AB 897

Motor vehicle policy liability limits

Under current law, if a motor vehicle accident results in injury, death, or

property damage of $1,000 or more, the Department of Transportation (DOT) is

required to notify the operator and owner of the vehicle involved in the accident that

the person must deposit with DOT security for the accident in an amount determined

by DOT to be sufficient to satisfy any judgment for damages resulting from the

accident. Unless an exception applies, if a person fails to timely deposit security after

this notice, DOT must suspend the person's operating privilege if the person was the

vehicle operator and suspend all vehicle registrations of the person if the person was

the vehicle owner. One of the exceptions is that the person provides proof of financial

responsibility. In addition, if DOT receives a certified copy of a judgment for damages

of $500 or more arising out of a motor vehicle accident, DOT must immediately

suspend the operating privilege and all registrations of the person against whom the

judgment was rendered unless the person can provide proof of financial

responsibility. In both situations, proof of financial responsibility includes coverage

under a motor vehicle liability insurance policy with the following minimum liability

limits for any single accident:

1. Before January 1, 2010, $25,000 for bodily injury to or death of one person,

$50,000 for bodily injury to or death of more than one person, and $10,000 for

property damage.

2. From January 1, 2010, to December 31, 2016, $50,000 for bodily injury to or

death of one person, $100,000 for bodily injury to or death of more than one person,

and $15,000 for property damage.

3. After December 31, 2016, the limits specified in item 2., above, adjusted for

inflation by DOT, and published by DOT, at five-year intervals.

Also under current law, beginning on June 1, 2010, subject to certain

exceptions, a person cannot operate a motor vehicle in this state unless the owner or

operator of the vehicle has in effect a motor vehicle liability policy with respect to the

vehicle being operated. The policy must provide coverage in at least the minimum

liability limits specified immediately above.

This bill eliminates DOT's inflation adjustment of required minimum liability

limits. The bill eliminates item 3., above, so that, for purposes of both mandatory

liability insurance and proof of financial responsibility, the minimum liability limits

after January 1, 2010, remain as specified in item 2., above.

Miscellaneous motor vehicle insurance provisions

This bill makes a number of changes to the current law provisions that relate

to motor vehicle insurance policies and umbrella and excess liability policies,

including the following:

1. Current law, as a result of provisions in the 2009-11 biennial budget act

(budget act), makes a number of formerly permissible provisions prohibited in a