Lack of Driver's License, No Bar to Getting Insurance

Wrong.

Auto insurance companies have realized what other businesses, including banks and car dealers, have: Illegal immigrants represent a large and lucrative market.

That is especially true in the Golden State, where analysts say about a quarter of the nation's estimated 12 million illegal immigrants live.

Many of those immigrants work and are willing to pay a premium for car insurance, even if they are unlicensed.

"We are not immune to accidents and it's the law," said Erica Avila, an undocumented immigrant in Escondido who has a car insurance policy. "We want to have whatever documents we can get."

Up until 1993, illegal immigrants could walk into any California Department of Motor Vehicles office and apply for a driver's license, just like everyone else. That changed when the Legislature passed a law requiring that people submit proof of legal residency.

Since then, millions of illegal immigrants have taken to the roads without a license and largely without car insurance. But that's beginning to change.

No law against it

The state does not prohibit insurance companies from selling policies to unlicensed people, said Molly DeFrank, a spokeswoman for the state's Department of Insurance. She said the department has not received any complaints about the provision of the policies to unlicensed immigrants.

The Alliance United Insurance Co. has been issuing policies to unlicensed drivers, some of whom are illegal immigrants, since 2004, said David Mandel, the company's president. The Ventura-based company is one of dozens in California that serve what the industry calls "nonstandard drivers."

That means drivers who have too many tickets, traffic accidents or no driver's license.

Mandel declined to say how many of the 100,000 policies the company has written involve unlicensed drivers. He said the company accepts government-issued ID cards as a form of identification, including the matricula card issued by the Mexican government at its consul general offices worldwide. The card is often used by illegal immigrants to establish their identity and can be used to open checking accounts in many U.S. banks.

Once the company realized that there was no law prohibiting the sale of insurance to undocumented immigrants, it saw an opportunity, Mandel said. The controversy over illegal immigration is not his company's concern, he said.

"We're just selling them a product," Mandel said. "We didn't sell them a car. We didn't bring them here. The politics is not our business."

Peace of mind

Alliance is not alone. Local Spanish television stations and newspapers carry ads telling immigrants that a California driver's license is not necessary to buy an auto insurance policy.

It's unclear how many illegal immigrants buy car insurance. There are no government statistics and industry officials keep their information private for competitive reasons.

Major insurers, such as Progressive and Bristol West, accept Mexican driver's licenses or matricula cards to buy insurance, albeit at a higher cost.

Mandel said typically policies for unlicensed drivers are 20 percent higher than for other drivers. That's because most illegal immigrant, unlicensed drivers don't qualify for a good driver discount since they don't have a driving record in California.

That's OK, Avila said. She doesn't mind paying for the peace of mind.

She and her husband need their vehicles to travel to work and shuttle their children to school and doctors' appointments.

Avila said she and her husband drive carefully to avoid getting into accidents. While they are protected against liability through their insurance, they are still subject to fines and having their car impounded by police for driving without a license.

She said the family has been insured for more than three years. In that time, they have had no accidents, but the insurance company responded with tow truck assistance when the truck they own broke down on the road.

The Avilas, who immigrated from Mexico about 15 years ago, are among an estimated 8.3 million illegal immigrant workers in the United States.

They make up about 5.4 percent of the nation's labor force, according to the Pew Hispanic Center, a research organization that studies the Latino population. In California, illegal immigrants make up an even larger share, nearly 10 percent, of the state's workers 18.8 million workers.

The state Insurance Department spokeswoman said the agency doesn't keep track of how many illegal immigrants have car insurance or how many insurance companies offer the policies.

In 2007, the median household income of illegal immigrants was $36,000 a year, according to the center's latest study on undocumented people.

With good reason

Assemblyman Martin Garrick, R-Carlsbad, an outspoken critic of illegal immigration, said there are legitimate purposes for selling insurance to people who don't have California driver's licenses, including foreign tourists and other legal visitors.

But selling insurance to illegal immigrants is not something he's considered, Garrick said. He said it is simply one more consequence of the federal government's failure to protect the country's borders against illegal immigration.

Asked if issuing illegal immigrants car insurance is a loophole in state law that needs to be closed, Garrick said: "It's something worth looking at."

However, Garrick added that: "I don't think we expect insurance companies to become immigration police."

Ira Mehlman, a spokesman for the Federation for American Immigration Reform, a group that lobbies against illegal immigration, said his organization generally opposes anything that legitimizes illegal immigrants, such as giving them driver's licenses.

However, the group has not taken a position on selling them car insurance, he said.

"Obviously if you are going to get hit (in an auto crash) by somebody, better to be by someone who has insurance," Mehlman said.

On that point, Mandel agrees.

"If there's someone driving in my street, I'd rather have them insured," he said.