Legislature(1993 - 1994)

03/08/1994 08:00 AM House STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
  HB 402 - PROOF OF MOTOR VEHICLE INSURANCE                                    
  CHAIRMAN VEZEY opened discussion on HB 402.  The sponsor of                  
  HB 402 is the House Labor & Commerce Committee.                              
  Number 383                                                                   
  COMMITTEE, addressed HB 402.  He stated HB 402 deals with                    
  proof of financial responsibility filings for SR-22 drivers.                 
  SR-22 filings are, in many instances, needed for those who                   
  have been convicted of driving while intoxicated or reckless                 
  driving.  He thought HB 402 would provide insurance                          
  companies the necessary information that would ultimately                    
  lead to lowered premiums.  All drivers would begin to be                     
  treated with some equity.  He noted HB 402 essentially                       
  provides that insurance companies be informed as to what                     
  vehicles they are insuring. Presently, drivers can get                       
  insurance for inexpensive cars, drive and wreck expensive                    
  cars, and the insurance companies are being asked to pay the                 
  cost for the higher cost vehicle.  HB 402 would provide a                    
  clear definition for the insurance companies as to what they                 
  are insuring.                                                                
  CHAIRMAN VEZEY moved to the Fairbanks teleconference site.                   
  Number 431                                                                   
  testified in favor of HB 402.  Presently, an offender of a                   
  crime such as driving while intoxicated must provide, to                     
  continue driving, verification of coverage by the means of                   
  an SR-22.  The insurance carrier affirms that the liability                  
  coverage has been in place, and if the policy is cancelled                   
  for any reason, the Department of Financial Responsibility                   
  will be so notified.  A standard family auto policy has to                   
  list their private passenger automobiles by make, year,                      
  value, etc...  This policy is very specific and it does                      
  include an allowance for driving other vehicles, which meet                  
  specific requirements.                                                       
  MR. BROWN felt an underwriter needs to list specific                         
  vehicles on policies to give them some idea of the uses,                     
  age, and potentiality of loss.  An underwriter for SR-22                     
  relating to private passenger automobiles comes into                         
  problems when an SR-22 driver is found driving commercial                    
  heavy equipment or heavy trucks, substantially raising the                   
  rate of coverage required.  The SR-22 filing requirement                     
  does not provide specific interpretation of what the driver                  
  can drive, therefore, a driver could drive a Ford Taurus or                  
  an International tractor or trailer.                                         
  MR. BROWN stated HB 402 amends SR-22 statutes only to cover                  
  those autos listed in the policy, that meet the definition                   
  of a private passenger automobile.  He emphasized the                        
  policies that fit these automobiles should be listed.                        
  Carriers have been getting reluctant to write SR-22 coverage                 
  in Alaska.                                                                   
  CHAIRMAN VEZEY asked MR. BROWN to explain what an SR-22 is.                  
  MR. BROWN explained an SR-22 is a verification of coverage.                  
  For example, if an indicted driving while intoxicated                        
  offender wanted to regain his/her license, an insurance                      
  policy must be secured that the insurance carrier is willing                 
  to submit an SR-22 to the Department of Financial                            
  Responsibility that verifies the insurance is in effect.                     
  CHAIRMAN VEZEY asked if commercial vehicles had to be listed                 
  individually under current laws.                                             
  MR. BROWN said yes, and most commercial auto policies                        
  require there be a listing of commercial vehicles.                           
  Number 509                                                                   
  CHAIRMAN VEZEY introduced HOWARD JAEGER as the next                          
  individual to testify in Juneau.                                             
  Number 514                                                                   
  in favor of HB 402.  He pointed out, presently in the                        
  preferred auto program, the preferred driver has to specify                  
  which vehicles they want insured.  If they buy another                       
  vehicle they have 30 days to notify the insurance carrier in                 
  order for coverage to apply to it.  After 30 days, coverage                  
  would not apply to that car.  The 1989 bill addressing SR-22                 
  filings was broadened to include all motor vehicles owned by                 
  that person, not specifying the 30 day notice period.  With                  
  HB 402, coverage would apply to all vehicles which the                       
  insured has notified the insurance company that they own.                    
  Number 534                                                                   
  REPRESENTATIVE SANDERS asked if HB 402 would affect the                      
  premiums an individual would pay for an SR-22 policy.                        
  Number 537                                                                   
  MR. JAEGER said yes.  Currently, only one car has to be                      
  notified and insured with an agency, but the person could                    
  then drive other vehicles, without notifying the carrier.                    
  If the person then wrecked, the carrier would have to pay                    
  the claim even if they have not collected a premium for the                  
  other vehicles.                                                              
  Number 546                                                                   
  REPRESENTATIVE SANDERS inquired if all of the cars insured                   
  under the one driver would be at the higher SR-22 rate.                      
