Oregon Insurance Division Bulletin INS 2013-04
TO: All Auto Insurers and Auto Insurance Producers
RE: Permissible use of lapse in insurance coverage as a rating factor – Oregon Revised Statute (ORS) 742.449
State law does not allow insurance companies and producers to charge higher premiums for auto insurance based solely on a client's lapse in coverage. The Insurance Division has not changed its interpretation of this law (Oregon Revised Statute 742.449) since 1990 bulletin INS 90-5. We are expanding the clarification so insurers and producers understand how the division interprets the law.
ORS 742.449 prohibits the practice of assigning a person a high-risk category based solely on a lapse in coverage unless the person violates the law by driving uninsured (ORS 806.010). A conviction isn't required. For example, a consumer's statement that he or she drove while uninsured would be a violation.
When a lapse may be considered as a rating factor:
In determining an auto insurance rate, a lapse in coverage may be considered only in conjunction with other factors (e.g., credit history, not-at-fault accidents, driver's age). Additionally, the insurer must give customers the chance to state that they didn't break the law (806.010) while they were without coverage. Typically, insurers provide clients with a checklist so they can indicate why their coverage lapsed. For example, they were on a sabbatical or serving in the military, they didn't own a vehicle or they only drove a vehicle insured by others.
ORS 742.449 does not apply to an applicant who has never had auto insurance, since "lapse" presumes prior coverage.
Proof insurers can require from a client
The statutes are below:
ORS 742.449 states:
742.449 Prohibition on assignment to high-risk category on certain grounds.
An insurer issuing motor vehicle liability insurance policies in this state may not assign an insured or applicant for insurance to a higher risk category than the person would otherwise be assigned to solely because the person has:
ORS 806.010 states:
806.010 Driving uninsured prohibited: penalty.
Note: A person can commit the offense of driving uninsured and be in violation of this section [see ORS 806.010(1)] without being convicted of a violation of the section - convictions are specifically mentioned in ORS 806.010(3) and (4), which state:
This bulletin takes effect immediately.
This bulletin is dated the 20th of August, 2013, at Salem, Oregon.