Auto Insurance Policy Bill Fails in the Assembly Insurance Committee
23 April 1999
AB 976 -- An Equitable, Low-Cost Auto Insurance Policy Bill Fails in the Assembly Insurance Committee
SACRAMENTO, Calif.--April 22, 1999--A proposal which would have made a more affordable auto insurance policy available to low-income motorists in California failed passage by a vote of 6 to 6 with one abstention yesterday in the Assembly Insurance Committee.AB 976 by Assemblyman Dennis Cardoza, D-Merced, would have permitted a low-income motor vehicle owner to comply with financial responsibility laws by purchasing a basic liability insurance policy in the amount of $10,000 per person and $20,000 per accident in bodily injury liability coverage and $3,000 for property damage.
"AB 976, unlike other low-cost auto insurance policy legislation being considered this week in the Senate, would not have required motorists in one part of the state to subsidize drivers in another part," explained Cardoza. I am very disappointed that the bill did not pass out of the Assembly Insurance Committee."
Diane Colborn, Senior Legislative Advocate and Counsel for PIFC noted, "PIFC has introduced a low-cost auto bill each session for the past ten years and, once again, the personal injury lawyers have helped to defeat it. Ironically, to test their sincerity, Assemblyman Cardoza graciously allowed amendments to the bill to allay their 'concerns.'
"Even with the amendments, the personal injury lawyers still opposed the measure and caused the defeat of AB 976. Their actions reveal that the true motives of personal injury lawyers is not in the best interests of California's insurance consumers. They oppose any legislation that would give consumers a break, if it would reduce the money they make off the system," she said.
"Assemblyman Cardoza's bill would require the policy to be priced in a manner that is actuarially sound and fair to all drivers in the state. It would have reduced the cost of a policy to allow any uninsured low-income, good driver who must, by law, purchase insurance to be able to afford an insurance policy."
"AB 976, unlike some of the other low-cost proposals introduced, does not establish a flat rated policy and would not have required other insured drivers, including low-income drivers, to subsidize the low-cost policy," Cardoza said.
"Whatever low-cost policy emerges, it has to be fair to all drivers in the state, actuarially sound and cost based. To do otherwise would be totally unfair to all drivers."
Colborn said, "There are currently two other low-cost auto insurance policy proposals now being considered by the Legislature. SB 171 (Escutia) creates a so-called 'lifeline' low-cost auto policy which good drivers who meet a low-income means test would be eligible to purchase for a statewide flat rate of $300.
"The flat rate will result in drivers in some parts of the state being forced to pay higher rates in order to subsidize lower rates for drivers who purchase the 'lifeline policy.' Auto policies providing the minimum required coverage today are already being sold in many areas of the state outside of Los Angeles for less than $300," Colborn continued.
"SB 527 (Speier), which creates a low-cost auto policy that low-income, good drivers could purchase to meet the mandatory insurance law also calls for one statewide unspecified flat rate to be set for each of two low-cost policies created by the bill. Because of the flat rate, the premium will, by definition, be excessive for some and inadequate for others."
Colborn concluded, "We commend Assemblyman Cardoza for taking the lead in ensuring that whichever low-cost policy is developed by the Legislature, it will be fair to all drivers in the state. PIFC will continue to work for that purpose in spite of the misguided efforts of the personal injury lawyers."
Note: Voting yes for AB 976 in the Assembly Insurance Committee: Assemblymembers Rico Oller, Tom Calderon, Dave Cox, Bill Leonard, Tom McClintock, and Tony Strickland. Voting no were Assemblymembers Jack Scott, (chairman), Gil Cedillo, Dick Floyd, Martin Gallegos, Sally Havice and Fred Keeley. Not voting was Assemblyman Howard Wayne.