Californian elected officials are considering one more tax on Californians and businesses. Senate Bill 1107 is not a tax within the meaning of the law, but it has a similar effect. This bill will make driving a car in California even more expensive.
Industry experts estimate that drivers will pay between $80 and $400 more than today. Worse, the harmful effects of the legislation will almost exclusively be borne by low-income drivers and small businesses in the Golden State.
The bill will double the minimum amount of liability coverage drivers are required to purchase and dramatically change how coverage works for underinsured motorists. These proposed changes to auto insurance will hurt all Californians, but especially low-income drivers, at a time when they are already struggling to keep up with the highest inflation in 40 years.
Every dollar counts, especially when your budget doesn’t allow for sudden increases. I remember my less than prosperous days as a 21-year-old worker. I was paid $2 an hour and my car insurance was $4 a week.
Adjusting for inflation, my salary was slightly higher than what minimum wage workers earn today. If my insurance had increased significantly, as SB 1107 threatens to do, it would have severely affected my cost of living and my tight budget.
Proponents of this bill say they are trying to help drivers by providing more coverage so that there is more money for settlement after a car accident. The reality is that these changes are completely unnecessary. Drivers are required under California law to have liability coverage. Today, drivers can buy as much liability and underinsured motorist coverage as they want to protect themselves and other drivers after a car accident.
SB 1107 would increase underinsured motorist limits from $15,000 for single injury crashes, $30,000 for multiple injury crashes and $5,000 for property damage crashes to $30,000, $60,000 and $25,000, respectively. Insurance premiums would rise dramatically, severely affecting the quality of life for many Californians.
The changes would also increase costs for the 1.5 million small businesses in the San Diego area. And this comes at a time when inflation in general and gasoline prices in particular are skyrocketing.
We don’t need to be insurance experts to understand that if minimum coverages are increased, more money will be paid out in claims and this will force higher premiums. The impact on some people and small businesses could be devastating.
If SB 1107 becomes law, California will also likely see an increase in the number of uninsured drivers on the road. Currently, approximately 16.6% of California drivers are uninsured. This is almost a third more than the national average of 12.6%.
For a bill that’s supposed to reduce the risk of financial disruption after an accident by creating larger payouts for victims — and their personal injury attorneys, of course — SB 1107 might actually do the exact opposite.
How could our legislators consider such a bill? Don’t they remember the long economic recovery after the pandemic? SB 1107 seems counter-intuitive to so much other work the Legislative Assembly has done.
Rising insurance premium costs will force more drivers to forgo insurance as prices become a barrier that many cannot afford. A larger cohort of uninsured drivers will cost Californians millions of dollars and put these uninsured people at tremendous risk of financial devastation.
The Legislature should help Californians by voting against Senate Bill 1107. Or at least do Californians a favor and ask the question about the November ballot so we can have our say.
Raoul Lowery Contreras is a Marine Corps veteran, political consultant and author of the new book White Anglo-Saxon Protestants (WASPS) & Mexicans. His work has been published in the New American News Service of the New York Times Syndicate.