BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 438| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: SB 438 Author: Hill (D) Amended: 4/6/15 Vote: 21 SENATE TRANS. & HOUSING COMMITTEE: 11-0, 4/7/15 AYES: Beall, Cannella, Allen, Bates, Gaines, Galgiani, Leyva, McGuire, Mendoza, Roth, Wieckowski SENATE JUDICIARY COMMITTEE: 7-0, 4/21/15 AYES: Jackson, Moorlach, Anderson, Hertzberg, Leno, Monning, Wieckowski SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8 SUBJECT: Motor vehicles: reportable property damage SOURCE: Author DIGEST: This bill raises the reportable property damage threshold for traffic accidents from $750 to $1,000. ANALYSIS: Existing law: 1) Requires all drivers and motor vehicle owners to carry evidence of financial responsibility, defined primarily as written evidence of valid automobile liability insurance. SB 438 Page 2 2) Defines proof of financial responsibility as resulting from 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 per person injured or killed, of at least $30,000 for the injury to or death of two or more persons in any one accident, and for property damages (in excess of $750) of at least $5,000, resulting from any one accident. 3) Provides that proof of financial responsibility may 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 property damages exceeding $750, or injury to any person caused by the operation of the person's motor vehicle. 4) Requires a driver who is involved in a traffic accident on a street or highway that has resulted in property damage exceeding $750, or in the bodily injury or death of any person, to report the accident within 10 days to the Department of Motor Vehicles (DMV). Provides that this report shall include evidence of financial responsibility. Allows the driver to report either personally or through an insurance agent, broker, or legal representative. 5) Exempts a driver from reporting if the vehicle involved in the accident is owned or leased by a federal, state, or local agency. Also exempts a driver from filing a report if the accident occurs off a street or highway (for example, on the driver's private property) and results in damage only to the property of the driver or vehicle owner and does not cause bodily injury or death to another person. 6) Requires a driver of a vehicle that is owned, operated, or leased by his or her employer at the time of the accident to report the accident to the employer within five days. Requires the employer, within 10 days of receiving such a report, to file a report with DMV (unless the employer is a public agency). Requires a driver of a public transit vehicle to report a reportable accident to the transit system within 10 days. Requires the transit system to transmit the report to DMV within 10 days and maintain a SB 438 Page 3 record of the report. 7) Provides, if the driver is not the owner of the vehicle and is physically incapable of making the report, that the owner shall file a report with DMV as soon as he or she learns of the accident. 8) Requires DMV to suspend the driving privilege of any person who fails, refuses, or neglects to report a reportable accident. Prohibits DMV from suspending the individual's driving privilege until 30 days after DMV has sent notification to the individual of the pending suspension. Provides that the suspension shall remain in effect until DMV receives a report or evidence of financial responsibility. 9) Provides that all reports pursuant to this law are confidential, except that DMV shall disclose specified information from the reports upon request. 10) Requires DMV to include a summary of the financial responsibility law, reportable accident requirements, and penalties for non-compliance with every motor vehicle registration, registration renewal, and transfer of registration, as well as with each driver's license and license renewal. 11) Authorizes DMV to suspend or revoke the driver's license of any person who is found liable for property damage of $750 or more, or bodily injury or death, from the operation of a motor vehicle on a California highway by the person or any other person for whose conduct the person was liable, unless the liability resulted from the person's signing the application of a minor for a driver's license, and the person fails to pay these damages. 