BETHLEHEM, Pa. — A state Senate committee this week took a closer look at how Pennsylvania handles alleged lapses in vehicle insurance — a system that affects every driver in the commonwealth.
On Wednesday, the Senate Transportation Committee questioned the state Department of Transportation about its process for suspending registrations tied to supposed insurance gaps.
“Every month, PennDOT suspends more than 15,000 vehicle registrations based on an alleged lapse in coverage, and almost a third of those suspensions are rescinded once PennDOT receives proof of insurance,” committee Chairwoman Sen. Judy Ward said.
Ward said the agency’s decades-old verification system “places an undue burden on those who are properly maintaining coverage” and needs a full overhaul.
What is an F-stop?
An F-stop, or F-suspension, occurs when PennDOT suspends a vehicle registration because of what it believes is a lapse in mandatory insurance coverage.
But testimony suggested many of those suspensions are based on incomplete data rather than actual lapses.
Lawmakers were told that while insurance companies must notify PennDOT when a policy is canceled, the new insurer is not required to report when coverage is reinstated.
After receiving notice of a cancellation, PennDOT sends letters asking vehicle owners to provide proof of insurance.
Failure to respond can result in a three-month registration suspension or a $500 fine, plus a $112 restoration fee and potential court costs.
Proposed solution
PennDOT Secretary Mike Carroll said the department already reaches out twice before a suspension is triggered — once when the first notice arrives, and again about 40 days before any suspension takes effect.
“In most cases, not every case, but in most cases, the individual has bound a new policy with another carrier,” Carroll said. “If there is a lapse less than 30 days, you can overcome any sanction.”
Sen. Marty Flynn, the committee’s Democratic chairman, said lawmakers are considering an online verification system similar to those used in other states.
Carroll said PennDOT’s ongoing modernization effort could help integrate such a system, preventing “a huge percentage” of unnecessary letters.
He compared it to being able to immediately recognize when “someone switching from Allstate to Nationwide” maintains continuous coverage.
Online verification supported
Jonathan Greer, president of the Insurance Federation of Pennsylvania, supported online verification managed by the Insurance Industry Council for Motor Vehicle Administration.
Greer described the system as a “searchable database that will identify not just people within the first 180 days of issuance. This is everybody, all the time.”
“It will identify people who don’t have replacement coverage, and when that occurs, that’s when they will get the letter from PennDOT."Jonathan Greer, president of the Insurance Federation of Pennsylvania
“It will identify people who don’t have replacement coverage, and when that occurs, that’s when they will get the letter from PennDOT,” Greer said.
Such a system, he said, would “dramatically reduce the number of these letters that go out.”
“It’s battle-tested," he said. "It’s now in place in 21 states, including the District of Columbia.
“What we don’t want to do is make criminals out of people who aren’t.” He said Pennsylvania is the sixth-lowest in the country in terms of uninsured drivers.
Carroll said upgrades to PennDOT’s Driver and Vehicle Services are underway and could help keep insurance records current while reducing unnecessary mailings.
The DVS updates could be completed sometime next year, followed by improvements to the vehicle registration system.
