554,219 Drivers Lose Licenses for Lack of Insurance

In the first full year of enforcement of California’s mandatory auto insurance law, 554,219 drivers had their licenses suspended after being unable to show proof of coverage when they were stopped for traffic violations, according to state records.

Of these 1988 suspensions, 262,898 drivers had not demonstrated by the end of the year that they had purchased the required liability coverage and their licenses remained suspended, a Department of Motor Vehicles spokesman said. This is about 2% of the state’s licensed drivers.

Meanwhile, the California Highway Patrol said this week that of the 2,780,139 motorists its officers stopped for violations in 1988, 912,191, almost one third, had not been able to show proof of insurance at the time they were stopped. Many of these were, however, able to show it by the time they went to court and thus escaped license suspensions.

The proof required is not the policy itself but can be the name of the insurer and the number of the policy written on a piece of paper.

The statistics suggest that a substantial number of motorists remain uninsured, despite the mandatory insurance law.

The cost of obtaining the minimum liability coverage is, according to many people involved in the controversy over auto insurance in California, one of the most important causes of public anger about the operation of the system, anger that led last Nov. 8 to the adoption of Proposition 103 to radically alter insurance industry prices and practices.

Two Proposals

Since the measure was adopted, two proposals have been made to cut the price of the state’s required minimum liability coverage ($15,000 for injury to a single party, $30,000 for injury to a group and $5,000 property damage).

A few weeks ago, a coalition of Latino groups proposed, for example, that the state provide the required coverage in a no-fault policy through the DMV. Estimating that the cost of a bare-bones policy might run about $300 a year, the groups proposed that every motorist in California be required to purchase it annually when vehicle registration are renewed.

John Gamboa, executive director of the Latino Issues Forum, said that at a meeting the group held with Insurance Commissioner Roxani Gillespie and several insurance lobbyists in Sacramento, the insurers came up with a counter proposal, saying they would develop their own plan for providing bare-bones coverage through private companies.

Since then, both Gamboa and spokesmen for the insurance lobby have said, there have been further discussions. Gamboa said Thursday that he has been assured that the insurers will come up with a proposal shortly. Any such plan would require legislation.

Assemblyman Charles L. Calderon (D-Alhambra) announced plans this week to propose a bill that would allow motorists to buy either a bare-bones no-fault policy, restricting their rights to claim pain and suffering damages, or a more expensive policy that would allow them the right to sue for these and other damages.

An industry spokesman said this week that Calderon has not secured the support of the insurers for his approach.

Pressure to provide more affordable mandatory coverage may grow in the wake of an announcement this week by insurers who direct the California Assigned Risk Auto Plan that they are seeking state approval for a 112.3% average rate increase for assigned risk policies, which are purchased by people who cannot obtain other policies or choose not to do so.

Cheaper Coverage

The proposed increase in the Los Angeles inner city, where the rates for the minimum coverage tend to be the highest, is 137%. The assigned risk system often provides cheaper coverage in such neighborhoods than any other policy.

In another insurance development Thursday, Gillespie issued “notices of noncompliance” against six insurers for refusing to renew private passenger auto policies in California in what she said were violations of Proposition 103.

The companies, National Indemnity Co., AIU Insurance Co., Central Mutual Insurance Co., All America Insurance Co., Dairyland Insurance Co. and Sentry Insurance, have 10 days to either renew policies or request a public hearing.