No-Fault Bill Is Rejected by Senate Panel : Insurance: Measure backed by governor falls one vote short. Committee chairman hopes defeat will spur its supporters to compromise with Willie Brown, who authored rival legislation.

A key Senate committee Tuesday rejected a no-fault automobile insurance bill backed by Gov. Pete Wilson and a coalition of consumer groups, minority organizations and insurance companies.

The Senate Judiciary Committee’s action dealt a severe blow to the chances of major changes this year in the state’s vehicle insurance system.

The committee postponed a vote on a rival measure by Assembly Speaker Willie Brown (D-San Francisco), which Wilson has threatened to veto.

The no-fault bill by Sen. Patrick Johnston (D-Stockton) called for providing motorists with good driving records a basic policy for $220 a year.

The chairman of the committee, Democratic Sen. Bill Lockyer of Hayward, said he hoped the rejection of the no-fault measure would spur Wilson and the bill’s other supporters to compromise with Brown.

“Until people know that no-fault is not an idea acceptable to Californians or their representatives, the discussion of alternatives won’t happen in a serious way,” Lockyer said.

Johnston said he was “disappointed” by the defeat. The bill fell one vote short of the six needed for passage on the 11-member panel.

“Auto insurance as an issue persists because rates are too expensive for Californians. The Legislature will have to face up to it,” Johnston said.

Supporters of both bills have contended that their legislation would provide a low-cost insurance policy tailored for the poor.

Both camps assume that more affluent motorists would purchase greater coverage to protect their assets--such as their homes--in case they are found liable in an accident.

Both bills also propose stricter enforcement of the state’s mandatory insurance law, requiring drivers to show proof of coverage when they register their cars each year with the Department of Motor Vehicles. Drivers are now required to carry proof of insurance, but must show it only when involved in an accident or cited for another traffic violation.

Beyond that, the measures are very different.

The Johnston bill proposed a dramatic overhaul of the civil liability laws--the statutes that govern when and how victims can sue the person they believe to be at fault in an accident. Brown’s bill would preserve most of the current liability system and use other means to create its low-cost policy.

Johnston’s bill relied on the no-fault concept, the idea that insurance companies should reimburse their own policyholders for their medical costs and other actual expenses, including lost wages. The bill called for capping these payments at $15,000 per person and allowing the victim to sue for damages over that amount.

The other major feature of the no-fault measure was a provision to limit lawsuits for so-called “pain and suffering”--damages that cannot be measured in objective economic terms. The bill would have permitted such suits only in cases where the injury was deemed to be serious or permanent.

Brown’s bill proposes a low-cost policy that would be available only to the poor who are good drivers and would be subsidized by motorists who did not qualify for the plan. Supporters said that most of the subsidy would be balanced by reductions in premiums that insured drivers now pay for uninsured motorist coverage. These premiums, Brown said, would go down as drivers who are now uninsured signed up for the new, cheap policy.

Brown’s legislation also proposes increasing penalties for criminal fraud, requiring random roadside safety inspections and giving police more power to enforce the state’s mandatory seat belt law. Any savings produced by these measures would be returned to all insured motorists, Brown said.

In an analysis, an actuary working for Insurance Commissioner John Garamendi said a no-fault policy as proposed by Johnston could be sold for $220 but suggested that $255 would be a more realistic figure.

Brown’s proposed policy, because it would be subsidized, can be priced at whatever level the Legislature decides is “affordable.” Based on a price of $350 a year, the actuary determined that the subsidy from other drivers would be about $850 million, or $63 per driver.