BILL ANALYSIS
SENATE COMMITTEE ON BANKING, FINANCE,
AND INSURANCE
Senator Jackie Speier, Chair
AB 778 Mullin Hearing Date: June 15, 2005
As amended: June 6, 2005
Fiscal: No
Urgency: No
Vote: 2/3 (Proposition 103 amendment)
VOTES:Asm. Ins. (4/27/05): 7-0/ Pass
Asm. Floor (5/16/05): 47-30/ Pass
SUMMARY Would prohibit an insurer from refusing to offer
insurance to an applicant who is an in-home supportive services
(IHSS) worker, would further ban rating based upon the worker
being an IHSS worker, and would prohibit insurers from excluding
coverage for the operation of a motor vehicle incident to IHSS
DIGEST
Existing law
1. Generally requires, pursuant to Proposition 103, that
private passenger auto insurance be rated according to the
insured's driving record, the number of miles he or she
drives annually, and the insured's number of years of
driving experience;
2. Permits other factors to be used to rate private
passenger auto insurance, with the approval of the
Insurance Commissioner (IC), and establishes, through
regulations, these other factors:
i. Type of vehicle;
ii.Vehicle performance capabilities;
iii.Type of use of vehicle (pleasure only,
commute, business, farm, etc.);
iv.Percentage use of vehicle by the rated driver;
v. Multi-vehicle households;
vi.Academic standing of the rated driver;
vii.Completion of driver training or defensive
driving courses by the rated driver;
viii.Vehicle characteristics, including engine
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size, safety and protective devices,
damageability, repairability, and theft
deterrent devices;
ix.Gender of the rated driver;
x. Marital status of the rated
driver;
xi.Persistency;
1. Requires the offer of a "Good Driver Discount" private
passenger auto policy to those who meet the statutory
definition of a good driver:
i. He or she has been licensed to
drive for three years;
ii. During the previous three years,
the person has not had more than one moving
violation point, as specified;
iii. During the previous three years,
the person hasn't had more than one point
dismissed through a traffic safety school;
iv. During the previous three years,
the person hasn't been involved in an accident
that involved bodily injury or death and was
principally at fault;
v. During the previous seven years,
the person hasn't been convicted of drunk
driving, reckless driving, vehicular
manslaughter, and other related offenses.
2. Requires all auto insurance policies to cover liability
when performing volunteer services for a nonprofit or
government organization when providing "social service
transportation," defined, generally speaking, as
transporting seniors or those with special needs;
3. Specifies that the policy will not cover those who
receive remuneration for transportation in excess of
mileage reimbursement;
4. Defines in-home supportive services to include,
generally speaking and among other services, the provision
of travel to health-related appointments (see "Opposition,"
below, for fuller explanation).
This bill
AB 778 (Mullin), Page 3
1 Would require all auto liability policies to include the
operation of a motor vehicle for IHSS purposes;
2. Would ban rating, canceling, or refusing to issue a
policy because the driver is providing IHSS transportation
incident to IHSS.
COMMENTS
1. Purpose of the bill . To ensure that IHSS personnel are able
to obtain insurance coverage at the rates otherwise
available to the general public, and to prevent higher rates
from being charged to these workers.
2. Support . According to the author, more than one in five
U.S. households is involved in helping care for a person
older than age 18. 62% of care givers are married and 2/3
are women. The typical care giver is a 46 year old woman
with at least some college experience who provides more than
20 hours of care each week to her mother. As the insurance
code now reads, if that person would take their loved one to
the doctor or to another necessary appointment, it would be
considered using their vehicle "in the course of employment"
because the consumer is considered the "employer" for IHSS
purposes. Insurance companies are basing their "course of
employment" requirements on how many days a week the IHSS
provider is using the vehicle for these purposes and also
how many stops are made.
SEIU, the sponsor, states that an insurer increased the rate
of an IHSS worker beyond the financial means of the worker,
and also classified the worker as a commercial driver
similar to the risk of a pizza delivery driver. The rates
for commercial or artisan purposes are "outrageous." IHSS
consumers cannot receive more than 283 hours of care per
month (all types of care-not just driving). A consumer may
receive only 2 or 3 hours of care per month from an IHSS
worker, for assistance going to and from medical
appointments, for example. Over 40 percent of IHSS
providers give care to their own disabled or aged family
members who are in need of constant care. "The few hours
and miles they spend using their automobile to fulfill their
duties to their consumer does not justify commercial or
artisan rates applied to their personal auto insurance."
SEIU also notes that over 340,000 Californians use the IHSS
program, funded by federal, state and county governments.
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While the other supporters of this bill made points similar
to those made above, the Area Agency on Aging Advisor
Council, of the Commission on Aging, El Dorado County noted
that, "In some situations, the IHSS recipient does not own a
car or their car is not in good working order, but has
transportation needs. If auto insurance policies exclude
the IHSS provider from using their own car, the IHSS
provider would need to use the client's car, possibly
jeopardizing their own safety."
