There’s no question California’s auto insurance system is broken. Premiums are too high, benefits too low. More dollars go for legal costs when people are hurt than for medical care, and there’s tremendous fraud—California drivers are three-and-a-half times as likely as Michigan drivers to claim “whiplash” after a minor accident.
So, yes, California’s auto insurance system could hardly be worse.
But Prop 213 is not the answer.
Part of it is trivial but worthy—the part that would deny criminals the right to sue if injured in the course of committing (or fleeing) a crime. Who could fail to be outraged knowing that today a carjacker can actually sue you for injuries he sustains while speeding off in a stolen car?
If this is all Prop 213 did, it wouldn’t accomplish much—statistically, cases like this amount to nothing—but would still be worth a YES.
The real thrust of Prop 213, however, is entirely different—and mean spirited. It’s not directed at a few fleeing bank robbers, but at millions of low-income families. It says that low-income drivers—who simply cannot afford insurance today because the price is inflated by unnecessary legal costs and fraud—are somehow to blame for this situation. It implies that they are little better than felons.
That’s just not fair.
If they’re hurt, Prop 213 would prevent their suing, except for their actual damages. And as a practical matter, it’s not at all clear they’d be able to sue even for that when the damages are relatively modest — there’s may not be enough money in it to interest a lawyer to take the case.
Had the initiative specified that people who could afford coverage but didn’t buy it were penalized, that would be one thing. Were auto insurance costs not bloated by $2.5 billion in high-priced legal fees and billions more in fraud, and thus affordable, THAT would be one thing. But to tell someone earning $12,000 a year that he or she must buy unaffordable auto insurance (rather than feed his kids) is just plain mean.
It’s true that if Prop 213 passes auto insurance rates would probably drop a little, maybe 3%-5%. But is that minor saving worth depriving millions of hard-working lower-income people of the right to sue if injured?
Prop 200, the auto-insurance reform initiative many of us backed last March, would have deprived virtually everyone of the right to sue another driver (except a drunk driver). But the “pay-off” for that was enormous. By cutting out the lawyers and fraud, Prop 200 would have cut premiums far more than 3%-5%. More to the point, your benefits, if seriously hurt, would have soared.
The RAND Corporation’s Institute for Civil Justice estimated that under Prop 200, someone who today buys just the legal minimum $15,000 in liability coverage—which doesn’t even protect them, just whomever they might hit—would actually have saved 17% on average buying Prop 200’s “standard” coverage, which provided up to $1 million per person in benefits no matter what, even if you couldn’t prove the other driver was at fault (or catch him). It would also have provided universal injury coverage to every child under 18, and to every pedestrian (including kids on skateboards and tricycles or darting out from between two cars). THAT was a trade-off worth making. (As many of you know, faced with the loss of $2.5 billion a year in fees, the lawyers did what they had to to defeat it.)
Prop 213, by contrast, is a lousy trade-off. It’s like cutting “government waste” not by cutting government waste at all, just taking school lunches away from poor kids.
Let’s make auto insurance affordable by cutting out the legal fees and fraud, and then expect everyone to buy it.
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The people who sustain the worst losses are usually the ones who overreach. And it's not necessary: steady, moderate gains will get you where you want to go.~John Train
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