November 19, 2011, ERIE, PA — Senate Bill 1339 of 2011 has been referred to the Banking and Insurance Committee for consideration. The bill would increase the minimum car insurance required in Pennsylvania from $15,000 per person/$30,000 per accident and $5,000 in property damage to $30,000 per person/$60,000 per accident and $10,000 in property damage. We support the bill because it’s a step in the right direction. Let me explain why Pennsylvania needs to change it’s minimum insurance requirements.
Car Insurance is Important
Insurance is a requirement to drive in Pennsylvania because we know, with some certainty, that most people will be connected to a car crash at some point in their lifetime and, without insurance, innocent injured people will be unable to pay their medical bills or be compensated for other harms and losses. In 2009 in the United States, for example, there were 5.5 million car crashes reported to the National Highway Traffic Safety Administration. Of those, 30,757 were fatal car accidents; 1.5 million were auto crashes involving injury; and almost 4 million crashes were property damage only.
So, before we allow people to use public roads and highways, we require that they first demonstrate that they can make it right if they cause someone else harm. Usually, people demonstrate that ability by buying car insurance.
Pennsylvania’s Insurance Requirements Are Dated and Inadequate
Pennsylvania last set minimum insurance levels 27 years ago, in 1984. At the time, the legislature decided that the minimum insurance needed was $15,000 per person for injury coverage and $5,000 per accident for property damage coverage. Even at the time, those minimum levels were pathetically low and led to a depressing number of “coverage tragedies” as people were terribly injured and there was inadequate insurance to pay for medical bills or make up for lost wages and other harms. As a consequence, sophisticated people began buying much more than the minimum levels required and they also bought “Underinsured and Uninsured Motorist Coverage,” a kind of insurance that protects you if you’re hit by one of those drivers who bought the minimum.
Still, many people aren’t sophisticated and continue to buy the minimum. They often say to their insurance company, “I want full coverage.” They get the minimum and think they’re protected. Only too late do they find out that the insurance they thought would protect them was not up to the task.
27 years later and the problem has only grown worse. Medical costs have skyrocketed. So, too, have vehicle repair costs. Rare is the significant car accident where $5,000 is enough to pay for repair of the damaged vehicles and even rarer is the significant injury that can be adequately compensated for $15,000 or less.
The Cost of Raising Minimum Coverage Requirements Is Minimal
The cost of raising the minimum rates is not significant. The National Association of Insurance Commissioners has long recognized that the minimum coverage levels are too low and the cost of raising those levels would be minimal for consumers. (See, Pennsylvania Considering Increase to Its Minimum Insurance Levels , Insurance and Financial Advisor, September 24, 2010).
As my own policy demonstrates, the difference between the cost of the minimum coverage and much higher coverage is affordable. For example, the minimum property damage coverage on my policy would cost $66 per year. To raise the limit of property damage coverage from $5,000 to $100,000 costs me $8 per year. That’s right: $8 per year. Injury liability coverage is similar. The minimum coverage on my policy would cost $27 per year. To raise that coverage from $15,000 to $250,000 costs me $71 per year more than the minimum. That’s less than $6 per month.
So, increased minimum insurance levels are both necessary and affordable.
Pennsylvania Won’t Raise Minimum Insurance Requirements Without Your Support
Despite the persuasive case for increased insurance requirements, the Senate Bill faces opposition from, of all places, the Insurance Federation of Pennsylvania, according to recent reports . Why would an insurance industry group oppose a law requiring people to buy more insurance? Well, this shadowy organization doesn’t say a lot out loud. Their website is limited to registered users only and makes public just the bare minimum about its members and officers. So, we’re left to speculate as to their motives. Why would insurance companies who already sell more than the mandatory minimum object to requiring Pennsylvania drivers to buy more?
Additional coverage doesn’t cost much, as we’ve written about here before so raised minimums won’t mean a great deal more revenue for insurance companies. Additional coverage would raise the risk for insurance companies. Additional coverage may also contribute to a more vigorous approach by Pennsylvania injury lawyers. As things stand, only the most sophisticated consumers understand the need to buy additional coverage while regular consumers are largely ignorant of this aspect of insurance law. Perhaps insurance companies don’t want the regular insurance customer to receive the benefits that more sophisticated consumers enjoy.
Whatever their motives, if you’d like to see Pennsylvania do the responsible thing with minimum insurance requirements, call your senator or representative and tell them you support Senate Bill 1339 of 2011.
Contact a Pennsylvania Accident Lawyer
For more information on Pennsylvania car insurance issues, visit our auto accident page or take advantage of our offer to give you a free consumer book, “The Ultimate Guide to Car Accident Cases in Pennsylvania: A Roadmap to Justice.” We are Pennsylvania auto wreck injury lawyers in Erie, Pennsylvania who believe in providing free information to the public about Erie County car accident injuries. To schedule a free consultation with one of our experienced Erie injury lawyers, call today toll free at 814-833-7100 or locally at 814-833-7100.