Accord May Be Near on Good Driver Policy

Republican Gov. George Deukmejian and Democratic Assembly Speaker Willie Brown are nearing agreement on a major proposal to create a basic auto insurance policy for good drivers, according to legislative sources and an internal memorandum.

The cost of the proposed policy is not yet clear but probably would be between $325 and $425 a year.

Under the proposal, an outline of which was obtained by The Times, drivers no longer would be required to carry insurance that includes coverage for the “pain and suffering” they cause others in an accident.

Liability coverage for so-called economic damages, such as medical expenses and lost wages, still would be included in the state’s mandatory minimum auto insurance policy.

In addition, the mandatory coverage law would be more strictly enforced by requiring drivers to show proof of insurance each year when they register their cars with the Department of Motor Vehicles. Today, drivers need to show that they have insurance only when stopped by a police officer for a traffic offense.

Backers of the proposal contend that it would significantly reduce auto insurance costs for all drivers--even those carrying more extensive coverage--by reducing the need for uninsured motorist coverage and cutting back the pain and suffering costs paid by the insurance system.

The proposal represents a limited compromise between Deukmejian and Brown on an issue that has vexed both of them for several years. It probably goes further than Brown’s allies in the trial lawyer lobby would like but not as far as Deukmejian’s supporters in the insurance industry would prefer.

Neither Speaker Brown nor the Deukmejian Administration would comment directly on the proposal, which was outlined in a memo to Brown from Bill Rutland, his negotiator on insurance issues.

“We have been making progress and we remain hopeful,” said Robert Gore, Deukmejian’s press secretary. “When someone surfaces with a formal proposal, we will be glad to react to it.”

So far, the negotiations have been limited to the staff level. Brown and Deukmejian have not discussed the most recent draft of the proposal in a face-to-face meeting.

But a source close to the negotiations said the two sides are “very close” to an agreement.

“They both want to see something happen,” the source said. “The governor does not want to leave office without having done something about auto insurance, and Willie Brown does not want to see this added to the list of problems people say he has not solved.”

If Brown and Deukmejian can reach final agreement on the proposal, the Democratic lawmaker and the Republican governor would present a formidable force in getting the measure through the Legislature. Assemblyman Steve Peace (D-La Mesa), who has been working with Brown on the issue, said he intends to introduce the plan as legislation within the next week. “We had hoped to have the governor on board but because of the budget crisis it has been impossible to get that far,” Peace said.

Supporters of this proposal suggest that it makes more sense to allow the poor to buy a limited insurance policy than to have them drive, illegally, with no coverage at all.

Current law requires every driver to carry liability insurance of $15,000 per person, with a maximum of $30,000 per accident. The minimum financial responsibility law also requires every driver to carry at least $5,000 in liability coverage for property damage.

The law allows accident victims to collect not only for their actual, out-of-pocket damages but also for “pain and suffering” that might be caused, for instance, by a disfiguring injury. The proposal that Brown and the Deukmejian Administration are developing would eliminate the ability of accident victims to collect non-economic damages from the insurance company of the driver who was at fault.

Victims still could sue for non-economic damages, but they would find it difficult to collect from anyone covered only by the proposed basic policy, because only people without many financial assets are expected to buy the minimum coverage. More affluent motorists would buy broader coverage because they would not want to risk having to use their personal funds to pay damages from an accident.

The proposal also includes a mechanism to prevent victims from collecting twice for their medical bills--once from their health insurer and once from their auto insurance carrier.

One major sticking point that could yet derail the negotiations is the subject of attorneys’ fees. Under current law, lawyers usually are paid out of the money paid to compensate the victim for non-economic damages. If those damages are no longer paid, lawyers would have little incentive to take cases and victims might find it tougher to obtain compensation from insurance companies.

“Without pain and suffering, without some type of penalty on insurance companies, they (insurers) have absolutely no incentive to pay,” said Judith Bell, a lobbyist for Consumers Union. “For every day they drag it out they know you are facing additional bills and your attorneys’ fees are going to come out of the money you get to pay those bills.”