Three automobile insurance bills that the National Association of Independent Insurers (NAII) says would drive up the cost of insurance, increase the number of underinsured motorists, and threaten a company’s proprietary rights passed the California Senate last week.
“In the end, these bills would only hurt consumers since it would make it even more difficult for California insurance companies to accurately price their risk and provide affordable policies,” Sam Sorich, senior vice president and general counsel for the NAII, said.
SB 1590 would restrict insurers’ efforts to carry out the mandates of Proposition 103 and would force safe drivers to pay more than they should for car insurance. The current vehicle code requires the reporting of accidents that result in property damage in excess of $500 to the Department of Motor Vehicles. The bill would increase the reporting threshold to $1,500.
“The bill’s proposed limit on reporting would be unfair to safe drivers,” Sorich said. “Drivers whose accidents would not be reported to the DMV would pay less than they should for car insurance because insurance companies would not have the proper access to information regarding accident history. Safe drivers with no accident history would pay more than they should for car insurance.”
Proposition 103 states that a policyholder’s driving record and mileage driven are the primary determinants of the auto insurance rates that the motorist will be charged. Currently, 29 states have a property damage reporting threshold of $500 or less.
SB 1427 would extend the state’s experimental low-cost auto insurance program and could increase the number of underinsured motorists in the state. The bill would change the program’s eligibility criteria from 150 percent to 250 percent of the federal poverty level, while decreasing the annual premium for participants of the program.
“By making the pilot programs’ policy too attractive, many drivers will be encouraged to ‘buy down’ from financial responsibility coverage they now purchase,” Sorich said. “The result would be more underinsured drivers.”
SB 1648 would ban an insurance company from owning or investing in auto body repair shops, violating a constitutional right for businesses to make investments and acquire property. It would require insurers that currently invest in auto body repair shops to divest their interests within eight years of the bill’s effective date, and would prohibit any new insurer investments in auto body repair shops.
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