A gubernatorial commission is likely to support a mandatory "no-fault" auto insurance law for Maryland that promises to lower drivers' rates by having them give up the right to sue for damages, according to commission members.
For nearly two months the Governor's Commission on Insurance has been studying a bill that would require all drivers to purchase auto insurance that provides at least $100,000 in coverage for "economic damages," such as medical costs and lost wages. The benefits would be paid by the driver's insurance company, regardless of who was at fault in an accident, under the bill that was drafted by Jeffrey O'Connell, a University of Virginia law professor.
Included in those economic damages would be coverage for a maximum of $500 a week in lost wages, said Charles Siegel, executive director of the commission. He said the commission increased that amount from $200 a week originally proposed in the bill.
Drivers would be able to purchase policies providing coverage for economic damages in excess of $100,000. And injured persons are entitled to sue for damages that exceed a policy's coverage.
Non-economic damages -- the value of an accident victim's pain and suffering -- would not be covered, and the driver would not be entitled to sue for them under the proposed legislation. Passengers or pedestrians injured in or by an insured driver's car would collect under that driver's no-fault coverage.
Mr. Siegel said that USF&G Corp. estimated the bill could lower the company's rates by about 40 percent. A USF&G official, however, said the proposal had not been priced by actuaries.
A favorable vote would represent the first time a state level commission has weighed in on a specific no-fault insurance plan.
The governor's commission voted in February to recommend "that the state develop and adopt a no-fault law," Mr. Siegel said. But, he pointed out, the group declined to decide among the various types of no-fault laws in existence.
Yesterday, Gov. William Donald Schaefer's chief legislative officer said that it is "premature" to make a judgment on the proposed O'Connell no-fault bill. Decisions about administration bills typically are made in December, he said.
The General Assembly this year rejected a bill that would have allowed drivers to choose between the no-fault system and the existing "tort" system that allows lawsuits. The bill would have required insurers to lower rates by 25 percent of their statewide average, but opponents, including plaintiffs' lawyers, argued that the legislation offered inadequate benefits.
Should Mr. Schaefer decide to back a no-fault bill, he can expect fierce opposition from the Maryland Trial Lawyers Association, the people who represent plaintiffs. MTLA Director Janelle Cousino criticized the proposed O'Connell bill because "it totally rejects the real costs that people have from pain and/or [the loss of] any kind of normal life. Literally, there's nothing in it for the injured person."
Mr. Siegel, who is not a voting member of the commission, said that he is "convinced once a state passes this kind of bill and there is a [rate] reduction of 30 or 40 percent with five times the benefits, other states will adopt it." The commission had planned to vote on the bill next week, but Mr. Siegel said that his staff has a few changes to make and that the vote probably will be delayed two weeks.