1M Louisiana Car Owners Face Increased Insurance Rates Since January 1

By
Published:

Since January 1, auto insurance bills rose for over 1 million Louisiana automobile owners due to a law that increases mandated minimum liability coverage.

1M Louisiana Car Owners Face Increased Insurance Rates Since January 1Many drivers were caught off-guard because auto insurance institutions were not compelled to warn policyholders. This law was approved in 2008.

Jim Donelon, Insurance Commissioner, expressed that because of the current economic crunch, increase in insurance bills comes at a very difficult time especially for consumers. Nonetheless, he said that this new law is welcome to keep up with rising costs which includes, but are not limited to, accidents, repairs and replacement vehicles.

Donelon explained: “Certainly there are thousands of drivers out there who can ill-afford this additional cost. That’s always the case. I think that’s outweighed by the tens of thousands who are left uncompensated by the damage that minimally insured drivers do.”

The commissioner also said that 40% of the 2.5 million vehicles which are insured in Louisiana possess only the required minimum liability coverage.

State law in Louisiana presently compels truck and car owners to have al least “10-20-10” liability coverage. This scheme includes coverage amounting to $10,000 (for injury or death to one person in an accident), $20,000 (for injury or death to more than one person), and $10,000 (for damage of other people’s property).

With this new law, levels will increase to “15-30-25.”

According to the chief actuary for the Louisiana Department of Insurance Richard Piazza, a typical policyholder who is minimally insured usually shells out an average of $71 annually for auto insurance.

The commissioner explained that people are most probably unable to notice this change in liability coverage since they do not typically pay attention to their insurance rates. Meanwhile, individuals who have fixed incomes are more likely to notice the increased rates.

Governor Bobby Jindal, Republican representative, did not affix his signature on the insurance bill authored by R-Baton Rouge representative Erich Ponti. However, Jindal allowed this bill to take effect without his signed approval. Similarly in 2007, Jindal’s predecessor, Democrat Kathleen Blanco, rejected a similar proposal.

The legislators who voted against this measure defended their stance by saying that there are some automobile owners who might choose to drop car insurance in a state where 12% of vehicles are not covered under any insurance policy.

Port Vincent Republican Representative Mert Smiley, during legislatives debates on the measure, said that there are many individuals who are financially burdened and struggling. He added that approval of this bill would be likened to a “straw that broke the camel’s back.”

The commissioner, however, anticipates that the number of drivers who are uninsured may have slight increases due to this new measure.