A Nebraska senator has introduced legislation that would double the minimum levels of financial protection that liability policies issued in the state are required to provide.
Currently, Nebraska policies must include at least up to $25,000 of bodily injury liability protection for damages to one person, $50,000 for damages to two or more, and $25,000 for property damage liability. This is commonly denoted as 25/50/25 coverage.
But the new bill–introduced by Omaha Sen. Steve Lathrop–would raise those minimums to 50/100/50.
Lathrop said he introduced the bill in order to make the state-required minimums reflect rising medical costs and cut the rate of underinsured drivers.
While opponents to raising minimum levels of coverage usually cite consequent spikes in premiums as a reason to keep them at current levels, a representative of an organization for independent agents has said the effect would be relatively insignificant.
Testifying to the state legislature’s Banking, Commerce and Insurance Committee, Dan Loring–of the Independent Insurance Agents of Nebraska–said doubling the liability minimums would amount to a rise in premiums of about 15 percent on average.
According to a report from the National Association of Insurance Commissioners (NAIC), low cost auto insurance has historically been relatively easy to find in the state.
The NAIC said that in 2008–the most recent year for which data is available–the average liability premium in the state was about $308. That’s about 35 percent lower than the national average of $471.
Nebraska’s state legislature is only the latest to see a proposal introduced to raise the minimums.
A similar change recently went into effect in Wisconsin, but Republican lawmakers in that state are now pushing to roll back those changes. Proposals have also been introduced to the Ohio and Pennsylvania state legislatures, although no formal actions have been taken regarding them.
The majority of states–27–currently have 25/50 bodily injury liability levels. Eight have higher minimums and 16 have lower.
According to the Insurance Information Institute, insurers in 2009 paid an average of $13,462 per bodily injury claim.
One surprising aspect of the senator’s bill is the proposed property damage liability minimum. No states currently require residents to carry at least $50,000 for this type of coverage. The highest state minimum for property damage liability is $25,000, which is in effect in 14 states.