Insurance limits: Bill would have unintended consequences

The state requires Nevada drivers to buy $15,000 worth of insurance to cover injuries or death suffered by one person in an auto accident, $30,000 for the injuries or deaths of all people, and $10,000 for property damages.

Those limits were set in 1958, when gasoline was 24 cents a gallon and new homes cost less than $13,000.

Fighting back tears at the Legislature on Tuesday, Assemblyman William Horne, D-Las Vegas, argued those limits are too low. The assemblyman last year suffered back, neck, wrist, shoulder and other injuries when his car was hit in Las Vegas by a driver carrying the minimum liability coverage, he explained.

The other driver’s $15,000 bodily injury limit won’t come close to covering his medical bills. He still might need surgery to reduce pain in a wrist, Mr. Horne said.

So the assemblyman has proposed a bill that would raise the minimum liability limits to $50,000 for one person, $100,000 total, and $25,000 in property damage.

Those limits would place Nevada in a tie with Wisconsin, Maine and Alaska as states with the highest required minimum coverages in the country.

The problem is, even those limits wouldn’t be high enough to indemnify against every likely outcome — hundreds of thousands of dollars in medical bills following serious accidents aren’t uncommon these days.

Yet even such “modest” hikes would have vast unintended consequences.

The proposed coverage requirements could boost annual auto insurance rates by $122 to $290 per year for Las Vegas drivers who now settle for minimum coverage, according to the Property Casualty Insurers Association of America.

Insurance lobbyists testified in Carson City this week that 15 percent of Nevadans already violate the law by driving without insurance. By making insurance less affordable, raising the limits would only increase that number.

Fortunately, other remedies exist. Those with substantial assets to protect are free to buy coverage above the minimum state requirements, and usually do.

And while those who choose to “get by” on the minimum required coverage probably don’t have many other assets for accident victims to go after, responsible drivers are free to buy special coverage against the chance of being hit by uninsured motorists.

Mr. Horne admitted this week that — because he was 48 at the time of his accident and never had been in an accident, he opted not to purchase underinsured/uninsured driver coverage.

“I didn’t think I needed it,” Mr. Horne said.

Buying insurance is smart, but the Legislature can’t mandate “smart.” Anything that drives up insurance rates will increase the number of uninsured motorists, thus driving up the likelihood of accidents with uninsured motorists, thus driving up coverage costs for the smaller number of people who continue to wisely buy insurance.

Younger people, particularly, should be better informed about the extensive — and expensive — risks of driving recklessly or drunk. No culprit should “walk” just because he or she is broke. The courts can always assess a percentage of future earnings.

But unfortunately, particularly in these economic times, Mr. Horne’s proposal would likely do more harm than good.