Md. needs higher auto insurance limits

March 25, 2010

In 1972, Maryland established minimum auto insurance requirements of $20,000 per person and $40,000 per incident so people injured by negligent drivers could pay their medical bills and receive lost wages.

At that time, the average income was $11,800, the average cost of a doctor's visit was $5, hospitals charged $350 for delivery of a baby, the average cost of a new car was $3,853, the average new home cost was $27,550, the average rent was $147 per month, and a gallon of gasoline cost only 50 cents.

Despite the meteoric rise in health care and other costs since 1972, Maryland has never raised its minimum insurance requirements. HB 825 would modestly increase minimum insurance to $30,000/$60,000, whereas a full adjustment for 38 years of inflation would require coverage at $103,000/$206,000.

The Sun's editorial of March 22 ("Warning: Insurance rate increase ahead") opposes HB 825, stating the bill would make Maryland's liability insurance requirements higher than the surrounding states.

The Sun failed to note, however, that Delaware and Pennsylvania (unlike Maryland) require drivers to purchase personal injury protection insurance, a product that covers medical expenses regardless of fault. Thus, HB 825 would put Maryland citizens on par with our neighbors in Delaware who already have $30,000 (liability plus PIP) in mandatory minimum insurance.

The Sun also expressed concern for the effect on low-income drivers insured through the Maryland Automobile Insurance Fund (MAIF). Yet, MAIF is a non-profit insurer of last resort for bad risk drivers, who are not necessarily poor. With a surplus of $125,000,000, MAIF should lower rates for its customers irrespective of whether HB 825 becomes law.

Moreover, the insurance industry always opposes reforms by claiming that change will result in higher costs to the poor. History has proven the industry wrong each time, for example following elimination of family exclusion and passage of first party bad faith legislation.

Events also disproved The Sun's assertion that HB 825 is a Democratic Party payoff to its supporters in the trial bar. The final House vote of 97-36 included broad bipartisan support from delegates who are not sympathetic to trial lawyers but who understood the merits of HB 825.

It is true the Maryland Association for Justice (MAJ) was the only group testifying in favor of HB 825. MAJ often finds itself standing alone fighting the excesses of the insurance industry. The reason is simple: MAJ is the only organization in Maryland whose mission is to represent injured people against the most powerful business interests in our state.

The Sun also wrongly asserted that amending the effective date of HB 825 from October 1, 2010 to January 1, 2011, was a political trick to fool the voters. In fact, the amendment came at the request of insurance industry representatives who expressed concern that implementing HB 825 during the current policy year would be administratively costly.

The House was right to pass HB 825; the Senate should do the same.

Wayne M. Willoughby, Baltimore

The writer is immediate past president of Maryland Association for Justice.

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