BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                        SB 438|
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                                    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.   








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            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  







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              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  







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                $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  







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          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.
          







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          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


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