Contact: Jess Cook
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STUDY SHOWS ADOPTION OF PROP 213 COULD CUT AUTO PREMIUMS 5 PERCENT
MEASURE BARS NON-ECONOMIC ACCIDENT COMPENSATION FOR INJURED LAWBREAKERS
SANTA MONICA, Calif. September 25 -- Proposition 213 on the November California ballot would bar drunk drivers and uninsured motorists from compensation for non-economic losses -- notably pain and suffering -- resulting from auto accident injuries. What are the likely effects of these provisions?
According to a new study by RAND's Institute for Civil Justice, the effects could include a 10 percent reduction in auto insurers' compensation costs for personal injuries and a consequent 5 percent, or $40, reduction in the average California driver's auto insurance premiums. Statewide, drivers' annual premiums would have been about $550 million lower if the proposition had been in force in recent years.
"Our results address relative costs," explains the study's lead author, economist Stephen Carroll; "They show the difference between what will happen if the current system is retained and what would occur if the proposal is adopted."
Under California's prevailing tort liability auto insurance system, injured parties seek compensation for economic losses (medical expenses, lost wages) and non-economic losses (pain and suffering) from the driver who caused the accident. There is no limit on claims.
Prop 213 would change this system, in part, for two classes of accident victims -- uninsured or drunk drivers injured by an insured driver and drunk drivers covered by uninsured-motorist insurance injured by a negligent, uninsured motorist. Carroll and co-author Allan Abrahamse estimated that about 11 percent of future California auto accident victims will be in the former category and another 2 percent in the latter. The cost savings achieved by the ballot measure would be the amount of compensation for non-economic loss that insurers would otherwise pay these victims, plus related claims-handling and legal expenses that insurers would avoid.
Prop 213 also largely bars compensation for any type of loss incurred by felons injured in auto accidents while committing or fleeing from crimes. "We didn't estimate this provision's effects on costs because of data limitations, but it's safe to say they would be slight," Carroll adds.
The full text of the Carroll-Abrahamse issue paper, "The Effects of Proposition 213 on the Costs of Auto Insurance in California," is available on RAND's Internet web site. Open www.rand.org and select Hot Topics. Hard copy will be mailed to you today or call the Public Information Office at 310-451-6913 for a fax.
The Institute for Civil Justice funded this study as a public service.