Louisiana Looking to Reduce Auto Insurance Rates

Louisiana lawmakers have pushed  legislation to lower car insurance premiums within the state. A bill has now moved to hrough the House and Senate floors after legislative committees approved them earlier. The bill is aimed at  targeting  high auto insurance rates in the state, and it may be signed into law.

The bills, sponsored by Republican members, targets the legal climate in Louisiana that lawmakers argue causes the state’s high auto insurance rates. With laws that make it easy to file a lawsuit after a car accident, Louisiana drivers pay some of the highest car insurance premiums in the country, only falling behind Michigan.

The bill drew bipartisan support to address several components of Louisiana’s tort laws that influence auto insurance rates. As the compromised bill passed both the House and Senate, lawmakers anticipate a decision from Governor John Bel Edwards shortly on whether the bill will be made into law.

What is This New Legislation?

In the new bill that passed in the House in June, changes to the process of the state’s justice system are purported to reduce insurance premiums by at least 10%. The only exception to this would be where a company could prove that the decrease in insurance payment would lead to bankruptcy. Some lawmakers hope to see rates cut by up to 25%.

“The new bill will limit the amount of recoverable expenses and insurance premium payments a person could require after an accident,” explained Attorney Joe Kopfler of Kopfler & Hermann, Attorneys at Law.

One change in the law is that if an injured driver or passenger is proven to have not utilized a seatbelt, this fact could be used to reduce the injured party’s recovery under the comparative fault law.  Cases that heretofore were required to be tried by a judge may be tried by a jury since the jury trial limitation has been reduced by the bill from $50,000.00  to $10,000.00.

Other elements within the bill address whether a person can sue an insurance company directly and , if a jury can see the evidence of an insurance policy in claims against insurance companies.

In regard to damages, a jurisprudentially created doctrine, the collateral source rule, would be somewhat tempered by the new bill.  Under that doctrine, the person at fault in an accident has to compensate the injured party for the full cost of medical treatment even though the injured party had health insurance which compensated his or her  health care providers at a reduced rate.  This change will allow the party at fault to reimburse the cost of medical treatment at the reduced rate.  The trial judge will have some discretion in adjusting the damages for medical expenses.

What Will Happen If The Bill Passes?

This legislation is considered to be a type of ‘tort reform’, seeking to change some of the technical language within the statutory law e to bring the state’s courts more in line with the realities of car insurance policies in Louisiana, and hopefully lower some of the insurance costs for those within the state. However, not everyone is pleased with the possibility of this drastic change.

Some attorneys and judges oppose the new bill because they believe there is insufficient evidence or expert testimony to guarantee that rates will fall. Additionally, the bill does not have legislative language that specifically requires insurers to reduce premiums. Rather, the bill hopes to initiate the change in insurance premiums by lowering the cost of the legal endeavors that insurance is intended to pay for.

Some are worried that the dramatic changes to Louisiana’s civil system could stress the courts, particularly as the burden to handle these cases shifts from judges to juries in rural jurisdictions. Some argue that the bill could leave accident injury victims more reliant upon an insurance company because lawsuits would become more difficult.

Current Legal Landscape in Louisiana

For many proponents of the bill, they are hopeful that the five-part bill will improve auto insurance prices for many within the state. While there is no specific language to reduce car insurance premiums directly, there is hope that by amending issues within the state’s civil justice system, insurance rates will accordingly decrease.

However, this is not the only legislation the state is pursuing to address their high car insurance rates. The Governor is also supporting a bill that would prevent insurance companies from setting rates based on demographic information like marital status, gender, credit scores, and other characteristics. As more and more legislation is approved to try and amend this issue, many are looking to see if the effects that follow are effective or detrimental.

As time progresses, there may be additional stipulations added to auto insurance laws as the full effect of the bill is realized. For now, many are hopeful they will see lower auto insurance premiums in the direct future for residents of Louisiana.

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