12) Provides that every judgment is deemed satisfied when: a) $15,000 has been credited, upon any judgment in excess of that amount, or upon all judgments collectively, which together total more than that amount, for personal injury to or death of one person as a result of any one accident. b) Subject to the limit of $15,000 as to one person, the SB 438 Page 4 $30,000 has been credited, upon any judgment in excess of that amount, or upon all judgments collectively, which together total more than that amount, for personal injury to or death of more than one person as a result of any one accident. c) $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 total more than $5,000, for damage to property of others as a result of any one accident. d) The person or a designee has deposited with DMV a sum equal to the amount of the unsatisfied judgment for which the suspension action was taken and presents proof of inability to locate the person owed damages. This bill raises the property damage threshold for a reportable accident from $750 to $1,000. It makes corresponding changes to the minimum judgment amount that qualifies a judgment debtor who has been found liable for damage but who has failed to pay the judgment rendered thereon, to have his or her driver's license suspended or revoked. Comments Purpose. The author notes that state law requires a driver involved in a reportable accident to file a "Report of Traffic Accident Occurring in California" with DMV. This form, known as an SR-1, includes the name, address, and insurance information of each party involved in the accident, along with injury and/or property damage details. The property damage threshold that characterizes an accident as reportable has not been updated since 2002. The author notes that according to the U.S. Bureau of Labor Statistics, $750 in 2002 dollars is equivalent to $984.15 in 2014 dollars. The average "fender bender" - a minor accident that occurs at low speed and involves a vehicle's bumper - often results in damage exceeding the $750 threshold. The author states that because of the outdated threshold, DMV collects more than 54,000 SR-1 reports per month; this creates unnecessary paperwork for DMV and an unnecessary burden for California drivers and insurers. Why must drivers report accidents to DMV? A driver must file an SB 438 Page 5 SR-1 for a reportable accident regardless of whether or not he or she was at fault. This information is public record and is accessed regularly by law enforcement and insurance companies. The SR-1 acts as a check to help DMV affirm that a driver is insured as required by state law. Existing law also, however, requires DMV to require proof of insurance when an individual is registering a vehicle or renewing or transferring the registration of a vehicle. In addition, existing law requires insurance companies in California to electronically report vehicle insurance information to DMV (other than vehicles covered by commercial or business insurance). The "principally at-fault" threshold. Proposition 103, approved by California voters in November 1988, requires the Department of Insurance (DOI) to approve new rates before insurance companies can implement them. It also requires insurers to provide a "good-driver discount" of 20% to qualified drivers, defined, in part, as drivers that the insurer has not determined to be "principally at-fault" in an accident during the past three years. Proposition 103 establishes that an insurer may determine that a driver is principally at-fault if his or her actions or omissions were at least 51% of the legal cause of the accident, and the accident either resulted in bodily injury or death, or caused property damage that exceeded a certain threshold. The principally at-fault threshold was initially set at $500, based on DMV's reportable accident threshold statute at the time. SB 1590 (Karnette, Chapter 766, Statutes of 2002) raised the DMV reportable threshold from $500 to $750. Subsequently, AB 1718 (Committee on Transportation, Chapter 451, Statutes of 2003) increased the minimum level of property damage to $750 to conform with the new reportable threshold. In 2003, DOI implemented regulations to update the principally at-fault threshold to $750. In December 2011, DOI raised the principally at-fault threshold to $1,000, based on the premise that the higher threshold was more in keeping with current costs and would help prevent drivers from being denied a good driver discount. This bill raises the DMV reportable accident threshold, and the minimum motor vehicle accident property damage limit, to $1,000 in order to align with the DOI principally at-fault threshold. SB 438 Page 6 FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: No SUPPORT: (Verified5/6/15) California State Sheriffs' Association National Association of Mutual Insurance Companies Pacific Association of Domestic Insurance Companies Personal Insurance Federation of California OPPOSITION: (Verified5/4/15) None received ARGUMENTS IN SUPPORT: The Personal Insurance Federation of California (PIFC) states that this bill makes the Vehicle Code consistent with principally at-fault accident determinations under the DOI regulations. PIFC believes that by requiring DMV reporting to be consistent with principally at-fault definitions, this bill could lead to a better customer experience and potentially reduce paperwork for customers. Prepared by:Erin Riches / T. & H. / (916) 651-4121 5/6/15 16:52:16 **** END ****