BILL ANALYSIS Ó SENATE JUDICIARY COMMITTEE Senator Hannah-Beth Jackson, Chair 2015 - 2016 Regular Session SB 438 (Hill) Version: April 6, 2015 Hearing Date: April 21, 2015 Fiscal: Yes Urgency: No TMW SUBJECT Motor vehicles: reportable property damage DESCRIPTION This bill would increase the minimum amount of damage to property resulting from a motor vehicle accident that must be reported to the Department of Motor Vehicles from $750 to $1,000. This bill would make corresponding changes to the minimum judgment amount that qualifies a judgment debtor, found liable for that damage but who has failed to pay the judgment rendered thereon, to have his or her driver's license suspended or revoked. BACKGROUND Existing law requires individuals driving in California to maintain minimum amounts of automobile liability insurance that would pay for bodily injury or property damage to an injured party resulting from an automobile accident caused by the driver. In support of this requirement, existing law also requires a driver who causes property damage in an amount of $750 or more or bodily injury or death in any amount to submit an accident report to the Department of Motor Vehicles (DMV). Failure to report that accident to the DMV may result in the suspension or revocation of the driver's license. Existing law also provides that a driver, who is found liable for property damage in an amount of $750 or more or bodily injury or death in any amount due to an automobile accident and SB 438 (Hill) Page 2 of ? who fails to pay the judgment creditor, is subject to driver's license suspension or revocation. This provision helps to ensure that individuals harmed by drivers with no automobile insurance will be paid by the at-fault driver. This bill would increase from $750 to $1,000 the minimum amount of reportable property damage resulting from an automobile accident and unpaid judgment debt that may subject an at-fault driver to license suspension or revocation. This bill was heard by the Senate Transportation and Housing Committee on April 7, 2015, and passed out on a vote of 11-0. CHANGES TO EXISTING LAW Existing law subjects a judgment debtor to driver's license suspension or revocation if the judgment debtor fails to satisfy a judgment that was for damage to property in excess of $750 or for bodily injury to, or the death of, a person in any amount, and resulted from the operation of a motor vehicle on a California highway by the defendant or by any other person for whose conduct the defendant was liable, unless the liability resulted from the defendant's signing the application of a minor for a driver's license. (Code Civ. Proc. Sec. 116.870.) Existing law provides that if the judgment was for $750 or less, resulted from a motor vehicle accident occurring on a California highway caused by the defendant's operation of a motor vehicle, and has remained unsatisfied for more than 90 days after the judgment became final, the judgment creditor may file with the Department of Motor Vehicles (DMV) a notice requesting a suspension of the judgment debtor's privilege to operate a motor vehicle. (Code Civ. Proc. Sec. 116.880(a).) Existing law requires the DMV to prepare and publish a printed summary describing the penalties for noncompliance financial responsibility requirements, which shall be included with each motor vehicle registration, registration renewal, and transfer of registration and with each driver's license and license renewal, and that printed summary may contain, but is not limited to, a provision advising a driver that under existing California law, if the driver is involved in an accident that results in damages of over $750 to the property of any person or in any injury or fatality, the driver must file a report of the accident with the DMV within 10 days of the accident; if the SB 438 (Hill) Page 3 of ? driver fails to file a report or fails to provide evidence of financial responsibility on the report, the driver's driving privilege will be suspended for up to four years. (Veh. Code Sec. 1656.2.) Existing law authorizes the DMV to refuse to issue or renew, or may suspend or revoke, the certificate or endorsement, as specified, of any person who meets any of the following conditions: (1) within 12 months, has been involved as a driver in three accidents in which the driver caused or contributed to the causes of the accidents; or (2) within 24 months, as a driver, caused or contributed to the cause of an accident resulting in a fatality or serious injury or serious property damage in excess of $750. (Veh. Code Sec. 13369(c)(1)-(2).) Existing law provides that the driver of a motor vehicle who is in any manner involved in an accident originating from the operation of the motor vehicle on a street or highway, or is involved in a reportable off-highway accident, as defined, that has resulted in