House passes bill to protect drivers insured by MAIF

March 26, 1991|By David Conn | David Conn,Annapolis Bureau of The Sun

ANNAPOLIS -- Motorists insured by the Maryland Automobile Insurance Fund for the first time would gain some protection against unethical insurance agents and financiers under a bill the House of Delegates approved yesterday.

But the measure that passed on a vote of 137-0 is much weaker than when it was originally drafted, thanks to lobbying by the industries most affected.

The bill now requires those who sell MAIF policies to obtain a signed statement from their clients acknowledging the cost and nature of so-called "add-on" policies, including vehicle towing services, automobile clubs, waivers of deductibles and supplemental hospital benefits. The client must be informed that the add-ons, some of which can cost more than $100, are optional.

"The people who can least afford it are the ones who are being hit hardest" by unscrupulous firms, said Delegate Gary R. Alexander, D-Prince George's, the bill's sponsor.

But the original bill would have gone further, separating the add-ons from the underlying insurance. A driver who stopped paying for the add-ons would not lose the MAIF insurance.

Joseph A. Schwartz III, a lobbyist for companies that sell and finance MAIF policies, said drivers already can cancel the add-ons without canceling the insurance.

If the original bill had passed, he said, "the customer would have [had] to enter into two contracts and pay two separate financing fees."

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