Brown Bill on Insurance Advances

Setting the stage for a major confrontation over automobile insurance between Assembly Speaker Willie Brown and Gov. Pete Wilson, the Assembly on Monday passed legislation that Brown promised would provide a $300-a-year policy for the state’s low-income motorists.

Passed with one vote to spare, Brown’s bill goes to the state Senate, where it will square off with a rival no-fault bill supported by Wilson and backed by Consumers Union and a large segment of the insurance industry.

Brown’s measure would leave most of the existing liability system in place while seeking to reduce fraud, improve safety and use binding arbitration to settle some accident claims. It also would strengthen the state’s mandatory insurance provision--a move expected to sharply reduce the number of uninsured drivers on the roads.

Savings produced by these changes, instead of being used to reduce insurance premiums for everyone, would go to subsidize a new inexpensive liability policy available only to low-income motorists with good driving records.

Brown said his bill, which Wilson has threatened to veto if it reaches his desk, is supported by “most of the good people in the state and those interested in actually solving the problem.” It is officially backed by the California Trial Lawyers Assn.

He said the alternative measure would not hold irresponsible drivers accountable for their actions. Under the rival no-fault measure, victims would collect from their own insurance companies and are prohibited from suing except in major accidents or when they suffer serious or permanent injury. It promises annual premiums of $220 for basic coverage for good drivers.

“People who do things ought to be responsible for what they do,” Brown said in explaining the rationale for his bill. “As a government, we ought to make it possible for those individuals to afford the protections for each one of us. This measure does exactly that.”

But a Republican opponent said the bill’s many elements are designed to protect the income of trial lawyers while failing to attack the root cause of higher insurance rates--unnecessary and expensive litigation.

“Unfortunately, this bill confuses motion with progress,” said Assemblyman Jim Brulte (R-Ontario).

The Assembly, splitting along partisan lines, passed the bill on a 42-28 vote. The measure is expected to go next to the Senate Judiciary Committee, where the rival bill by Sen. Patrick Johnston (D-Stockton) is awaiting a hearing.

Brown’s bill would not change the current law governing lawsuits over medical injuries suffered in auto accidents. It would, however, eliminate liability in most cases for vehicle damage, leaving it up to individual drivers to decide whether to protect themselves with collision coverage.

The measure also would establish a binding arbitration system to be used when both the insurer and the injured party are willing to submit to it.

In addition, the legislation would:

* Require all drivers to show proof of insurance every time they register their vehicle.

* Require a state-run insurance program for bad drivers to be self-supporting. Bad drivers who could not obtain insurance in the private market would be forced to pay whatever premiums were necessary to pay claims under this so-called assigned risk plan.

* Increase criminal penalties for certain acts of insurance fraud, and more than double--to $1.10--the annual surcharge assessed on each policy to fight fraud. Most of the money would go to the Insurance Department and to local law enforcement agencies to increase the investigation and prosecution of insurance swindles.

* Require the state Bureau of Automotive Repair to begin stopping vehicles at random and subjecting them to roadside safety inspections.

* Give police more power to cite motorists for not wearing seat belts. Current law permits police to issue such citations only after stopping a motorist for another violation.

* Enact several other safety provisions involving air bags, anti-lock brakes and bumpers, most of which could not be implemented without changes in federal law.

Under voter-approved Proposition 103, most of the savings from these provisions would be returned to drivers in the form of lower premiums. But Brown’s bill would instead require insurers to use the savings to subsidize a policy available only to drivers with an income of no more than $25,000 for a family of four. To qualify, these drivers could have no more than two moving violations in three years and no more serious driving offenses, such as drunk driving, during the period.

Brown promised that the new policy would cost about $6 a week, or $312 a year, although the actual text of his bill contains blank spaces where the cost of the policy is supposed to be. Brown said the blanks will be filled in after Insurance Commissioner John Garamendi completes an analysis of the proposed policy.

“Our numbers are not made up,” Brown said in an interview.

But Harry Snyder, director of Consumers Union’s California office, accused Brown of running a “scam.” Without knowing the cost of the low-income policy, he said, it is impossible for legislators to determine how much of a subsidy will be borne by other motorists.

Brown’s bill and the rival no-fault measure both deal only with basic liability coverage. Motorists who want to have higher limits on their policies would have to purchase additional coverage.