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F I S C A L   I M P A C T   R E P O R T

 

 

 

SPONSOR:

Foley

 

DATE TYPED:

2/21/03

 

HB

697

 

SHORT TITLE:

Uninsured Motorist Punitive Damages

 

SB

 

 

 

ANALYST:

Wilson

 

APPROPRIATION

 

Appropriation Contained

Estimated Additional Impact

Recurring

or Non-Rec

Fund

Affected

FY03

FY04

FY03

FY04

 

 

 

 

 

NFI

 

 

 

SOURCES OF INFORMATION

 

Responses Received From

 

Administrative Office of the Courts (AOC)

Public Regulation Commission (PRC)

 

SUMMARY

 

     Synopsis of Bill

 

House Bill 697 allows uninsured motorist coverage to exclude coverage for any punitive damages that the policyholder would be entitled to receive if the at-fault motorist had been insured. 

 

     Significant Issues

 

The PRC states punitive damages are above and beyond the actual damages incurred by the policyholder and exist, by definition, to punish the at-fault driver for gross driving misconduct.  Since these are paid by the policyholder’s insurance company through uninsured motorist coverage and not by the at-fault driver, they do not achieve their intended purpose. 

 

HB 697 will leave the policyholder who is harmed by another driver without insurance with no possibility of receiving punitive damages unless the at-fault driver has some assets.

 

Uninsured motorist premiums will go down if punitive damages are excluded from the coverage, but the PRC estimates that the decrease will be very small. 

  


ADMINISTRATIVE IMPLICATIONS

 

The Insurance Division of the PRC will have to review several hundred amended rate and form filings.

 

TECHNICAL ISSUES

 

HB 697 makes it optional to exclude punitive damage, but the bill does not state who gets to choose the option – the insurance company or the policyholder. 

 

DW/njw/ls