  Number 548                                                                   
  MR. JAEGER said no, only the first car would be higher.  The                 
  additional cars would have to be added to the SR-22 policy                   
  though.  He stated if a person had a speeding ticket and an                  
  accident the agency would only charge the surcharge on the                   
  one car.                                                                     
  Number  555                                                                  
  REPRESENTATIVE SANDERS commented with the new .08 alcohol                    
  limit there will be a lot of very responsible Alaskans                       
  paying SR-22 insurance.  He stated if HB 402 would make                      
  these people pay extra premiums on all their other vehicles                  
  then he would not be in favor of it.                                         
  Number 562                                                                   
  MR. JAEGER explained individuals with SR-22 would not be                     
  able to stay in a preferred market; therefore, they would                    
  have to pay the extra premiums.  SR-22 individuals would go                  
  into a substandard market, which is automatically a                          
  surcharge market on all of their cars.  In terms of their                    
  driving record, the agency would charge the surcharge on                     
  their first vehicle for the DWI and the others would act as                  
  second cars on which there would not be surcharge.                           
  CHAIRMAN VEZEY clarified HB 402 would also lower the cost of                 
  an SR-22 policy for a one vehicle owner, because as it is                    
  now, multiple vehicle owners were being lumped together with                 
  single vehicle owners.                                                       
  Number 573                                                                   
  MR. JAEGER said yes, multiple vehicle owners could be mixed                  
  together with single vehicle owners without the companies                    
  knowing it.                                                                  
  Number 575                                                                   
  CHAIRMAN VEZEY said the company's exposure is currently very                 
  high and they are not very willing to write SR-22 policies.                  
  He felt the competition may not be very stiff.                               
  Number 578                                                                   
  MR. JAEGER replied the competition is not very stiff now,                    
  but HB 402 may help encourage other companies to come into                   
  the state and offer SR-22 insurance.                                         
  Number 580                                                                   
  REPRESENTATIVE OLBERG wondered why the old language of June                  
  6, 1989, was not used in HB 402 which states, "applicable to                 
  all owned vehicles insured by the consignatary."  He asked                   
  why the language in HB 402 is more preferable.                               
  Number 586                                                                   
  MR. JAEGER responded the drafters were trying to say the                     
  same thing in different language by stating, "designated by                  
  description or appropriate reference, the motor vehicle that                 
  it covers."  The old law stated, "applicable to all owned                    
  vehicles insured by the insurance company."  He felt HB 402                  
  could read as it used to.                                                    
  Number 593                                                                   
  REPRESENTATIVE KOTT believed the language in HB 402 was                      
  legally the correct language of today.  He asked how many                    
  SR-22's were in the state.                                                   
  MR. JAEGER did not know.                                                     
  REPRESENTATIVE SANDERS wanted to clarify the answer to his                   
  previous question.  He asked if a person, who owns three                     
  cars, were to receive a DWI he/she would only have to pay                    
  that higher premium on one car, not all three.                               
  MR. JAEGER confirmed REPRESENTATIVE SANDERS.                                 
  Number 607                                                                   
  CHAIRMAN VEZEY introduced JOHN GEORGE as the next individual                 
  to testify.                                                                  
  (NAII), testified in favor HB 402.  The reason people have                   
  to have an SR-22 filing is because they have run afoul of                    
  the law; caught driving without insurance, driving while                     
  intoxicated, or involved in a serious accident.  The state                   
  wants to ensure, with an SR-22, that these people are now in                 
  compliance and have automobile insurance.  MR. GEORGE                        
  pointed out SR-22 is a requirement of the state.  Current                    
  laws require insurance companies to verify, if an individual                 
  is driving a car, that he/she is insured.  Therefore, if an                  
  individual owns ten cars and only has insured one of them                    
  with the company, but gets in a wreck in one of the other                    
  cars, the insurance company still has to pay the client's                    
  claim.  He clarified HB 402 would allow the insurance                        
  companies to pay claims on any car they insure, and only the                 
  cars described on the form.                                                  
  Number 641                                                                   
  REPRESENTATIVE OLBERG asked why cars were insured, instead                   
  of drivers.                                                                  
  Number 642                                                                   
  MR. GEORGE responded drivers can be insured, but not many                    
  companies offer that type of owner's policy.  A problem                      
  arises when an insured driver lends his/her uninsured car to                 
  another individual.  The car would only then be insured if                   
  the other driver had liability insurance.                                    
  CHAIRMAN VEZEY asked the pleasure of the committee.                          
  Number 655                                                                   
  REPRESENTATIVE BETTYE DAVIS moved to pass HB 402 from                        
  committee with individual recommendations.                                   
  Number 662                                                                   
  CHAIRMAN VEZEY asked the committee secretary to call the                     
  roll, and HB 402 passed unanimously from the House State                     
  Affairs Committee with individual recommendations.                           

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