Increased auto liability limits proposed

Nebraska motorists would be required to carry twice the current liability insurance on their automobiles under a bill heard by the Banking, Commerce and Insurance Committee Feb. 28.

LB643, introduced by Omaha Sen. Bob Krist, would increase liability insurance limits from $25,000 to $50,000 for the bodily injury to or death of one person in any one accident and from $50,000 to $100,000 for the bodily injury to or death of two or more persons in any one accident. Additionally, the liability limit for the destruction of property in any one accident would increase from $50,000 to $100,000.

Nebraska drivers are required to carry additional coverage to pay for bodily injury, sickness, disease or death caused by an accident with an uninsured or underinsured driver. The bill would increase the required amount from $25,000 to $50,000.

Krist said Nebraska has not increased its liability limits on auto insurance since 1988.

“Inflation and [increased] health costs over the last 29 years have made the old limits inadequate to cover modern automobile values and, of course, to help take care of health care costs,” he said.

Steve Mason, speaking on behalf of the Independent Insurance Agents of Nebraska, testified in support of the bill. He said a recent Insurance Research Council study found that increasing a state’s minimum required liability limits does not increase the number of uninsured drivers.

Mason said the average cost of a car in 1988, when the limits were last increased, was approximately $14,000, or approximately $27,000 today adjusted for inflation. A hospital room cost $270 a day on average, compared to $545 in today’s dollars, he added. A helicopter ambulance service can charge between $25,000 and $30,000 just to take off and a further $200 to $400 per mile to operate the aircraft, he added.

“It’s obvious if you want to buy or repair a car, if you want to visit a doctor, be hospitalized [or be] transferred by an emergency vehicle that the cost … more than doubled since 1988.”

Mark Richardson, speaking on behalf of the Nebraska Association of Trial Attorneys, also testified in support of the bill. Of the auto liability cases his firm has handled in the past year, he said, only one did not exceed the current $25,000 limit. For many drivers, Richardson said, the next worst thing to being hit by an uninsured driver is being hit by one who has only the minimum required coverage.

“When you have somebody driving down the road with minimum limits and they cause an accident,” he said, “two people’s financial stability is immediately put in jeopardy.”

Testifying in opposition to the bill was Jim Dobler of the Nebraska Insurance Information Service. He said Nebraska drivers are required to carry a minimum of $25,000 of underinsured and uninsured coverage in addition to $25,000 in liability insurance.

The average amount paid for an auto accident claim is $22,000, Dobler said, and 87.9 percent of all liability claims for bodily injury are resolved for less than the current minimum limit. The average payment on property damage claims is $2,790, he added, and 99 percent of those claims are resolved for less than the minimum limit.

“In our view, there just isn’t any need for change,” Dobler said.

Tad Fraizer of the American Insurance Association also testified in opposition. He said increasing the minimum limits also could increase the number of Nebraska drivers who go without insurance because they could not afford higher premiums. Even if the limits are increased to $1 million, he said, that would not cover some people who suffer catastrophic injuries in car crashes.

“There are always going to be outliers,” he said.

The committee took no immediate action on the bill.