BILL NUMBER: SB 171 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 15, 1999
INTRODUCED BY Senator Escutia
JANUARY 11, 1999
An act to add Article 6 4.1
(commencing with Section 11629.10 11627.5
) to Chapter 1 of Part 3 of Division 2 of the Insurance Code,
relating to automobile insurance.
LEGISLATIVE COUNSEL'S DIGEST
SB 171, as amended, Escutia. Automobile insurance: lifeline
policies.
Existing law requires motorists to demonstrate financial
responsibility by one of various means, including an automobile
liability insurance policy. Existing law specifies minimum coverages
for the policy. Existing law requires insurers to participate in a
plan, known as the assigned risk plan, to provide automobile
insurance to those otherwise unable to obtain coverage.
This bill would require insurers that participate in the assigned
risk plan to also participate in a plan established by the Insurance
Commissioner to offer a Lifeline Automobile Insurance Policy. The
Lifeline Automobile Insurance Policy would provide coverage of
$10,000 for liability for bodily injury or death to one person,
subject to a cumulative limit of $20,000 for all persons, and $3,000
for liability for damage to property.
The bill would provide that the policy would be sold for
a an average baseline premium of $300
$320 annually, to be adjusted, as specified.
The bill would set forth related provisions.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares as follows:
(a) Existing California law provides that it is against the law to
drive a car without purchasing automobile liability insurance.
(b) Proposition 213 provides that a person who is in a car
accident but who does not have automobile insurance may not be
compensated for his or her pain and suffering, even if the person was
not at fault in the accident.
(c) The insurance marketplace has not provided an automobile
insurance product affordable to low-income drivers. For this reason,
far too many people are without any automobile insurance.
(d) Proposition 103 does not address the issue of what kinds of
automobile insurance products must be offered. It only provides a
regulatory scheme for those products if an insurer decides to offer
them.
(e) Insurance companies selling automobile insurance products in
California earn significant profits for doing so, profits that have
increased significantly after enactment of those laws restricting the
ability of those without insurance to sue, court decisions further
restricting plaintiffs' rights of redress, and laws that make the
purchase of their products a legal requirement to drive in a state
where driving is a practical necessity. Because insurance companies
offering for sale automobile insurance in California thus enjoy the
benefits of these state laws, the Legislature finds and declares that
it is fair and equitable, and required for the public welfare, that
insurance companies should be required to participate in a plan offer
for sale a policy of automobile insurance that is affordable to
low-income drivers.
(f) For these reasons, the Legislature finds and declares that it
is essential to the health, safety, and welfare of Californians that,
as a condition of doing business in this state, that California
automobile insurers be required to participate in a plan offering
affordable Lifeline Automobile Insurance Policies.
SEC. 2. Article 6 (commencing with Section 11629.10) is added to
Chapter 1 of Part 3 of Division 2 of the Insurance Code, to read:
Article 6. Lifeline Automobile Insurance Policies
11629.10. The commissioner, after a public hearing, shall approve
or issue a reasonable plan for the equitable apportionment, among
insurers required to participate in the plan established under
Section 11620, of persons eligible to purchase Lifeline Automobile
Insurance. The Lifeline Automobile Insurance Plan shall be conducted
in conjunction with the plan established under Section 11620.
11629.11. (a) The plan shall require the issuance of a Lifeline
Automobile Insurance Policy affording coverage in the amount of ten
thousand dollars ($10,000) for bodily injury to, or death of, each
person as a result of any one accident and, subject to that limit as
to one person, the amount of twenty thousand dollars ($20,000) for
bodily injury to, or death of, all persons as a result of any one
accident, and the amount of three thousand dollars ($3,000) for
damage to property of others as a result of any one accident.
(b) A Lifeline Automobile Insurance Policy shall, notwithstanding
the coverage amounts required by Section 16056 of the Vehicle Code,
satisfy the financial responsibility requirements of Section 16021 of
the Vehicle Code.
(c) The initial premium for a Lifeline Automobile Insurance Policy
shall be three hundred dollars ($300). The premium shall be revised
every two years to reflect changes in the consumer price index.
11629.12. The Lifeline Automobile Insurance Policy shall only be
available for purchase by low-income, low-risk California residents.
A person shall be a low-income driver if his or her household income
does not exceed 150 percent of the federal poverty level. A
low-risk driver is one who has not accrued more than one violation
point under Section 12810 of the Vehicle Code, except that a driver
determined to be responsible by the commissioner for an accident
under subdivision (f) of Section 12810 of the Vehicle Code where the
accident resulted in bodily injury or death shall not be deemed a
low-risk driver for four years.
11629.13. The commissioner shall further define by regulations
pursuant to this article the form of the application to be used in
purchasing the Lifeline Automobile Insurance Policy, including, but
not limited to, those application requirements for demonstrating
eligibility to purchase the Lifeline Automobile Insurance Policy, and
regulations establishing the means by which applicants are notified
and may correct errors or mistakes in the application that result in
a determination that they are not eligible to purchase a Lifeline
Automobile Insurance Policy.
