Bill Description: Senate Bill 1269 would impose new regulations on vehicle insurance providers regarding "underinsured motor vehicle coverage."
Does it give government any new, additional, or expanded power to prohibit, restrict, or regulate activities in the free market? Conversely, does it eliminate or reduce government intervention in the market?
Senate Bill 1269 would amend Section 41-2503, Idaho Code, by adding a new subsection requiring "underinsured motor vehicle coverage" to mean additional coverage beyond the coverage possessed by the at-fault driver in a motor vehicle accident.
Underinsured motor vehicle coverage covers a driver who is hurt in a motor vehicle accident by an at-fault driver whose liability insurance is insufficient to cover the damages caused.
Under current law, an insurance provider's contract may specify that the total amount of the underinsured motor vehicle coverage includes whatever insurance the at-fault driver carries. Say for example, that the at-fault driver carries $50,000 in coverage and you have $100,000 in underinsured motor vehicle coverage. Your insurance would cover up to $100,000 in total expenses, with the first $50,000 paid by the at-fault driver's insurance.
Senate Bill 1269 would forbid such contracts. It would instead require that all the coverage of the underinsured motor vehicle policy apply after the coverage carried by the at-fault driver in an accident. In the above example, the insurance company offering the $100,000 policy would be required to pay up to the entire $100,000 in addition to the $50,000 paid by the at-fault driver's insurance.
This new regulation would change the concept of underinsured motor vehicle coverage from a type of gap policy (bridging the gap between the policy carried by the at-fault driver and the coverage purchased by the other driver) to a type of supplemental policy. This shift substantially increases the exposure of the insurance company and, based on the results we have seen in other states, it is likely to result in higher premiums for insurance customers.
Does it violate the spirit or the letter of either the U.S. Constitution or the Idaho Constitution? Examples include restrictions on speech, public assembly, the press, privacy, private property, or firearms. Conversely, does it restore or uphold the protections guaranteed in the U.S. Constitution or the Idaho Constitution?
In addition to being an expanded regulation, Senate Bill 1269 also forbids voluntary contracts between insurance providers and insurance customers in a manner that is likely to increase costs for consumers. The state should not prevent voluntary contractual relationships between consenting parties.