Legislature(1993 - 1994)
03/12/1993 01:00 PM JUD
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 79 DAMAGE TO PROPERTY BY MINORS Number 713 JAY FRANK, representing STATE FARM AND ALLSTATE INSURANCE COMPANIES, said that HB 79 made a major change in parental "strict liability" for malicious acts committed by minors. He said that the law currently allowed a person to recover up to $2,000 from parents for any type of vandalism committed by their children. He noted that HB 79 would raise that dollar amount to $50,000. MR. FRANK said that the insurance industry's concern about HB 79 was two-fold. He stated that parents were already held strictly liable, meaning that although parents might not cause the damage, they were liable for the acts of their children. He called the current law a rather drastic form of remedy, and said HB 79 would make that remedy exponentially more drastic. MR. FRANK stated that he felt that the intent behind HB 79 was to penalize parents so that they would exercise some supervision over their children. He said that the insurance industry was concerned that the provisions of HB 79 would become an item covered by a homeowner's insurance policy, increasing the cost to the policy-holders. MR. FRANK commented that he would like to see the bill amended so as to exempt the types of damages addressed by HB 79 from being covered under liability insurance policies. Then, he said, the effect of HB 79 would be to penalize parents and not penalize all insurance policy-holders through premium cost increases. Number 752 REP. JAMES asked Mr. Frank, If people could not get insurance to cover damages done by their children, what guarantee did victims have of compensation? Number 761 MR. FRANK said that Rep. James had asked a good question. He noted that it was difficult for a person to buy liability insurance that would cover intentional acts. He commented that the irony in HB 79 was that an intentional act committed by a child was not covered because of its intentionality. However, he said, because parents were being held strictly liable, damages from the minor's intentional act became insurable. MR. FRANK said that there were many things that people did that caused other parties to suffer losses, which one could not buy insurance to cover. Whether or not a person had the financial resources to compensate a victim for damages did not concern insurance companies, he said. Number 775 REP. JAMES asked how the situation addressed in HB 79 was different from someone tripping on her sidewalk and breaking his or her leg. Number 781 MR. FRANK responded that the difference lay in that Rep. James, in her example, had not done anything intentional to cause the act. REP. JAMES asked Mr. Frank if he were insinuating that the parents were intentionally allowing their children to commit crimes. MR. FRANK replied that the act committed by the child was an intentional act of vandalism, not covered under any insurance policy. But, he said, the liability was being strictly imposed upon the parents. Number 788 REP. PHILLIPS asked Mr. Frank if he were saying that no insurance company would write a policy to cover a child who engaged in mischievous behavior. Number 792 MR. FRANK responded that he was not suggesting that. He noted that it was questionable whether an Allstate policy would cover children's acts of vandalism. State Farm, he added, had always had a policy of covering those types of acts. Number 798 REP. PHILLIPS asked Mr. Frank how the provisions of HB 79 would be technically incorporated into a policy. Number 799 MR. FRANK said that if children's acts of vandalism were to be excluded from coverage, a policy could specifically contain an exclusion which said that the policy would not cover liability imposed on parents for intentional acts committed by their children. Number 802 CHAIRMAN PORTER commented that parents' strict liability for intentional acts committed by their children was already in place, and HB 79 was merely increasing the dollar amount of liability. Number 809 MR. FRANK noted that at the current $2,000 level, State Farm did not have a problem paying for those losses. However, he said that when the amount increased to $50,000, State Farm's view would probably be drastically different. Number 810 CHAIRMAN PORTER said that Mr. Frank's statement about the intent of HB 79 might not have been entirely inclusive. He commented that from his perspective, the intent of the bill was to more adequately provide coverage for victims. Number 813 REP. GREEN echoed the Chairman's concern. He asked Mr. Frank if it was his belief that if a child could cause $50,000 worth of damage, the victim should bear the loss for $48,000 in damages. Number 820 MR. FRANK commented that the insurance industry could not be all things to all people. He added that if a person were caused harm by a judgment-proof individual, the person would simply have to bear the cost of the damage. He said that the irony with HB 79 was that insurance companies could turn