11629.14. The commissioner shall further adopt regulations
setting forth the reasonable circumstances that would permit an
insurer to cancel, nonrenew, or refuse to sell a Lifeline Automobile
Insurance Policy to a person.
11629.15. The commissioner shall have all additional powers
required to implement this article, including, but not limited to,
the issuance of regulations setting forth the respective obligations
of each insurer to offer and service Lifeline Automobile Insurance
Polices under this article.
SEC. 2. Article 4.1 (commencing with Section 11627.5) is added to
Chapter 1 of Part 3 of Division 2 of the Insurance Code, to read:
Article 4.1. Lifeline Automobile Insurance Policies
11627.5. The commissioner, after a public hearing, shall approve
or issue a reasonable plan for the equitable apportionment, among
insurers required to participate in the plan established under
Section 11620, of persons eligible to purchase Lifeline Automobile
Insurance. The Lifeline Automobile Insurance Plan shall be conducted
in conjunction with the plan established under Section 11620.
11627.55. (a) The plan shall require the issuance of a Lifeline
Automobile Insurance Policy affording coverage in the amount of ten
thousand dollars ($10,000) for bodily injury to, or death of, each
person as a result of any one accident and, subject to that limit as
to one person, the amount of twenty thousand dollars ($20,000) for
bodily injury to, or death of, all persons as a result of any one
accident, and the amount of three thousand dollars ($3,000) for
damage to property of others as a result of any one accident.
(b) A Lifeline Automobile Insurance Policy shall, notwithstanding
the coverage amounts required by Section 16056 of the Vehicle Code,
satisfy the financial responsibility requirements of Section 16021 of
the Vehicle Code.
(c) The Lifeline Automobile Insurance policy shall only be
available for purchase by low-income California residents who are
either good drivers or very good drivers.
11627.6. As used in this article:
(a) "Very good driver" means a motorist who has accrued no
violation points in the previous three years under Section 12810 of
the Vehicle Code.
(b) "Good driver" means a motorist who has accrued no more than
one violation point in the previous three years under Section 12810
of the Vehicle Code.
(c) "Low-income" means a person whose household income does not
exceed 150 percent of the federal poverty level.
11627.65. (a) The initial premium for a Lifeline Automobile
Insurance Policy shall be based upon a three hundred twenty dollar
($320) baseline. The premium baseline shall be revised on January 1,
2002, and every two years thereafter to reflect changes in the
consumer price index and the distribution of very good drivers and
good drivers.
(b) The premium shall be differentiated for two driving classes:
very good drivers and good drivers.
(1) Very good drivers shall pay a premium 6.6 percent below the
baseline.
(2) Good drivers shall pay a premium in excess of the baseline to
the extent necessary to create an average Lifeline Automobile
Insurance Policy premium cost of three hundred twenty dollars ($320),
as adjusted under subdivision (a). The standard premium shall not
be more than 30 percent above the baseline.
(3) On and after January 1, 2002, the commissioner shall establish
premiums to be paid in accordance with this subdivision, based upon
the consumer price index adjustment and the percentage of lifeline
policyholders represented in each category.
(4) If, in order to establish an average baseline of three hundred
twenty dollars ($320), as adjusted, the commissioner determines that
a good driver would be required to pay a premium more than 30
percent above the baseline, the commissioner shall instead increase
the premium for very good drivers to an amount no greater than the
baseline.
(c) Until January 1, 2002, the initial premium shall be set at
three hundred dollars ($300) for very good drivers and four hundred
dollars ($400) for good drivers.
(d) Each policy shall provide and each insurer shall inform the
purchaser that he or she may pay the full premium or a monthly
premium. Insured motorists shall be permitted to pay in monthly
installments equal to one-twelfth of the annual premium. Insurers
shall not add any additional charges that would result in an increase
of the amount required to purchase a policy as established by this
section.
11627.7. The commissioner shall further define by regulations
pursuant to this article the form of the application to be used in
purchasing the Lifeline Automobile Insurance Policy, including, but
not limited to, those application requirements for demonstrating
eligibility to purchase the Lifeline Automobile Insurance Policy, and
regulations establishing the means by which applicants are notified
and may correct errors or mistakes in the application that result in
a determination that they are not eligible to purchase a Lifeline
Automobile Insurance Policy.
11627.75. The commissioner shall further adopt regulations
setting forth the reasonable circumstances that would permit an
insurer to cancel, nonrenew, or refuse to sell a Lifeline Automobile
Insurance Policy to a person.
11627.8. The commissioner shall have all additional powers
required to implement this article, including, but not limited to,
the issuance of regulations setting forth the respective obligations
of each insurer to offer and service Lifeline Automobile Insurance
Polices under this article.