HOUSE BILL REPORT
EHB 2638
BYRepresentatives Inslee, Dellwo, Chandler, Crane, R. King, Brekke and Rector
Revising provisions for sale and renewal of automobile insurance.
House Committe on Financial Institutions & Insurance
Majority Report: Do pass as amended. (11)
Signed by Representatives Dellwo, Chair; Zellinsky, Vice Chair; Anderson, Baugher, Crane, Day, Dorn, Inslee, Nutley, K. Wilson and Winsley.
Minority Report: Do not pass. (2)
Signed by Representatives Chandler, Ranking Republican Member and Beck.
House Staff:John Conniff (786-7119)
AS PASSED HOUSE FEBRUARY 8, 1990
BACKGROUND:
Automobile insurance companies may decline to renew an auto policy by giving the policyholder 20 days advance written notice of the actual reason for nonrenewal. An insurer may refuse to renew a policy for any reason so long as nonrenewal does not violate laws prohibiting unfair discrimination and prohibiting nonrenewal of liability coverage because of policyholder claims under comprehensive coverage.
State law governing the use of motor vehicle driving records by insurance companies prohibits companies from using non-fault accidents appearing in these records. Companies may not increase rates or base a decision to insure on non-fault accident information contained in the records. However, state law does not prohibit companies from obtaining similar information from other sources and using the information for purposes prohibited by the motor vehicle code.
Some motorists who have attempted to comply with the recently enacted mandatory auto liability insurance law have encountered problems obtaining insurance. Some auto insurance companies will not sell auto liability insurance to a person who has never been insured or who has not had auto insurance in the recent past. In addition, some companies will only sell insurance with coverage limits that exceed the limits of coverage required under the mandatory auto insurance law.
SUMMARY:
Auto insurers may not refuse to renew the liability or underinsured motorist coverage of a policy because of an accident where the insured's portion of fault is less than 25 percent.
Auto insurers may not refuse to sell an automobile insurance policy to a person solely because the person has never had auto insurance, nor may an insurer charge a higher rate for the insurance solely because the person has never had auto insurance.
Auto insurers must offer to sell automobile liability insurance with coverage limits equal to the limits required under the state mandatory auto insurance law. Insurers may not sell auto liability insurance with coverage limits below the amount required by state law. Nothing contained in the act prohibits an insurer from offering higher limits of liability insurance nor does the act require an insurer to sell insurance to a person who does not meet the insurer's underwriting standards.
Fiscal Note: Not Requested.
House Committee ‑ Testified For: Dennis Martin, Washington State Trial Lawyers Association.
House Committee - Testified Against: Jean Leonard, State Farm Insurance; Basil Badley, American Insurance Association; and Mike Kapphahn, Farmers Insurance.
House Committee - Testimony For: Persons who have not purchased auto insurance in the past are attempting to comply with the mandatory auto insurance law. Insurance companies who charge more for auto insurance simply because the person has not had insurance or who refuse to sell insurance to the person make compliance with the law difficult. In addition, many people choose to purchase the minimum amount necessary to comply with the law but have difficulty finding a company who will sell minimum limits.
House Committee - Testimony Against: Auto insurance companies charge persons who have not previously been insured more for auto insurance because statistics show that these persons are more likely to have an accident or make a claim than other persons who have been insured. Some companies will sell insurance to persons who have never had insurance and some companies will sell minimum liability limits. So long as some companies meet these needs, there is no reason to force every company to serve the same market thereby increasing costs for policyholders of preferred risk companies. As to prohibiting nonrenewal based upon non-fault accidents, defining fault in terms of percentages of liability invites argument and litigation.