Arizona motorists may soon have to obtain — and pay for — more insurance coverage.
Legislation sponsored by Rep. Ethan Orr, R-Tucson, would make it illegal to operate a motor vehicle without insurance that provides at least $25,000 for any individual injured. The current minimum is just $15,000.
Similarly, coverage for injuries to multiple victims in any one mishap would have to go from $30,000 to $50,000.
Motorists would need to purchase at least $20,000 coverage for property damage to things like someone else's vehicle or a city-owned streetlight, double the current figure.
Orr conceded the move will mean increased costs for those who now carry just the bare minimum, and estimates from various sources say the average would be anywhere from $50 to $100 more a year. But he said the move is long overdue.
“It hasn't been changed in 42 years,” he said. “If we're going to have a law that makes other people feel safe because other people have insurance on the road, that law should be tied to the times.”
Orr said the current minimums are not enough to ensure that those liable for accidents have adequate coverage to pay the expenses of those they hurt.
“But we're telling them it is adequate insurance,” he continued. “So by raising it, we give them the true level of security and safety they deserve.”
Attorney Geoff Trachtenberg, who is helping craft the bill, said what $15,000 covered in medical bills 42 years ago would probably take $80,000 now. Ditto the ability to replace a vehicle totaled by someone else — Trachtenberg said a Ford Gran Torino, one of the most popular cars in 1972, cost about $4,500.
But David Childers said all that is misleading. He represents the Property and Casualty Insurance Association of America, which is made up of companies who write close to half of all auto insurance policies in the state.
Childers said that even with inflation, the average claim for bodily injury last year was $13,275. He said 91.5 percent of all claims were settled within that $15,000 limit.
He also said the average claim for property damage was just $3,144.
Childers said probably only one motorist out of every five in the state has just the minimum coverage and would be affected. But he said the change has consequences for everyone.
He said that some of those who purchase only bare-bones coverage may do so out of choice.
“Some of them carry those (limits) because they have to,”' Childers said.
“These are probably the most economically challenged of our citizens,” he continued. “They're probably buying 15/30 because that's all they can afford to buy.”
Childers said while hiking premiums by even just perhaps $80 a year might not seem like much, it might be just enough to convince some people to drop coverage entirely. That would come on top of what he said is the estimated 9 to 13 percent of motorists who already are driving with no insurance at all.
If that happens, Childers said that would increase the premiums that all other motorists pay for coverage to protect themselves against uninsured motorists.
Trachtenberg, however, said the record in other states that have hiked their insurance requirements shows there is no significant increase in the number of uninsured motorists.
Rep. John Allen, R-Scottsdale, said there's another consideration that suggests higher minimum coverage should be required.
He said many Arizona motorists now feel the need to purchase coverage for “underinsured” motorists given the possibility that they will be hit by someone with just minimum coverage.
“It makes the rest of us take the risk that that guy's going to hit us,” Allen said. “He probably has an inferior vehicle to start with because he doesn't have $80 to put into it.”
Rep. Bob Robson, R-Chandler, said that the numbers Childers provided on bodily injury claims is a bit misleading.
He said there's a reason so many claims are settled for under $15,000: That's all the coverage the at-fault motorist has. He said the insurance company, with no major investment to protect, just agrees to pay the limits of the policy.
Trachtenberg conceded that, as an attorney who represents plaintiffs, often for a share of any verdict or settlement, he has a financial interest of sorts in the change: Having defendants with more money means more in legal fees.
Trachtenberg said much more is at stake.
“People charge for the services they render and they get paid out of these recoveries,” he said. “When there's not enough insurance, like a $15,000 policy, that cost ... gets passed on to the rest of us.”
That includes hospitals that have to find some way of making up what does not get paid in medical bills
The state also is involved because those who find their medical expenses exceed their ability to pay also can qualify for the state's Medicaid program. Trachtenberg said if the motorist responsible for the accident has more insurance, the state can recover more of what it paid for the medical care provided.
Childers said higher minimum limits also could have the effect of increasing lawsuits, as more money available would make cases more attractive for lawyers to take.
Trachtenberg said that new minimum of $25,000 for bodily injury and $20 for property damage is not out of line. He said it would put Arizona close to the national average.