BILL ANALYSIS Ó AB 1551 Page 1 ASSEMBLY THIRD READING AB 1551 (Torres) As Introduced January 26, 2012 Majority vote INSURANCE 13-0 APPROPRIATIONS 16-1 ----------------------------------------------------------------- |Ayes:|Solorio, Hagman, |Ayes:|Fuentes, Harkey, | | |Bradford, | |Blumenfield, Bradford, | | |Charles Calderon, Carter, | |Charles Calderon, Campos, | | |Feuer, | |Davis, Gatto, Hall, Hill, | | |Beth Gaines, Hayashi, | |Lara, Mitchell, Nielsen, | | |Miller, Olsen, Skinner, | |Norby, Solorio, Wagner | | |Torres, Wieckowski | | | | | | | | |-----+--------------------------+-----+--------------------------| | | |Nays:|Donnelly | | | | | | ----------------------------------------------------------------- SUMMARY : Provides an exemption from the duty to report automobile accidents to a private insurer if the accident occurs while a public safety officer is driving his or her personal vehicle at the request or direction of the employer, in the course of the officer's duties. Specifically, this bill : 1)Prohibits insurers from increasing the automobile insurance premium charged to a peace officer or firefighter based on an accident that occurs when they are driving a private vehicle in the course of their duty at the request or direction of their employer. 2)Specifies that peace officers and firefighters are not required to report accidents to their insurer that occur when they are driving a private vehicle in the course of their duty at the request or direction of their employer. 3)Specifies that the employer of a peace officer or firefighter may not require a peace officer or firefighter to report accidents that occur when they are driving a private vehicle in the course of their duty at the request or direction of their employer. 4)Specifies that any time a private vehicle is used by a peace AB 1551 Page 2 officer or firefighter at the request or direction of their employer, the employer shall bear all liability for accidents or injuries. 5)Requires the employer of a peace officer or firefighter to assume liability for any accident or injury when there is a dispute regarding whether the vehicle was being used at the direction or request of the employer. 6)Requires the private passenger insurer to reimburse the employer if it is determined that the employer did not direct or request the employee to use the vehicle when the accident or injury occurred. 7)Prohibits insurers from using a "good faith" delay in reporting an accident as a basis to claim delayed reporting, noncooperation, prejudice, or the like as a reason to avoid any obligations they may have in the insurance policy. 8)Defines "private passenger motor vehicle" or "private motor vehicle" as a motor vehicle that is insured under a personal automotive liability policy and has at least four wheels. 9)Provides that a report indicating that a vehicle is owned and operated by a peace officer or firefighter in the performance of his or her duty and at the direction of his or her employer is satisfactory evidence of financial responsibility. EXISTING LAW : 1) Provides that no peace officer, member of the California Highway Patrol (CHP), or firefighter is required to report, to his or her private automobile insurance carrier, any accident in which he or she is involved while operating an authorized emergency vehicle or any employer-leased or employer-rented vehicle, in the performance of his or her duty, during the hours of his or her employment. 2) Provides that no insurer may increase the premium on a private automobile insurance policy, or deny renewal of the private automobile insurance policy, of a peace officer, member of the CHP, or firefighter, due to an accident in which that individual was involved while operating an authorized emergency vehicle in the performance of his or her AB 1551 Page 3 duty, during the hours of his or her employment. 3) Provides that, if an employee or former employee of a public entity asks that public entity to defend him or her against any claim or action for an injury arising out of an act or omission occurring within the scope of his or her employment, as specified, and if the employee or former employee cooperates in good faith in the defense of that claim or action, the public entity must pay any judgment or any compromise or settlement of the claim or action to which the public entity agrees. 4) Requires the driver of a motor vehicle that is involved in an accident which results in property damage in excess of $750 or in bodily injury or death, to report the accident to the Department of Motor Vehicles (DMV), provided that a report is not required, if the motor vehicle involved in the accident is owned or leased by, or under the direction of, the United States, California, another state, or a local agency. 5) Requires every driver or employer that is involved in an accident subject to the reporting requirements noted in 4) above, to provide evidence of financial responsibility to DMV, however that evidence may be established by filing a report with DMV indicating that the motor vehicle involved in the accident was owned, rented, or leased by or under the direction of the United States, California, or any political subdivision of California or a California municipality. 6) Requires an owner of a motor vehicle to maintain evidence of financial responsibility that meets specified minimum standards. This is almost always accomplished through the purchase of an automobile insurance policy. FISCAL EFFECT : According to the Assembly Appropriations Committee, no direct fiscal impact. COMMENTS : Purpose . According to the author, and the sponsor, California AB 1551 Page 4 Professional Firefighters, local agencies are increasingly asking safety officers, especially firefighters, to drive in their personal vehicles to work-related locations. This places the officers' personal driving records at risk, and adversely impacts their premium expenses for their personal automobile insurance policy. They argue that these costs should be part of the employment costs covered by the public agency, and this bill remedies the problem. Department of Insurance Regulations . According to regulations adopted by the Insurance Commissioner that govern when an insurer may determine that a driver was principally at fault in an accident, the insurer is prohibited from doing so if "The driver was responding to a call of duty as a paid or volunteer member of any police or fire department, first aid squad, or of any law enforcement agency, while performing any other governmental function in a public emergency." While this provision provides some protection to a public safety officer, it does not fully address the issue of who should be responsible for incidents that occur during the course of employment that do not rise to the level of a public emergency. Mileage Rate . Public employees using their personal vehicles for work purposes are commonly provided reimbursement based on the number of miles driven. The standard business rate of reimbursement per mile is established each year by the Internal Revenue Service. The current reimbursement rate is $0.555 per mile. This rate includes items such as depreciation or lease payments, maintenance and repairs, tires, gasoline (including taxes), oil, insurance, and license and registration fees when calculating the reimbursement rate. Prior Legislation . In 2010, identical legislation was vetoed (AB 2151 (Torres)). The Governor's veto message provided: This bill would provide that peace officers, members of the California Highway Patrol, and firefighters would not be required to report any accidents to their private automobile insurer while operating their personal vehicles at the request and direction of their employer. This bill would further require all state and local agencies employing peace officers or firefighters to pay the costs of any accident and all damages regardless of whether the driver of the vehicle was acting recklessly or with gross AB 1551 Page 5 negligence. While there may be reasons for state and local entities to pay the costs of automobile accidents while employees are responding to emergency situations in their private vehicles, this measure would require indemnification in all situations regardless of the driver's fault, which is unwarranted. Moreover, the Internal Revenue Service-established mileage reimbursement rate already covers costs for insurance for employees that use their private vehicles for work purposes. Since this measure will unreasonably shift costs to public employers in a time of fiscal crisis, I am unable to sign this bill. Analysis Prepared by : Paul Riches / INS. / (916) 319-2086 FN: 0003470