around and exclude intentional acts committed by children from coverage. He said that he did not want to see people not "made whole." However, he noted the social cost resulting from HB 79's losses being borne by insurers. He said that the bill could eventually drive up premium rates. TAPE 93-32, SIDE B Number 005 REP. GREEN asked Mr. Frank if insurance rates would go up across the board or just for parents of minors. Number 008 MR. FRANK replied that insurance premiums were calculated based on an insurance company's losses, and that HB 79 would therefore result in increased insurance rates for everyone. He noted that a person could obtain first-party property insurance coverage to cover acts of vandalism to one's own property. Number 033 REP. DAVIDSON asked Mr. Frank what happened now in the event that a child committed $15,000 worth of damage to a neighbor's property. Number 049 MR. FRANK said that under current law, if the damaged person wanted to recover costs from the parents of the child who committed the act of vandalism, that person could file a civil suit. Under current law, he added, a person could recover up to $2,000 from the parents. Number 059 REP. DAVIDSON asked Mr. Frank if a damaged person could also turn to her or his own insurance company for repayment of the cost of the damage. Number 062 MR. FRANK noted that a damaged person could always turn to her or his own insurance company if the person had a "first- party policy." He said if a person submitted a claim to her or his own insurance company, the company would turn around and sue the parents of the child who committed the act of vandalism. Number 074 REP. DAVIDSON commented that some parents were at their wit's end in trying to deal with uncontrollable children. He said that it was not just the parents' fault that children were becoming more wayward. Number 100 CHAIRMAN PORTER noted that HB 79 might assist the insurance companies, in that when they sued parents to recover damages, HB 79 would allow them to recover up to $50,000 instead of the current limit of $2,000. Number 114 MR. FRANK responded that the Chairman was correct in that HB 79 would allow insurance companies to recover more money. However, he noted that HB 79 would still increase the amount of money that the parents' insurance company paid out, therefore increasing losses and premiums. Number 122 REP. CON BUNDE, PRIME SPONSOR of HB 79, called his bill "victims' rights legislation." He commented that going to court to recover $2,000 would result in a moral victory, but certainly not a financial one, due to resultant legal costs. He said HB 79 contained three steps: (1) proving that an individual committed a crime; (2) proving that the child was a dependent of the parent; and (3) proving actual damages. REP. BUNDE noted that HB 79 provided that a person could only seek recovery of actual damages caused, with an upper limit of $50,000. He said that knowing that they could be liable for $50,000 if their children committed crimes, parents would be more likely to make sure that they knew where their children were and what they were doing. REP. BUNDE stated that in the case of good parents whose children were simply uncontrollable, there was a process by which the children could be adjudicated as "delinquent." In that case, he added, the parents would not be financially responsible for damages caused by the child. REP. BUNDE addressed Mr. Frank's suggested amendment to HB 79. The amendment would put into statute a provision that no insurance company could write a policy in Alaska covering the type of liability addressed in HB 79. He said that he opposed the proposed amendment. REP. BUNDE said that increased liability would lead to increased awareness among parents as to their responsibilities toward their children. He noted that his bill would also allow victims of vandalism a greater opportunity to recover damages. Number 212 REP. PHILLIPS commented that had HB 79 been in place the year before, it might have saved the life of a Dimond High School student shot while stealing a furniture store sign in Anchorage. Number 220 REP. BUNDE noted that most children were not so evil that they would do something that would cause their parents to lose huge sums of money. He said that his bill would cause children to consider the consequences of their actions. Number 237 REP. GREEN asked about a situation in which a child caused damage and the child's parents were financially capable of covering the cost of the damage but moved out of state. REP. BUNDE replied that under current law, a person who moved out of state was still responsible for her or his debts. He noted that HB 79 would not change that. REP. GREEN asked Rep. Bunde if he had considered penalizing children directly for their acts of vandalism. He mentioned revoking their driver's licenses or seizing their permanent fund dividend checks. Number 255 REP. BUNDE said that what Rep. Green had suggested was one of the original thrusts of HB 79. However, he said that