HOUSE BILL REPORT

SHB 1041

BYHouse Committee on Financial Institutions & Insurance (originally sponsored by Representatives Baugher, Inslee, Dellwo, Todd, Rayburn, Crane, Zellinsky, Jones, Nelson, Grant, Gallagher, R. King, Hine, Sayan, Padden, Walker, Ballard, Silver, May, Brooks, McLean, Dorn, Fuhrman, S. Wilson, Smith, Sprenkle, Jesernig, Winsley, P. King, R. Meyers, Brough, Chandler, Schoon, Rector, Wineberry, Patrick, Jacobsen, Kremen, Van Luven, D. Sommers, Betrozoff, Schmidt, Rasmussen, K. Wilson and Spanel)

Requiring motor vehicle insurance.

House Committe on Financial Institutions & Insurance

Majority Report:  The substitute bill be substituted therefor and the substitute bill do pass.  (14)

      Signed by Representatives Dellwo, Chair; Zellinsky, Vice Chair; Anderson, Baugher, Beck, Chandler, Crane, Day, Inslee,  P. King, Nutley, Schmidt,  K. Wilson, and Winsley.

House Staff:John Conniff (786-7119)

AS PASSED HOUSE FEBRUARY 17, 1989

BACKGROUND:

In 1963, Washington adopted in substance, the Uniform Motor Vehicle Safety Responsibility Act.  The Washington statute, entitled "Financial Responsibility," requires drivers and owners of motor vehicles to pay for damages caused in accidents or face suspension of driving privileges and suspension of motor vehicle registration.  The Act does not prohibit the operation of a motor vehicle without insurance; rather, the Act requires that drivers pay for the damages they cause.

If an automobile driver negligently causes an accident and does not possess a qualifying automobile insurance policy or is not otherwise exempted from the Act, the Department of Licensing notifies the driver that driving privileges will be suspended and vehicle registration will be prohibited unless the driver complies with two main requirements.  These requirements are, first that the driver somehow agree to pay for damages and second, that the driver show proof of future ability to pay for damage, e.g., the driver must purchase insurance.

SUMMARY:

The mandatory automobile liability insurance act is not intended to modify, amend, or invalidate existing automobile liability insurance policy terms, conditions, limitations, or exclusions.

No person may operate a motor vehicle subject to registration unless the person has a motor vehicle liability insurance policy, the person is self-insured, the person is covered by a certificate of deposit, or the person is covered by a liability bond.

Operation of a motor vehicle without insurance is punishable by a fine of $200, which may be reduced to $50 if the person obtains insurance prior to a court hearing.  Second and subsequent violations are punishable by a fine of $400 which may be reduced to $200 if the person obtains insurance prior to a court hearing.

Insurance companies are required to give policyholders an insurance identification card containing information specified by the Department of Licensing.  At the policyholder's request, the insurer must provide cards to each person named as a driver under the policy and must provide a card for each vehicle.

The Department of Licensing must adopt rules specifying the type, style, and content of insurance identification cards to be used for proof of financial responsibility.  In adopting rules the department must consider the guidelines for identification cards developed by the insurance industry committee on motor vehicle administration.

Whenever a person operates a motor vehicle, they shall have in his or her possession, an insurance identification card and must show it to any law enforcement officer who requests it.

The provisions of this act do not apply to motor vehicles registered with the Washington Utilities and Transportation Commission as common or contract carriers.

Motor vehicle accident reports must contain insurance information of the drivers involved in the accident.

The Department of Licensing must notify the public of the requirements of the mandatory automobile liability insurance law at the time of vehicle registration.

The director of the Department of Licensing must compile a report on the incidence of uninsured motorists with the legislature after accumulating data for months after the effective date of this act.

Fiscal Note:      Requested January 30, 1989.

Effective Date:The bill takes effect January 1, 1990.

House Committee ‑ Testified For:    Harold Clayton; George Flood, Pemco; Pete Youngers, State Chair - MADD; and Marty Sangster, Washington Trucking Association.

House Committee - Testified Against:      Mike Kapphahn, Farmers Insurance Group.

House Committee - Testimony For:    The overwhelming majority of states require motorists to carry auto liability insurance.  Washington should join these states in requiring auto insurance.  Whether or not a mandatory auto insurance law removes uninsured motorist from the road, our state should penalize these irresponsible motorists.  While this act could be and should be tougher, the act constitutes a good first step.  While insurers generally oppose mandatory auto insurance laws as ineffective and costly, this act is the least intrusive and least expensive of the alternative mandatory auto insurance proposals.

House Committee - Testimony Against:      Mandatory auto insurance laws do not work and cost taxpayers money.  Such a law may cause the public to drop necessary insurance coverage based upon a false sense of security.  Some states with tough mandatory auto insurance laws have more uninsured motorist than does Washington.