Required Insurance Law Is Effective--Even on the Shelf

SACRAMENTO — Your chances of bending fenders with an uninsured driver on California’s highways are about half what they were last year, largely because of a law that isn’t even enforced.

Officers stopped writing citations for breaking the financial responsibility law in early December after the Supreme Court shelved it pending a decision on whether it is constitutional.

Despite that development, researchers say that Californians who once had no insurance on their vehicles are continuing to sign up with carriers for millions of dollars’ worth of new policies.

The result has been an industry windfall in new premiums valued at between $750 million to more than $1 billion.

Return Up in Air

How much of that eventually may be returned to policyholders in lowered rates depends on what happens in court and in the Legislature.

Even on the shelf, the 1985 Financial Responsibility Act is perhaps one of the most effective transportation laws in recent years. Figures compiled by the Senate Office of Research show that:

- More than 1 million insured automobiles have been added to the state’s pool since a year ago despite a decline of 360,000 car registrations. The number of uninsured automobiles is estimated at under 1 million, or half what it was a year ago.

- The number of license suspensions resulting from accidents in which there was an uninsured vehicle dropped by 70% between July, when the law went into effect, and October.

- Only 29% of drivers cited for moving violations in November lacked proof of financial responsibility, compared to 51% before the law took effect. The 55,000 drivers who were cited faced fines of between $100 and $240 and possible loss of their license unless they obtained insurance within 60 days.

The heaviest weight of the statute fell on uninsured drivers who were denied relatively inexpensive “preferred” policies and forced into much costlier “standard,” “sub-standard” or “assigned risk” categories.

Senate researchers estimate that almost 70% of all new 1985 policies had substandard or assigned risk status because drivers lived in high-risk areas, were previously uninsured or had bad driving records.

Redlining Charged

Public Advocates, the citizens’ group that challenged the insurance law, contended that drivers with flawless records also were unfairly required to pay the exorbitant rates merely because they lived in redlined neighborhoods.

“Clean drivers may be asked to pay five times more, just by virtue of where they live--for example, $200 in most parts of the state versus $1,000 in South-Central Los Angeles, for minimum liability insurance,” Public Advocates said.

As the Supreme Court considers the fairness issue, efforts also are under way in the Legislature to curb excessive rates and provide rebates to policyholders. Opposed by the insurance industry, they will be heavily lobbied in the coming weeks.

Unlike bills that failed last year, the legislation steers clear of directly challenging the practice of redlining.

One measure by Sen. Alan Robbins (D-Van Nuys), chairman of the Senate Insurance, Claims and Corporations Committee and co-author of the financial responsibility law, would require auto insurance premium rebates of up to 25% for drivers with clean records. The rebate money would come from the $750 million in new premiums generated by the law--if the court upholds it.