Why is Maryland’s Minimum Auto Insurance Amount So Low?

Update: This 11-year-old blog says the minimum auto insurance coverage in Maryland is $20,000 per claim.  This minimum has now been increased to $30,000.  Is this still too low?  It is too low.

There was an article in yesterday’s Baltimore Sun about a young man who was seriously injured in a car accident- a taxicab hit him while he was riding his bicycle. The article focused on his struggle to obtain medical care. One of the things that was pointed out was that the taxi only had $20,000.00 in liability insurance, which is the minimum amount of insurance allowed under Maryland law. The taxi’s insurer is the Maryland Automobile Insurance Fund (MAIF), which is the state’s insurer of last resort.

In handling auto accident injury cases in Baltimore City, I have noticed over the years that it seems that more drivers in Baltimore City have minimum limits than in other places. Also, more often than not these are MAIF policies.

In a serious injury case, a brief stay at Shock Trauma can eat up $20k immediately. I can tell you that 20k isn’t enough coverage for anybody. Why does our state require such a minimal amount of insurance?

I am sure some of you are saying “That’s why I have high limits on my policy- so I am protected from an uninsured or underinsured motorist.” Some people think that it isn’t fair to low income, new, or geographically disadvantaged drivers to require more insurance. Those folks pay higher premiums, so a higher insurance requirement would be a financial hardship.

Well, there are many people who aren’t covered by any UM policy. For example, a person who doesn’t own a car and does not live with a relative who owns a car is not likely to have any coverage available for UM/UIM. For example, my elderly aunt who doesn’t drive but frequently walks to take care of her errands. Also, insurance isn’t really that costly. What really hurts low income/high-risk drivers is that they are often limited to coverage through MAIF. The problem is that MAIF requires payment upfront on their policies, so consumers are at the mercy of financing companies that put up MAIF’s premium and charge interest on monthly payments. Someone who has a minimum policy is also unlikely to have assets to pursue to satisfy an excess judgment.

What kind of public policy is this? Is the state promoting irresponsibility at the expense of victims? Maybe we would be better off if the required minimum were higher, even if it made insurance more costly for some people. Driving isn’t a right. Should we help people who can’t really afford to drive at the expense of those who are just trying to walk around safely?

Other laws requiring set amounts of money have built-in increases over time, like Maryland’s statutory cap on non-economic damages. Why can’t our mandatory required insurance be modified as well?