Ohio House Approves Increase of Minimum Coverage Levels

A bill seeking to raise the low minimum liability limits in place in Ohio has gained approval from the House, while a bill that would open up the state’s salvage-car market appears to be stalling.

Lawmakers Seek to Raise Liability Limits Again

The Ohio House of Representatives passed HB 278 on Dec. 3 by an 85-7 vote, supporting an increase to the minimum amounts of coverage policies in the state must provide.

The bill would raise minimums as follows:
–The minimum per-person bodily injury liability limit would go from $12,500 to $25,000.
–The minimum per-accident bodily injury liability limit would go from $25,000 to $50,000.
–The property damage liability limit would go from $7,500 to $25,000.

Ohio currently has some of the lowest liability minimums in the U.S.

The state’s minimums for bodily injury liability—which covers other people’s injuries from an accident caused by the policyholder—are the second-lowest in the nation. Only Florida has a lower minimum, and that state has mandatory personal injury protection coverage that eliminates the need for liability coverage in most cases.

The state’s minimums for property damage liability—which covers other people’s property damages from an accident caused by the policyholder—are lower than 45 states and Washington, D.C.

Rep. Gerald Stebelton (R-Lancaster), the bill’s author, has made several similar proposals to the state Legislature that relate to Ohio auto insurance, most recently in 2010, when he submitted a bill to raise liability limits.

At the time, the Ohio Insurance Institute (OII) had opposed the bill and said that raising the limits would hurt new and low-income drivers and could push up the rate of uninsured drivers in the state.

OII president Dan Kelso said that the group did not support the new bill in the form it was introduced but has since lent its backing because lawmakers added provisions surrounding cancellation and territorial ratings.

These provisions “will assist the companies with a more sophisticated and accurate rating process,” Kelso said in an interview the Online Auto Insurance News. “They will be able to rate auto insurance risks better and that’s what they’re in the business to do.”

Kelso said that he remembers similar legislative efforts to raise liability minimums in “virtually every session” for more than a decade. He said that the OII has no stance on the liability limit portion of the bill.

“I think that this is a situation where beauty is in the eye of the beholder,” he said. “Regardless of what limits are, people are free to buy above the minimum, and there are a 1,000 ways to look at that. There are those in the state that want the limits raised because they don’t believe that enough people buy the coverage to cover the typical crash, and those are the people that brought this bill.”

The Ohio Department of Insurance’s “Guide to Automobile Insurance” offers advice to those who are purchasing just the liability minimums but are also worried about being involved with crashes in which damages are higher than those limits:

“If you do not have adequate coverage, the law allows the victim to take any assets that you may have in order to cover the costs of any damages that occur,” the guide states. “You would be held legally responsible to pay for any damages that are not covered by your insurance.”

Bill Changes Territorial Rating Restrictions and Minimum Coverage Periods

The bill also loosens the restrictions the law places on pricing policies based on where an individual lives.

Currently, insurers are prohibited from charging different rates to two residents of the same city if the price difference is based solely on where they live in the city. So, basically, insurers cannot have different pricing territories within an individual city.

The bill would remove that provision and replace it with a clause saying that “it is an unfair and deceptive act or practice in the business of insurance to charge premium rates that are excessive, inadequate or unfairly discriminatory based solely on the location of the residence of the insured.”

This would give insurers more options when deciding how to price policies based on where the policyholder lives.

Another portion of the bill halves the minimum period that policies cover, lowering the current two-year minimum to a one-year minimum.

HB 278 is scheduled for its first hearing in the Senate Insurance Committee Tuesday, Dec. 11.

Salvage Car Bill Likely Stalled This Year

The OII also supports SB 273, a bill backed by insurers who say they want to expand the market for salvaged cars beyond the current licensing system. Currently, salvaged cars in the state are only sold by through state issued licenses available to dealers and 21 other states.

Kelso said that the state’s insurers are currently the biggest seller of salvaged vehicles and need a way to broaden that market. The bill could reduce coverage rates in the state by making the sale of salvaged vehicles more profitable to insurers.

“Right now, we’re probably the most restrictive states in terms of salvaged vehicles,” he said. “If insurers can’t sell their salvaged vehicles for a better price that can help offset their claims costs, it ultimately affects the insurance products they sell.”

The Ohio Auto and Truck Recyclers Association voiced strong opposition to the bill, saying that it would promote criminality in the salvage market by opening it up to “an increasingly large pool of unlicensed and unregulated buyers from in and out of the country.”

Also, according to opponents, the bill would hurt local auto recycling businesses and cost the state jobs.

Kelso said that the OII received word from lawmakers late Friday that SB 273 would not be heard in the House Insurance Committee Tuesday, meaning that it is likely stalled; bills left undecided in the state’s lame-duck session, ending this week, are held over and need to be reintroduced the following year.

“We obviously would have liked to see the bill passed, but our understanding from the House leadership is that they don’t want to move on the bill,” said Kelso, who added that he has seen similar versions of the bill introduced to state Legislatures going back about a dozen years.

The House Insurance Committee could not be reached for comment but, as of Monday, its calendar still lists SB 273 for a hearing on Dec. 11. The bill had passed the state Senate by a 30-3 vote in April.

About Charles Nguyen
Charles Nguyen is an enterprising journalist who reported for Patch.com and the Desert Dispatch and was the editor in chief of the Guardian (the twice-weekly newspaper at the University of California, San Diego) before coming to Online Auto Insurance News.

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