Push Starts for No-Frills, No-Fault Car Insurance
In a major reorientation of the push for no-fault auto insurance, a coalition of minority and low-income groups will join with several legislators today to announce a plan to abolish the state’s requirement for liability insurance and replace it with a no-frills, no-fault policy that would cost only $160 to $200 a year.
Assemblyman Patrick Johnston (D-Stockton), chairman of the Assembly’s Insurance Committee, said Tuesday that he will radically revise his current no-fault bill to incorporate the mandatory no-frills policy, which would sell for the same price throughout the state.
He said Assemblymen Richard Polanco (D-Los Angeles) and Frank Hill (R-Whittier) will join as co-sponsors of the policy providing $15,000 of medical coverage and wage losses to be collected from one’s own insurer regardless of who is at fault in an accident.
This would replace the state requirement now that each driver purchase a liability policy of $15,000 for a single accident victim, $30,000 for multiple victims and $5,000 property damage.
More Affordable Insurance
The more extensive $50,000 mandatory no-fault policy Johnston had earlier proposed would not be required, in order to make auto insurance more affordable. Johnston said he has been informed that the $15,000 limit will cover injuries incurred in 90% of all auto accidents.
State Insurance Commissioner Roxani Gillespie, meanwhile, released estimates prepared by her department indicating that even with the optional liability policies above the no-fault limits that many people with assets to protect could be expected to buy, the proposal would mean sharply lower insurance prices in Los Angeles and many other urban centers.
Gillespie estimated that average annual auto insurance premiums in Los Angeles for all coverages would drop, under the plan, from $1,587 now to $856. In San Francisco, the average bill would decrease from $584 to $474. In Sacramento, where auto insurance is comparatively inexpensive, the decrease would be smaller, from $330 to $321.
The insurance commissioner said she is endorsing the proposal “in concept,” but she dropped earlier plans to attend today’s Sacramento news conference announcing it, saying she wanted to see the final detailed language.
Endorsing the no-frills, no-fault plan today are expected to be many of the most important minority and low-income organizations in the state, including the NAACP’s Western Region, the California Council of Urban Leagues, the American G.I. Forum, the Mexican American Political Assn., Latino Issues Forum, the League of United Latin American Citizens, Jesse Jackson’s Rainbow Coalition, the Black Business Assn. of Los Angeles, the Oakland Citizens Committee for Urban Renewal, Chinese for Affirmative Action and the Filipino-American Political Assn.
John Gamboa, executive director of the Latino Issues Forum, who originally put forward the plan, said Tuesday that he believes many low-income people are ready to give up some of their rights to sue for auto accidents in exchange for dramatically lower rates that will bring insurance within financial reach.
“I’m for it, because it’s going to allow our community to legally drive and not violate the mandatory insurance law,” Gamboa said. “It will take them out of the criminal class.”
Also expected to lend support to the plan are many elements of the state’s insurance industry, now anxious to find a way to lower California auto insurance premiums and reduce political pressure against the industry.
Under the proposal, people could only sue for medical costs in auto accidents if their damages exceeded the no-fault limits or their injuries were serious ones.
The proposal is radically different from one advanced in Sacramento on Monday by Assembly Speaker Willie Brown (D-San Francisco) with the support of consumer advocate Ralph Nader and Proposition 103 Chairman Harvey Rosenfield.
That plan, calling for a $350 or $500 basic policy for lower-income people only, would preserve the present litigation system, but the low-cost policies would have to be subsidized by the state’s other auto insurance policyholders in an amount yet to be revealed.
In the past, Brown and his allies in the California Trial Lawyers Assn. have always been able to block legislative action that would curtail the rights to sue in accidents, usually with solid support from minority legislators.
Now, however, with so many minority groups supporting the no-frill, no-fault policy plan, Johnston, Gillespie and insurance representatives are hopeful that the legislative balance may shift and a new coalition of Republicans and minority Democrats will be able to put no-fault across.
Johnston said Tuesday that he had concluded that his earlier plan, with its higher no-fault limits, could not secure passage.
“The criticism of my bill that I heard from liberals and conservatives alike is that it might stabilize insurance costs but did not offer the promises of lowering rates, particularly for low-income persons,” Johnston said.
