Why HB 825 Is A Good Bill (And The Sun Is Wrong)

Why HB 825 Is A Good Bill

HB 825 is a bill being considered by the Maryland House of Representatives this morning. What the bill does is raise Maryland’s mandatory minimum auto insurance requirements. As I write this, I am listening to the debate on the House floor.

Currently, Maryland requires drivers to purchase insurance coverage with limits of at least $20,000 per person and $40,000 per incident. This has been the requirement since 1972 when the mandatory insurance law was passed. That amount has never been changed.
HB 825 would raise the minimum limits to $30,000 per person or $60,000 per incident.

This is a change that is well overdue.

The bill has a positive fiscal note, which includes sample premium increases for drivers insured by the Maryland Automobile Insurance Fund (MAIF). These are the only numbers available, because private insurers are not required to provide this information, and refuse to do it voluntarily. In fact, I was at the committee hearing on this bill, and the insurer’s lobbyists were asked this question and they responded that they “did not have” that information.

MAIF is the state’s insurer of last resort, required by statute to cover drivers who have been turned down by at least three commercial insurers. These are Maryland’s riskiest drivers to cover, who consequently pay the most to purchase car insurance. MAIF drivers who face the biggest increase in premium would have to pay about 9.3% more, about $14.50 per month.

So what we have is a 37-year-old insurance requirement that has never been raised. The bill will cost the state nothing and will result in only a modest premium increase even for the state’s worst drivers.

Consider what a dollar bought in 1972 (thanks to Jim MacAlister, Esq.):

A new car’s average cost was $3,853;
A new house’s average cost was $27,550;
Apartment rent averaged $165 per month;
Average yearly income was $2,800
A year’s tuition at Harvard was $2,800
A gallon of gas cost $0.55
$20,000 in 1972 dollars equals about $103,000 in 2010 dollars. To put this further in perspective, I have been handling auto accident cases for eleven years. I was BORN in 1973.

Our minimum insurance requirement needs to be brought into the 20th century. Injured Marylanders pay hospital bills in 2010 dollars. They lose wages at 2010 rates. This is a good bill for Marylanders.

The local fish wrap, the Baltimore Sun, recently published an editorial opposing the bill. They called it a “trial lawyers’ bill.” They said that the bill only enriches lawyers and that it is a legislative reward for campaign contributions. They said that neighboring states have similar limits- Delaware is 15/30, Pennsylvania is 13/30, and West Virginia is 20/40.

Of course, the Sun failed to give its readers all the facts. They used the classic ploy of using technically accurate information to support a completely misleading conclusion. The numbers for those states are correct, but what the Sun left out is the PIP coverage. PIP is Personal Injury Protection. It is no-fault insurance that covers expenses from an accident regardless of fault. The practical effect of PIP is that medical bills that are paid by PIP do not need to be paid out of any recovery from the negligent driver’s liability insurance. This means more of that coverage is available to protect the injured person.

Two of the states the Sun lists require at least twice the amount of PIP that Maryland does. Maryland requires PIP coverage of $2,500, which can be waived. DE requires $15,000 in PIP. PA requires $5,000. That is extra protection for injury victims that Maryland does not have. This means that even to be equal to the neighboring states, our minimum should be increased between $2,500 and $12,500.

Just as I reached this point in the blog post, the House debate concluded, and the bill was called for a vote. It passed overwhelmingly by a vote of 97 – 36. Thankfully, our legislature had ALL THE facts, not just the ones the Sun thought best for lining the bottom of a birdcage. This bill will now proceed to be considered by the Maryland Senate, where it will hopefully pass by a similar margin. Hopefully, the end result will be better protection for Marylanders injured by bad drivers.