Car insurance bill passes Senate

Thousands of car owners could get relief from a recent spike in their insurance bills under a bill approved by the Senate on Monday night.

The legislation, passed 48-0, would eliminate a requirement that auto insurance policies provide the same level of coverage for uninsured and underinsured motorist protection that they do for liability coverage.

Many car insurance bills rose on Jan. 1 because of a statewide rate increase, but thousands of those premiums also jumped because of a twist in a new state law. The law requires that all policies include coverage for medical expenses and other costs from accidents in which the car owner is hit by another driver who has no insurance or insufficient insurance.

Roughly 12 percent of drivers are uninsured, according to the Department of Insurance. Car owners cannot renew their auto registration each year without proof of insurance, but some let the insurance lapse in between registration renewals.

"Unfortunately the [new law] had an unintended consequence," Sen. Dan Clodfelter, a Charlotte Democrat and chief sponsor of the bill, said during the vote Monday night.

The catch was that the new law required that the amount of coverage, the maximum payout, would be the same whether it's to the policyholder for injuries from being hit by an uninsured driver or to another driver when the accident is the policyholder's fault.

Some owners didn't need that much uninsured/underinsured motorist coverage, because their health insurance or other means would take care of medical bills.

"They had to either pay a lot more than they wanted to pay for uninsured motorist coverage," Clodfelter told senators, "or, if they wanted to keep their premium down, they had to lower the coverage on their liability."

Policyholders could choose the level of uninsured/underinsured coverage that they want under the bill approved Monday night.

The number of car owners who saw a rate increase because of the new requirement for equal levels of coverage is unclear. One indicator is that about 70,000 customers of Nationwide, the largest auto insurer in the state, got bigger insurance bills because of the law. The average increase was about $22 for the year, and the largest jump was about $120 for the year, according to a company spokeswoman.

Those customers, though, were a small percentage of overall customers. About 99 percent of Nationwide's customers already carried uninsured/underinsured coverage, and 91 percent maintained equal levels of coverage.

The bill that passed Monday, if next approved by the House, would take effect Oct. 1.