because minors could not enter into contracts, the state could not personally address those things for which a minor had to sign. He said that HB 86, which he had also sponsored, provided for the seizure of a minor's vehicle if it was used in the commission of a crime. Number 278 REP. DAVIDSON said that it seemed to him that HB 79 would create another type of victim -- the parents. He expressed concern over the manner in which the problem of wayward youth was being attacked. He suggested increasing the amount of liability from the current $2,000, but making it lower than the $50,000 proposed in HB 79. Number 307 REP. BUNDE said that it was not his intention to set a new limit. He noted that he just set out the jurisdictional amount currently allowed in the district court. He commented that he shared Rep. Davidson's concerns about wayward children. However, he stated that parents needed to do all they could to be responsible for their children. Number 323 REP. DAVIDSON asked about society's obligation toward wayward youth. Number 327 REP. BUNDE indicated that if a parent knew of her or his substantial financial obligation, he or she would either rein in the children as best they could or have them adjudicated as delinquent. Number 334 REP. DAVIDSON asked what tools parents could use to rein in their children. REP. BUNDE replied that parents could decide what tools to use. He commented that the only legal protection parents had against out-of-control children was to have them adjudicated as delinquent. Number 342 REP. DAVIDSON noted that the state could do better than to pass legislation dumping the load back on the parents. He reiterated his belief that parents were not the only ones at fault when it came to wayward children. Number 356 CHAIRMAN PORTER commented that he agreed with Rep. Davidson's point that the state needed to strike a balance between accountability and authority capability. He said he was looking at ways to allow parents to have the authority that they needed to maintain discipline and control over their children. He stated that in recent years, laws protecting children from abuse and sexual assault might have gone overboard to the point that parental authority had been diminished. Number 386 CHAIRMAN PORTER spoke about a case he had once handled in which a 15-year-old girl had run away from home because her parents would not allow her to smoke. Under current law, he said, the police could not take her home if she did not want to go. Number 409 REP. NORDLUND mentioned Rep. Bunde's HB 100, Prosecution of Juvenile Felons, and the sponsor's comment that children under the age of 18, in some cases, ought to be tried as adults. Yet in HB 79, he said, the sponsor provided that parents should be responsible for the actions of children under the age of 18. He asked Rep. Bunde to explain this apparent incongruity. Number 425 REP. BUNDE said that Rep. Nordlund's point was well taken. He said HB 79 relied somewhat on existing law in that it was difficult to recover damages from a person under the age of 18. Number 442 REP. NORDLUND commented that the approaches of HB 100 and HB 79 seemed to be at cross-purposes. Number 446 REP. BUNDE stated that he understood Rep. Nordlund's point, but he did not entirely concur. He said he did not see his ideas as mutually contradictory. REP. NORDLUND clarified his point by saying that if a child was able to make adult decisions, then the parents should be released from responsibility for the child's actions. Number 459 REP. BUNDE said that parents could be released from responsibility through legal action. Number 464 REP. JAMES stated that she viewed HB 79 and HB 100 as addressing two entirely different issues. She said that the issue of parental responsibility did not necessarily enter into HB 100. Number 479 REP. BUNDE expressed his opinion that the two bills addressed two different issues. REP. KOTT asked if HB 79 would result in the state being obligated to cover damages committed by a minor. He mentioned a case on the Kenai Peninsula in which a child in the custody of the state and living in a foster home had committed arson. REP. BUNDE said that under current law, a state agency or its agents would not be liable for the acts of a minor in their custody. He said his bill would not change that or increase the state's liability. Number 514 REP. DAVIDSON asked Rep. Bunde if he had children, and if so, what tools he employed to control the behavior of his teenagers. Number 515 REP. BUNDE said that he did have children and used remedies ranging from a strong voice and spankings to "time out" and threats of kicking the children out of the house if they did not behave. He noted that if he had been responsible for $50,000 in damages committed by his children, he would have adjudicated them as delinquent as soon as he felt they might commit damage in retaliation for being kicked out of the house. He said that he subscribed to the theory of "Tough Love," whereby a child was told that if he or she lived