Commercial auto insurance has its unique set of regulatory requirements, including those for reporting automobile liability insurance. Based on Verisk staff’s review of certain laws and regulations as of March 2020, 37 states and the District of Columbia mandate that insurers report liability coverage on personally registered vehicles, but just 19 of these jurisdictions require coverage to be reported on commercially registered vehicles. The remaining 19 make reporting on commercial vehicles optional.
When considering reporting in optional states, here are some questions for commercial insurers to consider:
- Does the insurer allow personally registered vehicles on commercial auto policies?
- Would reporting in optional states improve the policyholder experience?
- How would the insurer benefit from reporting in the additional states?
The type of vehicle registration is the primary driver of automobile liability insurance reporting (ALIR). If a commercial insurer allows personally registered vehicles on commercial auto policies, the carrier should follow the same requirements as personal auto insurers and report those vehicles and coverages on them to the various jurisdictions where required. Failure to do so may result in letters from state motor vehicle authorities to policyholders, along with fines, suspended registrations, and towing.
Recently, many Idaho and Oklahoma commercial vehicle owners received letters requiring they provide verification of liability insurance on their vehicles. Inconvenienced and confused, some policyholders contacted their insurers for answers.
But policyholders of commercial insurers that chose to report in these optional states shouldn't have received these letters. These policyholders also were able to renew their vehicle registrations online and minimize any issues with law enforcement concerning traffic stops or accidents. These benefits flowed from their insurers’ choice to report liability coverage in optional states, which made the policyholders’ auto insurance information readily available in the state motor vehicle systems.
Benefit to the insurer
Reporting auto liability in all available states can yield at least one primary benefit for commercial insurers—it can help with customer retention. Verisk strongly encourages insurers to weigh policyholder benefits when deciding whether to report auto liability insurance in optional states.
At Verisk, CV-ALIR® can help personal and commercial insurers seamlessly manage their auto liability insurance reporting. Verisk’s all-in implementation approach gives insurers flexibility to activate reporting in states on demand and manages the unique liability insurance reporting needs of commercial insurers.