Carl Perry just dropped a bill, House Bill 1083, which modifies the amounts required for proof of financial responsibility for the future for motor vehicles. In reading it, I can’t help but wonder if he bothered to discuss his master plan with anyone in the insurance industry. Because it seems … well, dumb for a few reasons. The bill is as follows:
An Act to modify the amounts required for proof of financial responsibility for the future for motor vehicles.
Be it enacted by the Legislature of the State of South Dakota:
Section 1. That § 32-35-2 be AMENDED:
32-35-2. The term, proof of financial responsibility for the future, as used in this chapter, means proof of ability to respond in damages for liability, on account of accidents occurring after the effective date of the proof, arising out of the ownership, maintenance, or use of a vehicle of a type subject to registration under the laws of this state, in the amount of twenty‑five following amounts:
(1) Seventy-five thousand dollars because of bodily injury to or death of one person in any one accident;
(2) Subject to the limit for one person, in the amount of fiftyseventy-five thousand dollars because of bodily injury to or death of two or more persons in any one accident; and
(3) in the amount of twenty‑fiveSeventy-five thousand dollars because of injury to or destruction of property of others in any one accident.
Wherever used in this chapter, the terms, proof of financial responsibility, or, proof, are synonymous withhave the same meaning as given to the term, proof of financial responsibility for the future.
Read that here.
The first thing that jumped out to me was the limit.. Seventy-five? During my years as an SD Division of Insurance employee, and throughout my time (now six-years) as a property insurance claims manager, I have never seen a policy with 75/75 limits. It’s a weird amount, and nobody currently writes it. Everyone has policies with $25,000/$50,000 limits (25/50 for short.) 50/100 limits, and 100/300. No one out there has 75/75. Which means that every company offering covering auto insurance in the state will now have to draw up and file new rates and forms. Every company. Could they even get those filed and approved with the DOI by July 1?
The Bodily Injury/Death limit for two or more people is capped at 75K, the same limit as one person. This is just poorly drafted, and makes even less sense. If insurance coverage for one person for “bodily injury to or death of one person” was inadequate at 25k, so we needed to raise it to 75k, why would we have the same limit for two or more people at 75k.. which is $37.5k each. If we would have to have such a drastic increase from $25k to $75k for one person, why is the multiple-person coverage increase from the $25k each that’s currently in existing law just a pittance? It’s a proposal designed for for single passenger injury accidents, but not so great for anyone driving with anyone in their car.
If we continue to have problems with uninsured motorists at 25/50 coverage, what is tripling the amount of coverage (along with a significant increase of cost) going to do? Obviously, make it more expensive, so even more people decide to skip the coverage. And here’s the figure to look at, because South Dakota actually doesn’t do a bad job here.
According to the Insurance Research Council, in 2019, South Dakota had 7.4% of our motorists estimated to be uninsured, placing us at a rank of of being the 41st in the nation for uninsured drivers. According to this study, on a percentage basis, we are in the top ten of the least uninsured drivers at this time. Why would we want to put insurance farther out of reach?
Even worse, what does this bill propose to do to us? Perry’s bill to take South Dakota to 75/75/75 would actually move our minimum liability limits to being the highest in the country. Higher than California (15/30). Higher than Massachusetts (20/40). Higher than Texas (30/60). And even higher for one-person accidents than Alaska (50/100). You can review the chart of state minimums (current as of 10/22) here.
Sorry, but House Bill 1083 is just an awful idea. The only things that this measure would do would be to raise rates for all consumers, make it tougher to get insurance, and actually raise the number of uninsured motorists in the state.
As an old insurance agent once told me, if we could legislate responsibility, then we would have no drunk drivers, unintended pregnancies, or need for a Division of Child Support.
But legislators seem to think they can do so with auto insurance, so here we are.