The Effects of Proposition 213 on the Costs of Auto Insurance in California

by Stephen J. Carroll, Allan Abrahamse

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Proposition 213, the Personal Responsibility Act of 1996, which qualified for the November 1996 California ballot, would have barred drunk drivers and uninsured motorists from compensation for any non-economic losses resulting from auto accident injuries. It would also have barred compensation for any loss incurred by felons who were involved in auto accidents while committing crimes or fleeing from them. This Issue Paper describes the likely effects of the proposition's provisions regarding uninsured or drunk drivers on the costs of private-passenger auto insurance. The analyses suggest that the proposition would have reduced auto insurance costs. If current claiming, negotiating, and insurance-purchase patterns persist, the proposition would have reduced auto insurers' compensation costs for personal injuries by about 10 percent relative to the costs under California's current auto insurance rules. Given the past relationship between compensation costs and auto insurance premiums in California, this difference would translate into a reduction of about 5 percent in the average California driver's auto insurance premiums.

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