Driver’s licenses and auto insurance seem to go together like Vin Diesel and fast cars. Yet despite conventional thinking, you don’t really need a driver’s license to have auto insurance in some states or in certain situations.
“We have found that some insurers just issue policies without asking for any form of driver’s license,” says Pete Moraga, a spokesman for the Insurance Information Network of California. “That’s truly remarkable because there is no way to verify their driving ability.”
In California and other states, your driving record -- and, therefore, your driver's license -- helps determine how much you pay for auto insurance.
It's not big auto insurance companies that are tossing policies around like confetti, Moraga says. In California, most of the auto insurers that sell coverage to unlicensed drivers are companies that are small players, he says.
“Several of these companies have found a niche market that may include undocumented workers who are, by law, not allowed to get a driver’s license,” Moraga says. "We have found that in these cases, the insurance brokers use an international driving license or the driver's license of the home country of the insured person.”
Getting an auto insurance policy without having a driver’s license is a crapshoot. There’s no set standard for auto insurance companies when dealing with unlicensed drivers -- they may not even be aware that their policyholders don't have licenses. And there's simply no way to track how much auto insurance premiums are for unlicensed drivers compared with licensed drivers, according to Moraga.
To find out your state’s rules on auto insurance and driver's licenses, check the website of the National Association of Insurance Commissioners.
There's no shortage of loopholes that enable unlicensed drivers to get auto insurance. Here’s a look three of the most common:
1. Some states, such as Texas, allow unlicensed drivers to buy auto insurance simply to keep their vehicle registrations current. That can save motorists the trouble of re-registering their cars once they do get driver's licenses.
2. Consumers can buy auto insurance if they don’t have a driver’s license for health reasons, such as impaired vision, but do have a car title in their name and are listed as the primary driver on an insurance policy. This is a common occurrence among senior citizens. For instance, Illinois and New Hampshire will yank a driver's license from a senior citizen based on a failed driver's test at age 75, but will let the driver maintain auto insurance coverage.
3. If you’ve had your driver's license revoked, you may want to keep your auto insurance active for financial reasons. Consumers "want to keep the car covered so that they don’t lose their continuity discount," Moraga says, "or to keep their comprehensive and collision coverage in case the car is parked and gets stolen or crashed into by a drunk driver."
Some states cracking down
Some states have decided that they no longer can look the other way when it comes to unlicensed drivers. Those states include Montana, New Jersey, Oklahoma and Oregon.
Oregon enacted a law in 2008 that tightens documentation and identity verification requirements for state residents seeking driver's licenses. But officials say it’s too early to say how it's affecting the number of unlicensed drivers in the state; the Oregon Department of Transportation notes that drivers are required to renew their driver's licenses every eight years.
According to a report released by the Oregon Department of Transportation, these are the percentages of unlicensed drivers who were involved in Oregon traffic accidents in the past four years:
• 2007 -- 4.4 percent.
• 2008 -- 3.7 percent.
• 2009 -- 4.1 percent.
• 2010 -- 3.4 percent.
However, there doesn't appear to a high number of car accidents in Oregon involving motorists who lack driver's licenses and auto insurance. The majority of people in car accidents involving uninsured motorists do have driver's licenses, state officials say.
Across the country, a large number of U.S. drivers cannot meet the basic requirements for getting a license. According to the 2011 GMAC Insurance National Drivers Test, about 18 percent of U.S. drivers -- or about 36 million motorists -- flunked a written driver's exam.