Washington Auto Insurance Bills Approach Deadline for Vote

Washington State lawmakers have until February 14 to pass a pair of bills that would pave the way for vehicle-sharing programs in the state and make insurance regulations more hospitable to insurers who want to offer usage-based options to Washingtonians, according to the Office of the Insurance Commissioner.

Insurance-Friendly Car Sharing

Following similar legislative moves in California and Oregon, lawmakers in Washington are pushing to eliminate the negative coverage implications of participating in car-sharing programs.

Currently, auto owners in the Evergreen State would likely see their personal Washington car insurance policies invalidated if they lent their cars out in exchange for money, since the vehicle is being used commercially.

House Bill 2384 fixes that by transferring liability from the car owner to the car-sharing service when the automobile is being used by people other than the owner. So any damages that occur while the car is being rented would be covered by the service’s policy, not the owner’s.

Policies provided by the sharing service would have to provide at least $180,000 worth of total liability coverage–three times the minimum required by the state–as well as comprehensive and collision coverage.

Paving the Way for Usage-Based Programs

There has been rapid growth over the past few years in demand and supply of usage-based insurance options.

Usage-based options often involve an insurer providing a small electronic device that plugs into a diagnostic port on a car. That device then sends policyholder driving data back to the insurer, showing how many miles are put in behind the wheel, how often drivers of the insured car brake hard, and where and at what times of day the car’s driven, among other factors.

These programs in theory reward drivers who put in fewer miles behind the wheel and display safer driving habits.

House Bill 2361 would allow insurers to keep from public inspection the rating methodology used when incorporating usage-based information in pricing formulas. It also states that location data recorded by the devices cannot be collected without the user’s consent and that “individually indentifiable usage information” that’s collected may not be used in any way other than in premium calculations.

Public testimony summarized in a report from the House Business and Financial Services Committee indicate that the legislation would help only one company: Progressive Insurance.

Progressive championed usage-based coverage options with its Snapshot Discount, which is available in nearly every state in the country. But Washington remains one of the few where Snapshot is still not available.

According to a summary of public testimony include in the committee report, a supporter said, “The concerns raised about this bill appear to be based on an inability to compete with a product that is available in most of the country. That product will not be sold in this state without some type of confidentiality protections.”

Progressive owns a handful of patents regarding usage-based coverage, but supporters of the bill noted that the rate filings would be open to public inspections, which would expose the company’s information and possibly lead to the company’s having to defend its patent in court.

The summary of the testimony from individuals “with concerns” said that Progressive–although the company is not named outright in the testimony–is suing other insurers who have tried to develop similar products, and it “should not be given even more protection than their existing patents.”

About John Pirro
John Pirro is a licensed fire and casualty insurance agent specializing in various aspects of the auto insurance industry. He worked in the auto body repair industry before taking a reporting position at Online Auto Insurance News.

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