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Nonpartisan In Depth Analysis of

PROPOSITION 31

INSURANCE CLAIMS PRACTICES. CIVIL REMEDIES AMENDMENTS.

Referendum Statute

THE QUESTION

Should the 1999 law which amended the provisions of Proposition 30 to limit when a third-party claimant can sue an insurance company be approved?

PROVISIONS

If approved, this proposition would allow provisions of AB 1309 to go into effect. By itself, however, this proposition does not change existing law. It becomes law only if the voters also approve Proposition 30 on this ballot. Proposition 31 would amend parts of Proposition 30, limiting to some extent when a third-party claimant can sue an insurance company for unfair claims practices.

  • Proposition 30 allows both individuals and businesses to sue. Under Proposition 31, only individuals can sue.
  • Proposition 30 places no restrictions on economic loss claims. Proposition 31 limits claims for property damage to those resulting from a car accident.
  • Proposition 30 places no restrictions on bodily injury claims. Under Proposition 31, bodily injury claims cannot include emotional distress resulting from economic loss, but can include emotional distress resulting from other causes if there are physical signs of the distress.
  • Under Proposition 30, in specified cases if an insurance company agrees to arbitration, the third-party claimant cannot sue the company. Under Proposition 31, if an insurance company requests or agrees to arbitration, the third-party claimant cannot sue the company.

BACKGROUND

See section Background for Proposition 30 and 31.

FISCAL EFFECT

This proposition would have a fiscal effect only if Proposition 30 is approved. Proposition 31 would cause state revenues to increase slightly less than if only Proposition 30 were approved. The net impact on state court costs is unknown.

IMPACT OF YES OR NO VOTE

A YES vote means there will be restrictions on when a third-party claimant can sue another party's insurance company for unfair claims handling--but only if Proposition 30 is approved by the voters.

A NO vote means the provisions of Proposition 30 will not be amended.

SUPPORTERS SAY

  • Voting yes on this referendum will protect your newly restored right to hold insurance companies responsible.
  • Propositions 30 and 31 prohibit drunk drivers from suing, and they do not give uninsured motorists the right to sue you. Furthermore, they do not change Proposition 213 that prohibits uninsured drivers from suing for pain and suffering.
  • Propositions 30 and 31 will reduce the number of lawsuits in California: If an insurance company agrees to resolve your claim through arbitration or simply decides to treat your valid claim fairly, there is no lawsuit.
  • Insurance companies penalized for violating the new law will not be able to pass on their penalties to consumers by raising premiums. The California Code of Regulations says: "Bad faith judgments and associated loss adjustment expenses" are "excluded expenses" for setting insurance premiums in California.

OPPONENTS SAY

  • Propositions 30 and 31 mean dramatically higher insurance premiums for all Californians and will bring personal injury lawyers billions in higher fees.
  • Under Propositions 30 and 31, if your insurer refuses to pay an unreasonable settlement demand made against you, it risks a separate multi-million dollar lawsuit.
  • Under current law, if someone thinks a settlement offer is too low they can already take the dispute to court. They can also file a complaint with the state Insurance Commissioner's Enforcement Division.
  • Propositions 30 and 31 would give drunk drivers new rights to sue and recover financial rewards against an insurance company, even if they are drunk at the time of the collision.

SUPPORTERS AND OPPONENTS

The official ballot arguments in support are signed by Howard L. Owens, Executive Director, Consumer Federation of California; Rosemary Shahan, President, Consumers for Auto Reliability and Safety; and Kay McVay, RN, President, California Nurses Association.

Other supporters mentioned in the ballot arguments include Consumers Union, Congress of California Seniors, and United Policyholders.

The official ballot arguments in opposition are signed by Harriet C. Salarno, President, Crime Victims United of California; Jeff Sedivec, President, California State Firefighters' Association; Betty Jo Toccoli, Chair, California Small Business Roundtable; John H. Sullivan, President, Civil Justice Association of California; Larry McCarthy, President, California Taxpayers' Association; and John Powell, C.O.O., Seniors Coalition.

Other opponents mentioned in the ballot arguments include Mothers Against Drunk Driving, Howard Jarvis Taxpayers Associaton, National Taxpayer Alliance, California Chamber of Commerce, California Manufacturers Association, National Federation of Independent Business, 60 Plus Association, Voter Revolt, Consumers First, Consumers Coalition of California, California Alliance for Consumer Protection, Civil Justice Association of California, California Organization of Police and Sheriffs, California Correctional Peace Officers Association, Latin Business Association, California Mexican-American Chamber of Commerce, Black Business Association, US-Mexico Chamber of Commerce, California Black Chamber of Commerce, Hmong American Political Association, Schools Excess Liability Fund (SELF), California Business Properties Association, U. S. Chamber of Commerce, American Association of Business Persons with Disabilities, Small Business Survival Committee, California Building Industry Association, California Grocers Association, Citizens for a Sound Economy, Citizens Against Lawsuit Abuse (Los Angeles, San Diego, Orange County, Silicon Valley).

For more information:

Supporters: Consumers and Their Attorneys, Yes on Proposition 30, 916-491-4691, www.yes31.org

Opponents: Consumers Against Fraud and Higher Insurance Costs, 800-952-0530, email info@cafhic.org, www.NO30and31.org


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