insuring partner would reimburse the owners of the ship and goods. To pay for the loss, the merchant would be sold into slavery to the insurer until the debt was repaid. This was a mutually beneficial arrangement since a merchant could not afford to pay for the lost goods or even buy a ship unless someone invested. The merchant could become very rich and even own a fleet of ships if he was successful.

Of course, slavery is not an option today, but the penalty of not having insurance can still be financially devastating. In Illinois, it is law that all motor vehicles registered and operated in this state are covered by liability insurance for property damage and/ or injuries caused to others in an accident. The required limits of liability are very low: $20,000 for injury or death of one person in an accident; $40,000 for injury or death of more than one person in an accident and $15,000 for damage to the property of another person.

When you buy a car, you must show proof of insurance to register. Some people try to save money on a policy by making the minimum down payment and then letting it expire for nonpayment. They might get away with that, but if the state computer randomly selects their license plate registration, a verification of insurance form is sent from the Secretary of State. It does not pay to return this form with information on an expired policy because the company also has to verify that you had coverage on the date indicated on the form. If they cannot verify insurance for you, your license plates will be suspended. Your plates could also be suspended if you are stopped for a traffic violation or have an accident and are convicted in court for operating an uninsured vehicle. The penalties are a minimum $500 fine for operating an uninsured vehicle and a minimum $1,000 fine for driving a vehicle while the registration is suspended for no insurance.

Occasionally law-abiding citizens get stopped and do not have their most current insurance card, so they get a ticket for no insurance—often in addition to the speeding ticket that originally caused the stop. Just make sure that you either find the card or get another from your agent before you go to court. In most cases, the no-insurance ticket will be dismissed. If your insurance was out of force or non-existent when you were stopped, you had better reinstate or buy insurance before you go to court, or the consequences are expensive. You will discover that modern-day slavery (working to pay something that could have been avoided) is alive and well. TPW