Opinion ID: 2167753
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Heading: Question 1: Is Indiana a Compulsory Insurance State?

Text: In Allstate Insurance Co. v. Boles (1985), Ind., 481 N.E.2d 1096, 1101, we determined in response to another certified question from the Seventh Circuit that Indiana was not then a compulsory insurance state. [1] The cause of action in Boles accrued prior to adoption of the statute now at issue. Under prior law, Indiana required proof of financial responsibility only after the occurrence of an accident. Ind. Code § 9-2-1-4 (Supp. 1981). Because coverage was not required until after the first accident occurred, Indiana courts examining our former law had long ago come to the inescapable conclusion that our Legislature did not intend the financial responsibility law to be or to become a compulsory insurance statute. Green v. State Farm Mut. Auto. Ins. Co. (1976), 168 Ind. App. 434, 439, 343 N.E.2d 828, 831. [2] The purpose of the scheme in place then was only protecting victims against an owner or operator's second or subsequent accident. Id. It permitted most people to register and drive an automobile without first giving proof of insurance or other ability to be financially responsible for damages they might cause to others. Accordingly, Indiana was not a compulsory insurance state for two reasons: lack of compulsion to prove responsibility until after an accident and a statute which permitted proof of responsibility after an accident in any of several ways. The enactment of § 9-1-4-3.5 changed the one free accident scheme. The statute now requires that: (a) A motor vehicle may be registered in Indiana only if proof of financial responsibility in the amounts specified in IC 9-2-1-15 is produced for inspection at the time application for registration is made in a form required by the department. (b) Financial responsibility, in one (1) of the forms prescribed by IC 9-2-1-16 or by self-insurance under IC 9-2-1-37, must be continuously maintained in at least the amounts specified in IC 9-2-1-15 as long as the motor vehicle is operated on roads, streets, or highways in Indiana. A person who operates a motor vehicle on a road, street, or highway in violation of this subsection commits a Class C misdemeanor. Ind. Code § 9-1-4-3.5. Obviously, this statute requires that proof of financial responsibility must be made before a motor vehicle can be registered in Indiana. Safeco Ins. Co. of America v. State Farm Mut. Auto. Ins. Co. (1990), Ind. App., 555 N.E.2d 523; see also Hitt v. Githens (1987), Ind. App., 509 N.E.2d 210. The statute also demonstrates that the legislature intended that there should be no certificate of registration outstanding without concurrent and continuous proof of financial responsibility. American Underwriters Group v. Williamson (1986), Ind. App., 496 N.E.2d 807, 810. Indiana's new financial responsibility statute, Ind. Code § 9-1-4-3.5, requires that proof of financial responsibility be (1) made to register a car and (2) be maintained as long as the motor vehicle is operated in Indiana. Unlike under the previous system, every car on the road must be covered regardless of whether its drivers have been in a previous accident. Transamerica's counsel noted at oral argument that the overwhelming majority of Indiana vehicle owners prove financial responsibility by purchasing insurance, although the law still permits proof of responsibility through bond, deposit of funds or securities, and self-insurance. [3] Thus, we think it is probably most accurate to call Indiana a compulsory financial responsibility state. [4] Having concluded that Indiana is a compulsory financial responsibility state, we still must ask whether the adoption of § 9-1-4-3.5 evince[s] a social policy to guarantee compensation for all victims of automobile accidents. We find that it does not. From the time the General Assembly enacted financial responsibility laws, the other two branches of Indiana government have regarded these statutes as predicated upon a state policy to facilitate recovery for loss suffered because of the negligent operation of motor vehicles by others. 1944 Op. Att'y Gen. 22 (emphasis added); Boles, 481 N.E.2d at 1102 (DeBruler, J., dissenting). Justice Pivarnik's opinion for this Court in Boles reaffirmed this conclusion, saying: Clearly, the purpose of the [Safety-Responsibility and Driver Improvement] Act is not to require an automobile owner to be insured for personal injury sustained by himself, rather it is to require insurance for liability for injuries sustained by others. ... [T]he Act only requires liability insurance for injuries sustained by persons other than the insured. ... 481 N.E.2d at 1101 (emphasis added); cf. Safeco, 555 N.E.2d at 524 (the legislature did not intend to require that all owners' policies would necessarily provide protection to any person operating a vehicle with the owner's consent.). Indiana's current financial responsibility scheme, like the prior one, demonstrates a policy to protect automobile owners, their families, friends, and guests from damages which might be inflicted on them by other cars out on the road. See Gelco Vehicle Leasing, Inc. v. Boston (1989), Ind. App., 539 N.E.2d 979, 981 (Although the Act has been modified to require insurance for all registered vehicles, [the Boles ] interpretation remains persuasive.). One who owns a car has the opportunity to buy protection for himself, his family, and friends whom he permits in his vehicle. The owner has no control, of course, over the acts of other motorists. The purpose of our financial responsibility statute is to compel those other motorists to make provisions for our protection. Indiana's motor vehicle scheme, even with the amendment of § 9-1-4-3.5, is designed only to protect motorists from drivers other than themselves. It is not designed to protect owners (and their families and friends) from themselves. Therefore, Ind. Code § 9-1-4-3.5 does not constitute a social policy to guarantee compensation to all victims of motor vehicle accidents.