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LEAGUE OF WOMEN VOTERS OF CALIFORNIA EDUCATION FUND	Nonpartisan Pros & Cons 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?

THE SITUATION

In the fall of 1999, SB 1237 (Chapter 720) and AB 1309 (Chapter 721) were signed into law. These laws allow third-party claimants to sue insurance companies under certain conditions. They would have gone into effect January 1, 2000. However, once Propositions 30 and 31 qualified for the Primary ballot, the laws were put "on hold" until the outcome of the March election.

THE PROPOSAL

By itself, Proposition 31 does not change existing law. It becomes law only if the voters also approve Proposition 30. Proposition 31 would amend parts of Proposition 30, limiting when a third-party claimant can sue an insurance company for unfair claims practices.

· Proposition 31 allows only individuals (not businesses) to 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; with 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.

· Proposition 31 provides that if the insurance company either requests or agrees to arbitration in specified cases, the third-party claimant cannot sue the company.

FISCAL EFFECT

This proposition would have a fiscal effect only if Proposition 30 is approved. The Legislative Analyst estimates that Proposition 31 would cause state revenues to increase slightly less than if only Proposition 30 were approved.

SUPPORTERS SAY

· Voting yes on this referendum will protect your newly restored right to hold insurance companies responsible.

· Insurance companies will not be able to pass on their penalties to consumers by raising premiums. "Bad faith judgments and associated loss adjustment expenses" are "excluded expenses" for setting insurance premiums in California.

OPPONENTS SAY

· 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.

· Propositions 30 and 31 would give drunk drivers new rights to sue and recover financial rewards against an insurance company.

For more information:

Supporters: (916) 491-4691, www.yes31.org
Opponents: (800) 952-0530, www.NO30and31.org

(Analysis prepared by the League of Women Voters of California Education Fund
for the March 7, 2000 Election.)

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Last updated: January 18, 2000
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