Legislature(1993 - 1994)
04/06/1994 09:07 AM STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
CHAIRMAN LEMAN brings up HB 402 (PROOF OF MOTOR VEHICLE INSURANCE) as the next order of business before the Senate State Affairs Committee. The chairman calls the first witness. Number 394 JOHN GEORGE, Representing the National Association of Independent Insurers, states HB 402 would correct an unintentional equity. Insurance companies insure specific vehicles. If a person is determined to have driven without insurance, or a person has their license suspended, that person is required to file a form SR22 with the State of Alaska, which verifies that that person now has insurance on their vehicle. Unfortunately, the SR22 form does not list specific vehicles. This means a person could have five vehicles, insure only one, and when an insurance company fills out an SR22 for that driver, the courts interpret that as meaning that person has insurance on all five vehicles. If one of those vehicles was an 18 wheel truck, that person's policy would cover that. The insurance companies feel this is inequitable. If a person wants coverage on all the vehicles, that should be paid for. If a person does not have an SR22, they are not covered for vehicles not on their policy. So a person who is required to file an SR22 actually has broader coverage under their insurance policy than someone who has not broken the law. Number 428 MR. GEORGE states a person can get a policy that covers the driver, and not the vehicles they drive. It may be appropriate for someone who has a number of vehicles to get that type of a policy. However, if that person loans one of their vehicles to another person, the borrower would not be covered while driving the borrowed vehicle. Unless, of course, the borrower had a conventional policy. SENATOR DONLEY adds the borrower would not be covered if he also is an SR22 driver. Number 449 MR. GEORGE states the standard auto insurance policy covers someone when they are driving someone else's vehicle. Number 458 SENATOR TAYLOR states, under a standard policy, if a person owned eight vehicles, but only insured one, he would not be covered while driving one of the seven uninsured vehicles. However, if that person borrowed a friend's car, that person would be covered. Number 464 MR. GEORGE responds that is correct. However, the owner policy is primary. But if the owner is uninsured or underinsured, then the borrower's insurance would kick in. Number 469 SENATOR MILLER asks how many people in the state have SR22's. Number 474 JUANITA HENSLEY, Chief, Driver Services, Division of Motor Vehicles, Department of Public Safety says there are currently 26,000 persons who have revoked or suspended licenses. Those drivers are required to have an SR22 policy at the time they reinstate their licenses. Number 479 SENATOR TAYLOR wants to ask the Division of Insurance if anyone is keeping track of the claims made and the actual costs of SR22 policies, or if the state is allowing the insurance industry to rip SR22 drivers off as they choose. He wonders if anyone has ever looked at those policies to see if they reflect the actual cost of insuring those drivers. Number 491 MS. HENSLEY responds that is something the Division of Motor Vehicles does not track. She would like to clarify a statement made earlier by Mr. George regarding a commercial vehicle being covered by an SR22. If that commercial vehicle is operating inter- state, they are required to have a lower limit of liability insurance of 700,000$. So their private SR22 would not cover a commercial vehicle. Number 496 CHAIRMAN LEMAN asks if there are any further questions of Mr. George or Ms. Hensley. Hearing none, the chairman invites Senator Donley to present his testimony. Number 498 SENATOR DONLEY states HB 402 will create an especially dangerous situation. The only people required to show proof of insurance up front, are those drivers who have exhibited some reason for that requirement: drunk drivers, dangerous drivers, persons who have been caught driving previously without insurance. When mandatory auto insurance was reinstated in 1989, the decision was made to require dangerous drivers to show proof of insurance for all the vehicles they owned. SENATOR DONLEY states he was the prime sponsor of the legislation that was passed in 1989, and he remembers specifically discussing this very point. The representation that it was a mistake or inadvertent that dangerous drivers be covered for all the vehicles they own, even though they actually insure just one vehicle, is completely false. That was the subject of intense discussion and debate, and a vote on this very issue in committee. Senator Donley states he remembers it very well; he remembers, at the beginning of the discussion, being torn about which side was best. He was convinced by the debate that the way the law stands now, is the right thing to do. Number 545 SENATOR DONLEY states HB 402 is simply making it easier for dangerous and drunk drivers. Under HB 402, if an SR22 driver injures a person while driving a vehicle not covered by his policy, the state and social service agencies will end up footing the bill for the accident. SENATOR DONLEY believes the proponents of HB 402 twist the facts to support the bill. SENATOR DONLEY states automatic coverage of all vehicles an SR22 driver owns are reflected in the high rates paid by SR22 drivers. He also states it is not entirely true that SR22 drivers are not required to disclose all vehicles under their ownership. While it is true that SR22 drivers are covered, even when not disclosing all vehicles under their ownership, non-disclosure is clearly grounds for termination of coverage by the insurance company. SENATOR DONLEY restates the only people he thinks will benefit from HB 402, if their rates are structured properly, are the dangerous drivers. Number 591 SENATOR DONLEY states a much better option than HB 402 would be to require dangerous drivers to show proof of insurance for every vehicle they own. Make the policies vehicle specific, and make dangerous drivers insure every vehicle registered to them. TAPE 94-23, SIDE B Number 593 SENATOR DONLEY continues his analysis of alternatives to HB 402. He thinks that, at a minimum, the penalties for dangerous drivers who do not carry insurance on their vehicles be increased. HB 402 will increase the risk to citizens of the state; it will make the problem worse than it is. SENATOR DONLEY's last point is that the Division of Insurance no longer supports HB 402. The division is, at a minimum, neutral on HB 402. The division originally supported HB 402, but they have now withdrawn their support of the bill. Number 496 CHAIRMAN LEMAN asks if there are any questions of Senator Donley, or if anyone else wishes to testify on the bill. Hearing none, the chairman asks the pleasure of the committee. Number 578 SENATOR MILLER makes a motion to discharge HB 402 from the Senate State Affairs Committee with individual recommendations. Number 573 SENATOR TAYLOR objects to the motion to discharge HB 402 from the State Affairs Committee. CHAIRMAN LEMAN notes the objection and asks if there is any discussion regarding the objection. Hearing none, the chairman asks for a roll-call vote on whether to discharge the bill. The motion fails, with Chairman Leman and Senator Miller voting in favor of the motion, and Senators Taylor, Ellis, and Duncan voting against the motion.