Insurelane Insurance Blog

The Louisiana Senate recently passed a bill to increase the minimum liability auto insurance coverage. Currently, the minimum coverage is $10,000 for the bodily injury of one person, $20,000 for two or more injured, and $10,000 for property damage.

The new bill would raise the bodily injury minimum to $25,000 for one person, $50,000 for two or more, and $25,000 for property damage.

Governor Kathleen Blanco has until July 18 to decide if she will veto the bill. After the deadline, the bill will automatically become law if she takes no action.

There’s a lot Governor Blanco must consider to make her decision. The Insurance Commissioner, Jim Donelon, is urging her to sign the bill into law. He points out that Louisiana’s current liability requirements are the lowest in the country and don’t provide enough protection for good drivers.

Auto insurance companies contend the law would force premiums up 30% to 50%. The higher premiums may force many to drop coverage — and likely add more cost to the daily struggles of residents after Hurricane Katrina.

“While this legislation may be well-intentioned, the end result will not only be an increase in the cost of auto insurance, but quite possibly an increase in the number of uninsured drivers,” said Greg La Cost, who is assistant Vice President of the Property Casualty Insurers Association of America (PCI).

“Louisiana already has the fourth highest auto insurance premiums in the country and this will only make insurance cost more than before,” La Cost added.

But Donelon and other advocates of the bill counter the current liability coverage minimum isn’t enough to pay for the costs of repairs. Republican State Senator Mike Michot, the bill’s designer, argues liability coverage hasn’t risen in 24 years, even though the average cost of a car has gone up $11,000 since 1983.

“This is not meant to be a burden or cause there to be more uninsured drivers. [The bill is meant to provide] more realistic coverage,” said Senator Michot.

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