damage to the property of any one person in excess of $750, or in bodily injury, or in the death of any person shall report the accident, within 10 days after the accident, either personally or through an insurance agent, broker, or legal representative, on a form approved by the DMV, to the office of the DMV at Sacramento. (Veh. Code Sec. 16000(a).) Existing law includes in the definition of a "reportable off-highway accident" an accident which results in damages to the property of any one person in excess of $750, or in bodily injury or in the death of any person. (Veh. Code Sec. 16000.1(a)(3).) Existing law provides that suspension provisions do not apply to a driver or owner until 30 days after the DMV sends to the driver or owner notice of its intent to suspend his or her driving privilege and advises the driver or owner of his or her right to a hearing. If the driver or owner makes a timely request for a hearing, the DMV is required to hold a hearing before the effective date of the suspension to determine the applicability of potential driver's license suspension or revocation, including the determination of whether the accident resulted in property damage in excess of $750, or bodily injury, or death and whether the driver or owner has established financial responsibility, as specified, was in effect at the SB 438 (Hill) Page 4 of ? time of the accident. (Veh. Code Sec. 16075(a), (c).) Existing law provides that "cause of action" means any cause of action for damage to property in excess of $750, or for damage in any amount on account of bodily injury to or death of any person resulting from the operation by the defendant or any other person of any motor vehicle upon a highway in this state, except a cause of action based upon statutory liability by reason of signing the application of a minor for a driver's license. (Veh. Code Sec. 16251.) Existing law provides that every judgment is deemed satisfied: when $15,000 has been credited, upon any judgment in excess of that amount, or upon all judgments, collectively, which together total in excess of that amount, for personal injury to or death of one person as a result of any one accident; when, subject to the limit of $15,000 as to one person, the sum of $30,000 has been credited, upon any judgment in excess of that amount, or upon all judgments, collectively, which together total in excess of that amount, for personal injury to or death of more than one person as a result of any one accident; when $5,000 has been credited, upon any judgment in excess of that amount, or upon all judgments, collectively, each of which is in excess of $750, and which together total in excess of $5,000, for damage to property of others as a result of any one accident; or when the judgment debtor or a person designated by him or her has deposited with the department a sum equal to the amount of the unsatisfied judgment for which the suspension action was taken and presents proof, satisfactory to the department, of inability to locate the judgment creditor. (Veh. Code Sec. 16377.) Existing law defines proof of financial responsibility to mean proof of financial responsibility resulting from the ownership or operation of a motor vehicle and arising by reason of personal injury to, or death of, any one person, of at least $15,000, and, subject to the limit of $15,000 for each person injured or killed, of at least $30,000 for the injury to, or the death of, two or more persons in any one accident, and for damages to property (in excess of $750), of at least $5,000 resulting from any one accident. (Veh. Code Sec. 16430.) Existing law provides that proof of financial responsibility may SB 438 (Hill) Page 5 of ? be given by a bond, which is conditioned for the payment of specified amounts, and provides for the entry of judgment on motion of the state in favor of any holder of any final judgment on account of damages to property over $750 in amount, or injury to any person caused by the operation of the person's motor vehicle. (Veh. Code Sec. 16434.) This bill would change the above threshold amounts of $750 to $1,000 and make other technical or clarifying revisions. COMMENT 1. Stated need for the bill The author writes: When a motorist is involved in an accident and the personal damage exceeds $750, the motorist must file a report with DMV. The ? amount is set by statue and has not been updated since 2002. The DMV collects at least 54,000 SR1 reports on a monthly basis. SB 438 increases the $750 reporting amount to $1,000 on DMV SR-1 reports. 