La. Passes Higher Auto Coverage Requirements

The Louisiana House approved legislation last week that would increase minimum limits for auto coverage.

The bill, which now goes to the State Senate, could increase auto insurance premiums 30-to-50 percent by dramatically raising the state's minimum insurance limits, according to the Property Casualty Insurers Association of America (PCI).

Democratic Gov. Kathleen Blanco has not indicated if she will sign the legislation if it wins final passage, according to Greg La Cost, assistant vice president and regional manager for PCI.

Senate Bill 223 increases the current minimum limits of $10,000 for bodily injury liability to one person, $20,000 for bodily injury liability for two or more persons injured in any one accident, and $10,000 for property damage liability (commonly stated as 10/20/10 limits) to 25/50/25.

The bill's effective date was amended in the House and will be sent to the Senate, which is expected to concur with the change.

"This change will increase premiums for approximately 40 percent of Louisiana drivers," said Mr. La Cost.

The PCI noted that Louisiana already has the fourth-highest auto insurance premiums in the country, and with such a significant change it is likely that some consumers will drop their coverage rather than pay the higher prices.

"We are concerned that this will have the unintended consequence of increasing the number of uninsured drivers, which according to floor debate is nearing 28 percent," Mr. La Cost said.

The group that benefits the most from this change, he argued, "is the same one that pushed this through the legislature--the lawyers."

This bill will also result in many drivers being forced to buy additional insurance coverage whether they want it or not. "If a motorist wants additional coverage, he or she already has the option to purchase more protection," he said.