2 Conflicting Car Insurance Bills Advance in Assembly

Two competing insurance measures, each described as the best way to provide low-cost auto policies for poor Californians and at least modest rate reductions for other drivers, both advanced Wednesday in a key Assembly committee.

The bills, one supported by the state’s trial lawyers and the other backed by an unusual alliance of consumer advocates and insurance companies, were approved by the Finance and Insurance Committee and sent to the Ways and Means Committee for further consideration.

Although the measures contradict each other, several Democrats on the committee voted for both bills, probably because one was authored by powerful Assembly Speaker Willie Brown (D-San Francisco) and the other was written by the committee’s chairman, Democrat Patrick Johnston of Stockton.

“It’s in the nature of the process that (Assembly) members want to support their colleagues, even though (the bills) have different provisions,” Johnston said.

Both bills were put forward as necessary to provide the rate reductions that voters expected when they approved Proposition 103, the November ballot measure which called for 20% premium rollbacks that so far have not been implemented. Neither bill changes any of the provisions of Proposition 103, but both would work with the initiative to further change the system.

Voter Revolt Forces

A spokesman for Voter Revolt, which sponsored Proposition 103, said the group opposed Johnston’s bill but was not ready to endorse Brown’s measure because it still disagrees with parts of it.

Brown’s measure would tighten auto safety rules, strengthen enforcement of mandatory insurance laws, and simplify claims procedures. This, the Speaker says, would save insurance companies enough to help them subsidize $220-a-year “lifeline” insurance policies for low-income good drivers and offer anticipated, across-the-board savings for most other motorists.

Johnston’s bill would create a “no-fault” insurance system under which injured drivers would be compensated by their insurance company without regard to who was at fault for the accident. The measure would require every California motorist to purchase a $180 “no frills” policy and would allow drivers to purchase added coverage if they wished.

The low-cost policy in Brown’s bill, which would provide coverage of $15,000 per person for bodily injury and $5,000 for damage to property other than a vehicle, would be subsidized by part of the projected savings realized by virtually ridding the state of uninsured motorists. This could be done, Brown asserted, by requiring that motorists prove they have insurance before they register their cars each year with the Department of Motor Vehicles.

Brown’s measure also would eliminate the liability system for property damage to motor vehicles and replace it with an optional no-fault system. In other words, motorists could choose whether or not to insure their car for collision damage, and if they did buy such coverage, any repairs would be paid for by their insurance company, no matter who was at fault for the accident.

The legislation also includes a number of provisions designed to increase safety, and therefore decrease insurance costs, through stricter enforcement of the state’s mandatory seat belt and child safety seat laws, and regular safety inspections for all cars, similar to the smog equipment certificate program.

Brown’s bill was approved on a vote of 12 to 7, with 11 Democrats and one Republican in support.

Johnston’s bill would provide a much more dramatic change in the state’s auto insurance statutes by creating a no-fault system to compensate injured motorists for their medical bills and some lost wages, regardless of fault. Every motorist in the state would be required to purchase a minimum policy providing $15,000 coverage per person. The policy would cost good drivers $180 a year when implemented in July, 1990.

Insurance companies would also be required by Johnston’s bill to provide more extensive no-fault coverage--up to $50,000--for those drivers who wished to buy it.

Under Johnston’s bill, motorists could go to court to recover basic economic losses--medical bills and lost wages--in excess of their policy limits. But they could not sue for non-economic losses such as pain and suffering unless their injury was “serious”--a description covering items ranging from fractures to dismemberment to death.

Johnston’s bill was approved on a vote of 12 to 1.

Insurance industry representatives who backed Johnston’s bill, which is sponsored by Consumers Union, claimed that the bill’s no-fault provisions provided the dramatic action needed to cut industry costs so rates could be reduced.

“The system must be reformed,” said Bud Wilson, a Chula Vista insurance broker who is chairman of the Insurance Agents and Brokers Legislative Council. “It can’t just be patched up and sent back to the marketplace.”

But Brown said industry representatives opposed his bill because they needed to “protect their profits.”

“This is a good bill,” he said. “It is a bill that is workable and will cause us to have adequate coverage for everybody operating motor vehicles in this state at prices people can afford and with the safety features they need provided.”