Drivers might have to buy more insurance coverage under a bill given initial approval by members of the House on April 6.
Lawmakers backed a change in the law that would say coverage for uninsured or underinsured motorists purchased on one car doesn’t extend to all other cars they may also own
Motorists would have to sign a form saying they don’t want to pay for such coverage on those other cars under the measure (House Bill 1355).
The coverage protects motorists if they are in a collision with a driver who is uninsured or doesn’t have enough insurance to cover the damage.
The change, pushed by both the insurance industry and trial lawyers, was proposed because of two recent court decisions that found the current law allows people to use their uninsured motorist coverage even if they’re not driving the insured car at the time of the accident.
That’s at odds with how state regulators interpret the law. Insurance Commissioner Doug Dean says for 25 years regulators have allowed companies to set different uninsured coverage rates for different vehicles a person owns. He has said rates could rise by at least 30 percent if state lawmakers don’t clarify who is covered.
The first court case, decided by the state Supreme Court, involved a boy riding an all-terrain vehicle who was hit by an uninsured driver. His parents won a legal battle to get their insurance company to pay a claim using their uninsured motorist coverage. The second, heard by the state appeals court, retroactively applied the first decision to a case involving a man who wanted to use his wife’s policy to help cover a claim involving his car.
Rep. Rosemary Marshall, D-Denver, said she wasn’t sure how many people would have to buy coverage on their second or third cars under this change but she worries they may not find out they need to until after an accident.
She said Dean has promised her that insurance companies will have to notify people of the change.
“This is a very important public policy change,” she said.
Bill sponsor Rep. Al White (R-Winter Park), said the bill isn’t a change to current law because the courts misinterpreted what’s already been in place. Not doing anything would hurt consumers because rates would certainly go up because of the court decisions, he said.
“The companies have held off repricing waiting to see if this bill passes,” he said.
Insurance companies have been afraid the court decisions would allow policy holders who felt they were led to buy more coverage than they needed would join a class action lawsuit to recover those costs. The original bill would have blocked such a suit by changing the law retroactively but the version passed by lawmakers Tuesday doesn’t do that.
The current law allows people to use their uninsured motorist coverage if they are hit by uninsured driver if they are a pedestrian. They are also allowed to use the coverage if they are riding as a passenger with a driver who isn’t insured. Neither of those provisions would change under the bill.
The bill must pass another vote in the House before being sent to the Senate for consideration.
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