with parents, he or she would have to abide by rules set by the parents. Number 531 REP. KOTT asked what happened once a child was adjudicated as delinquent. Number 535 REP. BUNDE replied that he believed that such children became wards of the court. Number 543 REP. DAVIDSON commented that a parent could not have a child adjudicated as delinquent unless the child had committed a crime, in his understanding. Number 547 REP. BUNDE said that his research indicated that if a child were out of control, a parent could have him or her adjudicated as delinquent. He noted that the process was not a simple one. Number 554 CHAIRMAN PORTER noted that it was his understanding that a court had to judge whether or not a child was delinquent. Number 560 REP. DAVIDSON said that a parent could not necessarily have an unruly child adjudicated as delinquent. CHAIRMAN PORTER replied that Rep. Davidson was correct. REP. NORDLUND asked about a child who committed an act of vandalism, was caught, and was charged with a crime by the police. At that point, he asked, would the child be adjudicated as delinquent, and therefore not covered under the provisions of HB 79? Number 574 REP. BUNDE said that the child would not be considered delinquent at the point at which the crime was committed. He or she would be adjudicated as such after the crime was committed. Number 579 CHAIRMAN PORTER commented that one malicious act would not guarantee that a child would be branded "delinquent." Number 586 REP. KOTT asked if a parent could petition the court to adjudicate a child as delinquent if that child ran away from home. Number 596 RANDALL HINES, YOUTH CORRECTIONS SPECIALIST with the DEPARTMENT OF HEALTH AND SOCIAL SERVICES, commented that children entered the juvenile justice system through a number of means: petitions filed by law enforcement agencies, school district referrals, and parental referrals. However, he said if a child did not break the law, no delinquent offense had occurred. He stated that a child could not be adjudicated as delinquent just because he or she had run away from home and was incorrigible. Number 613 REP. KOTT asked if, under HB 79's provisions, a parent could be liable for $50,000 worth of damage caused by a teenage runaway. Number 620 MR. HINES noted that parents could not "adjudicate" their children as delinquent; only the court could do that. Number 626 REP. KOTT commented that the committee should get a legal opinion as to whether adjudication was the only mechanism for alleviating parental responsibility for damage caused by their children. He asked Mr. Hines to discuss the emancipation process. Number 631 MR. HINES said that in order for a child to be legally emancipated, it had to be demonstrated to the court that the child was recognized as an adult. CHAIRMAN PORTER noted that for a child to be emancipated, the child often had to demonstrate talents, not liabilities. Number 639 REP. JAMES expressed her belief that if a parent could not control a child, he or she could have the child placed in foster care. Number 646 MR. HINES replied that emergency foster care could be provided for such children in some cases. Number 654 REP. DAVIDSON asked Mr. Hines if he felt that changing laws so as to give parents reasons to relinquish control of their children to the state was a good idea. Number 663 MR. HINES said that each family was "a fingerprint," and the issues surrounding a family's ability to care for a child were very complex. He said that strengthening the runaway law might be a step in the right direction. He added that providing additional foster care might also be part of the solution. He said that there was not one simple answer to this complex problem. Number 689 REP. PHILLIPS made a motion to move HB 79 out of committee with individual recommendations. Number 692 REP. DAVIDSON objected. He asked that the committee hear testimony from the court system on the issue. Number 697 CHAIRMAN PORTER commented that the committee had addressed many important issues. He said that in his understanding HB 79 was not intended to solve the whole problem of delinquent juveniles. He said that the bill had a relatively narrow focus in deterring some juveniles from committing acts of vandalism. Number 715 REP. DAVIDSON maintained his objection, as he was not convinced that HB 79 was a good bill. He noted that bills that the committee passed out might well become state law. He said that the legislature needed to address all the aspects of the problem of delinquent juveniles. He said he appreciated the sponsor's effort, but felt that HB 79 would result in more pressure on the family unit. He said that he would like to hear from more agencies, more parents, and perhaps some children. CHAIRMAN PORTER called for a roll call vote on the motion to move the bill from committee. Reps. Green, Kott, James and Porter voted "yea." Reps. Davidson and Nordlund voted "nay." And so, HB 79 was moved out of committee with individual recommendations and a zero fiscal note.