2. Increasing minimum amount of property damage triggering driver's license suspension or revocation Existing law provides that a driver found liable for property damage in an amount of $750 or more resulting from an automobile accident that has resulted in an unpaid judgment may be subject to driver's license suspension or revocation. (Code Civ. Proc. Sec. 116.870.) Additionally, a judgment creditor of a judgment for $750 or more of property damage that has not been paid within 90 days after the judgment has become final is authorized to file a request with the Department of Motor Vehicles (DMV) requesting a suspension of the judgment debtor's privilege to operate a motor vehicle. (Code Civ. Proc. Sec. 116.880.) This bill would increase those minimum amounts to $1,000. The author notes that the current $750 minimum reportable amount has resulted in more accidents being reported to the DMV and more license suspensions than intended by the law. The author argues that this bill will lessen the burden on the DMV in processing accident reports and lessen the burden on California SB 438 (Hill) Page 6 of ? motorists who are involved in minor accidents. The Personal Insurance Federation of California (PIFC), in support, argues that "[t]here is currently a discrepancy between the Vehicle Code and Insurance Regulations for principally at fault accidents. SB 438 would make [the] Vehicle Code consistent with the principally at fault accident determinations under the Insurance Regulations." PIFC states that this bill "could lead to a better customer experience to have the DMV reporting be consistent with the principally at fault definitions and potentially reduce some paperwork for our customers." The minimum level of property damage was last increased from $500 to $750 by AB 1718 (Committee on Transportation, Chapter 451, Statutes of 2003). Those increases were enacted to conform to the provisions of SB 1590 (Karnette, Chapter 766, Statutes of 2002), which increased the minimum motor vehicle accident property damage limit from $500 to $750 before an accident report is required to be filed with the DMV. SB 1590 made the same increases for provisions pertaining to driver's license suspensions due to unpaid civil judgments in the Vehicle Code but failed to make the corresponding increases to the Code of Civil Procedure provisions. Following the enactment of SB 1590, the California Department of Insurance proposed amendments, which were subsequently enacted, to the California Code of Regulations that would increase the minimum amount from $500 to $750 for determinations of when a driver may be considered to be principally at fault in an accident. (See Cal. Code Regs., tit. 10, Sec. 2632.13(c).) Nine years later, the Department of Insurance issued a final statement of reasons explaining another update to the Code of Regulations, which increased the minimum amount from $750 to $1,000, "in order to rule out de minimis damage, in recognition of the fact that the damage to more than one person may now be counted and that inflation has increased the cost of repairs." (Dept. of Ins., Final Statement of Reasons, Reg-2010-00011 (May 25, 2011).) That statement of reasons also noted that, although the Insurance Commissioner's authority governing the determination of a principally at-fault accident is not derived from the Vehicle Code (which enacted the 2002 increases upon which the Commissioner relied to update the Code of Regulations at that time), but rather from Insurance Code Section 1861.025(b)(3), Vehicle Code Section 16000 was no longer applicable and no longer relied upon to determine at-fault accidents. SB 438 (Hill) Page 7 of ? Notably, the increases proposed by this bill reflect the appropriate increases for annual California Consumer Price Index for All Urban Consumers (CPI). The last time the minimum property damage amounts were increased from $500 to $750 was 2002, with corresponding increases made to the Code of Civil Procedure in 2003. Based on 2002 figures, the CPI increase for $750 is $978.55, which is within $25 of the proposed increased to $1,000 in this bill. Further, increasing the property damage minimum amount to $1,000 is consistent with the intent of the law, which is to require every driver and owner of a motor vehicle to establish financial responsibility. The law requires that motorists and vehicle owners involved in accidents to be insured, and the DMV is able to monitor financial responsibility when an accident occurs involving property damage in an amount of $750 or more. These are the laws to which the driver's license suspension or revocation provisions in the Code of Civil Procedure are tied and are also being increased by this bill. Support : California State Sheriffs' Association; Personal Insurance Federation of California Opposition : None Known HISTORY Source : Author Related Pending Legislation : None Known Prior Legislation : AB 1718 (Committee on Transportation, Chapter 451, Statutes of 2003) See Comment 2. SB 1590 (Karnette, Chapter 766, Statutes of 2002) See Comment 2. Prior Vote : Senate Transporation and Housing Committee: (Ayes 11, Noes 0) ************** SB 438 (Hill) Page 8 of ?