ACIC Opposes Small Claims Court Legislation

June 14, 2005

The Association of California Insurance Companies (ACIC) is opposing Small Claims Court legislation that would hurt consumers by reducing the ability of insurers to represent their policyholders in court.

Jeff Fuller, ACIC’s executive vice president and general counsel, said the legislation, SB 422, would increase the jurisdiction of Small Claims Court from cases with $5,000 in damages to cases with $7,500 in damages. Because attorneys – and insurers – can not represent clients in Small Claims Court proceedings, SB 422 would reduce the number of cases in which insurers would be able to defend their policyholders.

The Senate-approved bill by Sen. Joe Simitian (D-Palo Alto) is scheduled to be heard next by the Assembly Judiciary Committee.

“Policyholders, under this bill, will suffer,” said Fuller. “First, insurers would be unable to meet their contractual obligations to defend their policyholders. Second, consumers would be deprived of a benefit under their insurance policies for which they pay a premium.”

If SB 422 becomes law, insurers likely will have little choice but to appeal Small Claims Court decisions that they feel are questionable. In such appeals to Superior Court, insurers would be able to represent their policyholders.

“The number of such appeals would increase substantially, which in turn will result in higher costs to the judicial system – precisely the opposite effect of the intended purpose of operating small claims courts in the first place,” said Fuller.

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