Pay-at-Pump Car Insurance Proposal Voted Down

Amid charges that it bowed to powerful special interests, a Senate committee on Tuesday killed a radical pay-at-the-pump car insurance bill that proposed a surtax on gasoline to finance less costly coverage for California motorists.

The bill, considered the most revolutionary car insurance plan to be introduced in years, drew only one favorable vote from the Judiciary Committee--that of its author, Sen. Art Torres (D-Los Angeles). Eight votes were cast against it.

From the outset, the legislation appeared doomed because it contained controversial features alternately opposed by the insurance industry and personal injury attorneys, two of the most powerful lobbies at the Capitol.

“Everybody (on the committee) was looking for an excuse to vote no,” Torres complained to reporters later.

Meantime, author Andrew Tobias, who promotes the pay-as-you-drive concept in his book “Auto Insurance Alert,” said he is pressing ahead with plans to put a pay-at-the-pump, no-fault initiative on the California ballot in November, 1994.

“The trial lawyers and the insurance companies will probably spend more than $100 million to defeat it,” Tobias said in a telephone interview. “But it doesn’t mean they are going to win.”

Tobias deflected questions on how his campaign would be financed. “The first thing is to get a good (initiative). If we can do that, I think we might be able to find the money.”

Under no-fault, a motorist’s own insurance policy would pay for his or her costs of an automobile crash without regard to who was at fault. Lawsuits for pain and suffering damages would be prohibited, a feature strongly backed by insurance companies and fiercely opposed by personal injury attorneys.

To pay for a basic no-fault auto insurance policy, the bill would have imposed a surcharge of about 30 cents per gallon on gasoline and an additional $25 annual registration fee for some drivers.

It also would have either eliminated or dramatically reduced the need for motorists to insure themselves against uninsured drivers, who account for about one in four drivers statewide. The savings to drivers would occur chiefly as a result of eliminating costly lawsuits and expensive administrative costs of insurance companies.

Tobias started out as an enthusiast for the Torres bill, but earlier this month withdrew his backing. He said the bill had had been so compromised with amendments sought by insurance agents that he no longer supported it.

Torres said after the hearing that the proposed Tobias initiative “may be the only alternative to combat the tough special interests in this Capitol. I don’t see anything else to overcome it.”

Mike Johnson, a former assistant to state Insurance Commissioner John Garamendi, said he is drafting the Tobias ballot plan and intends to file it with the secretary of state by mid-August and start gathering the 615,000 voter signatures required to put it on the ballot.