Bill to Reduce Payments for Low-Income Nevadans Advances

[Read "Nev. Bill to Reduce Payments for Low-Income Drivers Dies" for a more recent update on the status of this legislation.]

The Nevada Senate’s Committee on Commerce, Labor and Energy gave its approval on Monday to a contentious piece of legislation that would set up a low income car insurance pilot program in Clark County.

Modeled after a similar program that has been active in California for about 10 years, Nevada’s Low-Cost Automobile Insurance Pilot Program would allow insurance regulators to establish a mechanism that would give financially strapped Clark County residents access to reduced coverage at reduced rates.

If it’s approved and proves successful, it could be expanded statewide.

The initiative is being proposed in response to constituents’ saying they cannot find policies they can fit in their budgets, one of the bill’s primary sponsors said.

The Nevada News Bureau reported that Assemblyman Kelvin Atkinson said the program would lower annual premium payments by about $184 a year.

Hopes are that the program would provide a viable option to driving uninsured for policyholders struggling to make their payments. It has been estimated that 1 in 8 Nevada drivers on the road in 2009 lacked basic liability coverage, which every motorist in the state is required to have by law.

Eligible participants would be required to have a household income that is at or below 250 percent of the federal poverty level, and there is a number of other restrictions relating to driving history and vehicle type that narrow down eligibility.

The state’s commissioner of insurance said that his rough estimate of enrollment in the program, if it were to go statewide, would be “in the vicinity of 1,000 policies per year.”

Coverage issued through the program would actually be lower than the state-required minimums. While Nevada law mandates that all drivers carry a total of at least $40,000 in liability protection per accident, the low-cost policies would only provide up to a total of $23,000 of that protection per accident.

The proposal’s fate looks uncertain. It barely made it out of the state assembly at the end of last month and got a harsh initial treatment at a committee meeting earlier this month.

Opponents of the measure said that it amounts to “wealth redistribution,” since it would assess a 50 cent fee for every automobile insured in the state that would go to promoting and covering the costs of the program.

The National  Association of Mutual Insurance Companies took it a step further, saying that it “is unlikely to do anything other than create a new state bureaucracy for taxpayers and insurance consumers to fund.”

Sponsors of the bill stand by their claim that it would effectively help struggling Nevada motorists.

About Ben Zitney
Benjamin Zitney has been covering the auto insurance industry for the past 2.5 years. Before coming to Online Auto Insurance News, he produced an extensive company history of the 30-year-old California Joint Powers Insurance Authority and worked at the Cal State Long Beach Daily Forty-Niner as a reporter, copy editor and news editor.

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