The California Association of Public Authorities for
In-Home Supportive Services notes that IHSS workers
transport consumers to medical appointments. "However, this
is a fairly limited component of the work performed by IHSS
workers and should not trigger higher auto insurance rates.
AB 778 would remedy this problem by [by allowing] their
existing auto insurance coverage [to be used] and would
prevent these low-wage workers from bearing unnecessary and
expensive business coverage rates.
3 Opposition . The Association of California Insurance
Companies (ACIC) opposes the bill. ACIC believes that the
categories of in-home supportive services described in the
bill is broad (Welfare and Institutions Code Article 7,
Section 12300). Reprinted, below, is the language of
existing law (bold) that appears, to staff, to be relevant
to the intent of the bill:
Welfare and Institutions Code Section 12300:
(b) Supportive services shall include domestic services and
services related to domestic services, heavy cleaning,
personal care services, accompaniment by a provider when
needed during necessary travel to health-related
appointments or to alternative resource sites, yard hazard
abatement, protective supervision, teaching and
demonstration directed at reducing the need for other
supportive services, and paramedical services which make it
possible for the recipient to establish and maintain an
independent living arrangement.
[Staff note: While the remainder of the language describing
in-home supportive services relates to other subjects, it
would appear from the statute that the risk that is inherent
in the job is described by the bold-faced text, above. ACIC
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will be present to explain why this (or any other relevant
language) is "broad." There may be other statutes that are
relevant, and that were the basis of ACIC's concerns.]
ACIC states that the bill doesn't permit an insurer to
require higher limits for injury to passengers, such as may
be needed to fully account for injuries to those who need
in-home supportive services. [Staff note: While true,
neither does it require an insurer to indemnify beyond the
limits of the policy. If the policy limits ultimately prove
to be inadequate, the driver of the car will be responsible
for the excess of damages over the limits, not the insurer.]
ACIC also states, "Personal automobile rate plans do not
provide adequate rates for commercial exposures," and notes
that personal automobile rates may exclude vehicles that are
commercial vehicles.
The Pacific Association of Domestic Insurance Companies
(PADIC) believes that IHSS companies will, in summary, evade
the costs of commercial insurance by "forcing" their
employees to begin to do many of the jobs that would
otherwise be carried out in a commercial vehicle by company
employees covered by commercial rates. These activities may
include delivery of personnel and supplies to in-home
customers. PADIC would agree to drop its opposition to the
bill if it were limited to allowing family members to
continue to use their private passenger vehicles for in-home
care, and if insurers could still use the mileage rule of
Proposition 103. [Staff note: While an earlier version of
the bill proposed a mileage rule, the latest version drops
this language and thus mileage could, should this bill pass,
be used to rate a policy.]
4. Question .
a. The bill in its current form amends
Proposition 103 and is therefore keyed 2/3. The
Legislature may amend Proposition 103 only if it
furthers the purpose of the initiative.
Proposition 103 contained this statement: "The
purpose of this chapter is to protect consumers
from arbitrary insurance rates and practices, to
encourage a competitive insurance marketplace, to
provide for an accountable Insurance Commissioner,
and to ensure that insurance is fair, available,
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and affordable for all Californians. " Does the
bill further the purpose of Proposition 103?
AB 778 (Mullin), Page 7
5. Amendment needed .
a. Legislative counsel has offered an
informal opinion to staff that the bill amends
Proposition 103 because on page 7 at line 28, it
bans the use of IHSS status to rate a policy. To
avoid amending Proposition 103, but to require
insurers to adhere to Proposition 103's analysis
of this type of risk, counsel has drafted the
following language. Counsel has indicated that
this amendment would eliminate the 2/3 vote key on
this bill because the bill would no longer amend
Proposition 103. Staff recommends that the author
take the amendment.
On page 7, line 28, strike the words "rated or"
On page 7, at line 32, after the period, insert:
"No policy of insurance issued under this section
may be rated by an insurer for the reason that the
named insured or applicant is operating or using
an insured motor vehicle, owned by a natural
person, to provide transportation incident to the
provision of in-home supportive services, except
to the extent that the insurer used rating factors
permissible under Section 1861.02 and the
regulations adopted thereto."
POSITIONS
Support
Service Employees International Union (Sponsor)
California Senior Legislature
United Domestic Workers of America
Commission on Aging El Dorado County
Triple-A Council of California
California Seniors Coalition
California Association of Public Authorities for In-Home
Supportive Services
Area Agency on Aging (Humboldt/Del Norte Counties)
Protection and Advocacy
Oppose
AB 778 (Mullin), Page 8
Association of California Insurance Companies
Pacific Association of Domestic Insurance Companies
Consultant: Brian Perkins 916-651-4102