Insurance Commissioner Robert R. Googins proposed reforms recently that he said could save many drivers 30 percent to 50 percent, or more, on a basic Indiana auto insurance quote. The wide-ranging reforms would keep - but modify - the state's no-fault insurance system and would mandate a rate rollback.
The proposals, which Googins announced to a task force on auto insurance that he heads, are expected to frame the legislative debate on the issue in 2008. However, insurers, trial lawyers and consumer advocates - all represented on the task force - found fault with parts of Googins' plan, and said they aren't sure the group will be able to reach a consensus to present to the General Assembly.
Googins' plan would raise the threshold of medical bills that an auto accident victim must have in order to sue for damages from the current $ 400 to $ 5,000. In addition, a policyholder could collect up to as much as $ 25,000 in no-fault benefits for medical bills and lost wages instead of the current $ 5,000, regardless of who caused the accident. The plan addresses a major problem with the no-fault law - that a $ 400 threshold is not the deterrent to lawsuits that it was designed to be. Does not deter many lawsuits, as it was designed to do. But Googins' plan rejects insurers' stand that a description in words, rather than numbers, should dictate when people can sue. Insurers want a "verbal threshold" that says people can sue only if very seriously injured.
Other major points in Googins' program would:
* Make optional the part of the policy that protects people from uninsured drivers or those who don't have enough insurance. Currently, the only major optional coverage's are collision insurance and comprehensive coverage, which pays when a customer's car is stolen or damaged in ways other than in a crash.
* Mandate a rate rollback, though the size hasn't been determined. yet. People who buy only the liability and no-fault coverage's required by state law - and no uninsured-motorist insurance - could save 50 percent or more, Googins said. Drivers who also buy uninsured-motorist insurance might get a 30 percent to 35 percent savings, he said.
* The effect of a rollback wouldn't be as dramatic on the overall premiums of people who also buy collision and comprehensive insurance.
* Ensure the rollback would be to rates in effect as of Jan. 1, 2009, so insurers could not boost rates now to counteract the rollback.
* Subject any rate changes to prior approval by the Department of Insurance for two years.
* Eliminate a practice that allows drivers with more than one car on a policy to collect more money from their uninsured-motorist insurance. Under "stacking," a person with $ 100,000 of uninsured-motorist coverage and two cars on a policy could collect as much as $ 200,000 after one of the cars is in an accident.
* Over time, increase the proposed $ 5,000 threshold for when people can sue according to an index reflecting inflation in medical care.
* Limit the medical bills that can count toward the $ 5,000 threshold to sue. No more than $ 500 for certain treatments and diagnostic tests that turn up no problems would be counted in Indiana auto insurance quote.
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