Minimum Liability Coverage is Up, So are Insurance Rates


In Louisiana, drivers are required to at least have “10-20-10” liability coverage. These numbers simply correspond to liability limits. However, with the passage of a new law approved January 1, a vehicle owner is now compelled to obtain a minimum “15-30-25” coverage and with this comes higher rates, or more fees to be paid.

Minimum Liability Coverage is Up, So are Insurance RatesAccording to Richard Piazza, actuary head for the Louisiana Department of Insurance, policy holders would need to cough-up $71 more a year for car insurance.

Proponents of this law had cited a need to increase minimum liability requirement to meet rising costs associated with accidents such as repairs and replacement vehicles, as well as rising medical costs.

Insurance Commissioner Jim Donelon, said that while there are concerns for step-up in rates, this old requirement had been in existence for 30 years and added that most of these fears refer to the economic crisis.

While he admitted that “there are thousands of drivers out there who can ill-afford this additional cost,” he mentioned that because of this old policy, there are “tens of thousands who are left uncompensated by damage that minimally insured drivers do.”

In 2007, former Democrat Representative Kathleen Blanco vetoed said law. Governor Bobby Jindal did not sign the bill, but he let it take effect without his signature. Finally, in 2008, this bill sponsored by Rep. Erich Ponti, R was approved by the Legislature.

Those who are against this bill claim that as a long-lasting effect, many car owners may opt not to insure their vehicles. There are currently 12 percent of automobiles which are not covered by an insurance policy.

Donelon however, down-played this saying that they expect only a slight increase in the number of uninsured drivers.

“Most people won’t probably notice it because they don’t pay attention to their insurance rates,” Donelon stated. He continued that in all probability, only “people on fixed incomes and the ones who it will affect the most will notice it.”

The “10-2-10” liability coverage stands for the following: The first number (10) represents maximum coverage for bodily injury for one person injured in an accident. It must be multiplied by a thousand. The second number (20) covers bodily injury for one accident (thousand).The third number, however, constitutes maximum coverage for property damage for one accident.

To put it simply, a policy holder is therefore entitled to be indemnified $10,000 for injury or death to one person in an accident, $20,000 for injury or death caused by vehicular accidents to more than one person, and $10,000 if the damage was incurred against other people’s property.