Bill would increase minimum auto insurance liability

Minimum liability policy limits on auto insurance in Nebraska would double under a measure heard Feb. 1 by the Banking, Commerce and Insurance Committee.

Currently, minimum policy limits are $25,000 per person, $50,000 per occurrence and $25,000 for property damage. LB196, introduced by Sen. Steve Lathrop of Omaha, would increase those minimum limits to $50,000 per person, $100,000 per occurrence and $50,000 for property damage.

Lathrop said the bill is meant to protect those who purchase the minimum coverage believing that they are adequately insured. Nebraska’s minimum coverage requirements have not been raised in many years, he said, and have not kept pace with the cost of a claim when someone is injured in an auto accident.

“This is all tied to the cost of medical care,” he said. “The cost of medical care is significantly greater than it was just 10 years ago.”

Dan Loring of the Independent Insurance Agents of Nebraska testified in support of the bill, saying that a corresponding increase in premiums would be minimal and likely would not lead to more uninsured drivers. Under the bill, an average family paying $194 per year for auto insurance would see their premium increase by $28 per year, he said.

“I wouldn’t think that $28 would drive someone to drop their insurance,” Loring said.

Robert Moodie of the Nebraska Association of Trial Attorneys also testified in support.

Bad drivers who have been in several accidents often insure at the minimum levels, he said, in an attempt to lower their premiums.

“These are the people who ought to be required to carry higher limits,” Moodie said. “A $25,000 limit on personal injury is, quite frankly, just not responsible.”

But Jim Dobler of the Nebraska Insurance Information Service said high-risk drivers, along with low-income individuals and the elderly, will be tempted to forego insurance entirely rather than pay increased premiums resulting from the bill’s passage.

“The cost of requiring higher minimum liability limits for auto insurance will fall most heavily on those who can least afford it,” Dobler said.

In addition, the current policy limit is enough to cover the average bodily injury claim, he said, which was $23,723 in 2006.

Tad Fraizer of the American Insurance Association also opposed the bill, saying it may have the unintended consequence of increasing the number of uninsured drivers in Nebraska.

“This [bill] will impact people who are right at the margin and can’t afford that additional premium amount,” he said.

The committee took no immediate action on the bill.