BILL ANALYSIS
SB 81
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Date of Hearing: June 20, 2001
ASSEMBLY COMMITTEE ON INSURANCE
Thomas M. Calderon, Chair
SB 81 (Speier) - As Amended: May 8, 2001
SENATE VOTE : 24 - 13
SUBJECT : Motor vehicle insurance.
SUMMARY : Permits an injured insured owner of a motor vehicle to
recover damages under the uninsured motorist coverage of his/her
policy if he/she is struck by his/her own insured car while it
is being operated without his/her permission in the course of
criminal activity. The criminal activity must be one to which
the injured insured is not a party and must be documented in a
police report.
EXISTING LAW
1)Requires that all automobiles driven upon public roads be
covered by liability insurance (or a bond) for bodily injury
in a minimum amount of $15,000 for injury to one person and
$30,000 for injuries to all persons.
2)Requires that all such policies include coverage for bodily
injury to the policyholder if the policyholder is injured by
an uninsured or underinsured vehicle (UM coverage).
3)Defines uninsured motor vehicle as a vehicle for which there
is no bodily injury liability insurance or bond applicable at
the time of the accident, or there is the applicable insurance
or bond but the company writing the insurance or bond denies
coverage thereunder or refuses to admit coverage thereunder
except conditionally or with reservation.
4)Permits the policyholder and company to agree to increase,
reduce or eliminate UM coverage, under specified
circumstances.
5)Excludes an insured from payment under his/her own UM coverage
when damaged by his/her own vehicle.
6)Does not generally require that a police report be filed to
support a claim to payment under UM coverage, except if the
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claimant does not know the owner of the vehicle.
FISCAL EFFECT : Unknown
COMMENTS : The author's office states that the purpose of the
bill is to ensure that a crime victim is paid for their bodily
injury when their own cars are used to injure them.
The author introduced this bill in response to an unpublished
Second Appellate District Court decision which reaffirmed the
decision in Denny v. St. Paul Guardian Ins. Co . (1987) 196 Cal.
App. 3d 73. The court in Denny held that when compensation for
injuries sustained is sought pursuant to Section 11580.2 of the
California Insurance Code, relating to uninsured motorists, in
conjunction with the provisions of a particular policy,
"uninsured motorist coverage is not dependent upon the uninsured
state of the driver of the vehicle, but upon the uninsured state
of the vehicle." (Id. at p. 77.) Because of this, an uninsured
motorist policy does not provide coverage to victims injured by
their own insured vehicles.
The author believes that it is unfair to deny crime victims
coverage just because the vehicle that struck them was their
own. If the same vehicle caused injury to someone else in the
same manner, the injuries would be covered. Or, if the owner
was injured by a vehicle owned by someone else, in the same
manner, and that other driver was not insured, the owner would
be able to recover for the injuries sustained. Thus, the
injured insured owner of a vehicle could be doubly victimized:
once by the criminal, and again by the laws meant to protect
him.
According to the Department of Justice, there were approximately
1,024 carjackings, 1,611 kidnappings, and 162 vehicular
manslaughters in California in 1999. Therefore, the total
number of crimes likely to prompt coverage under this bill is
probably quite small.
The Consumer Attorneys of California supports the bill, stating
that it is unjust for carjacking victims to be denied coverage
just because their own car is used to injure them. The Consumer
Attorneys also note that a police report will be required to
confirm the criminal activity.
In opposition, the Association of California Insurance Companies
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(ACIC) contends that the bill
would invite claims in domestic violence cases, fraud, and such
acts as child molestation, arson, or intentional collision of
one insured vehicle into another insured vehicle.
ACIC argues that "the intentional acts and familial exclusion
portions of an insurance policy are not arbitrary concepts that
should be disregarded without a compelling reason. These
essential parts of an insurance contract are designed to protect
both insurers and policyholders from fraud and increasing
premiums."
ACIC further argues that in domestic violence cases "abusers
will get paid for their abuse. As the spouse of the person
being beaten, the abuser is considered by definition of the
policy, an "insured" person. When the insurance check comes in
the mail, the abuser can cash it just as easily (or maybe even
more easily) as the abusee."
In response to ACIC, the author argues that collusion by spouses
in this case, where one strikes the other with a car and must
report the incident to the police to get coverage, is such a
highly visible situation that it would certainly invite
investigation by the police and would probably result in the
couple being charged with trying to defraud the insurance
company.
The author notes that California law currently makes insurance
settlements the separate property of the injured spouse and that
those few crime victims who are the victims of spousal abuse
involving their own automobile ought to be treated with the
dignity and respect to which they are entitled. The author
further notes that "to presuppose that they would permit
enrichment is an insult to all victims of domestic violence."
The author further contends that the provision in SB 81
requiring that the injured insured not be a party to the crime
would prevent any of the situations imagined by ACIC from being
covered under this legislation.
REGISTERED SUPPORT / OPPOSITION :
Support
SB 81
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Consumer Attorneys of California
Opposition
Association of California Insurance Companies
National Association of Independent Insurers
Analysis Prepared by : Liberty Sanchez / INS. / (916) 319-2086