Opposition to Nevada”s Low Cost Insurance Emerges

Posted & filed under Car Insurance News.

We recently covered the low cost insurance scheme that was being piloted in Clark County, Nevada.   The scheme aims to lower the minimum coverage from $15,000 cover for injury or death per person, and $30,000 for two or more people to a new low of $10,000 per person per accident, up to a maximum of $20,000 for two or more people in any one accident.

However, Assemblyman Kelvin Atkinson, the major proponent of the bill, received something of an unexpected surprise in the form of staunch opposition to the bill. Senator Michael Roberson who says that a similar program isn’t working in California, and told Atkinson: “Now you want to bring that failure to Nevada.”

No Official Opposition in the Assembly

However, the bill passed without opposition in the Assembly, but it will require a two-thirds majority to be passed in the Senate as it requires an additional $1 per vehicle assessment cost for new policy holders.

Atkinson believes that he can get the bill out of committee on a partisan vote.

Debate Over Real Savings

There has been much discussion about the supposed savings that the working poor will actually enjoy. In theory the bill will provide savings for those at 250% below the poverty level, and these savings should be around $184 per year per policy.   However, the State Insurance Division estimated that take-up of the pilot would probably be limited to around 1,000 policies – not enough to make a serious impact.

In addition to this, Farmers Insurance has weighed in, saying that the actual savings per policy will only be around $50 a year, calling into question the calculations put forward by Atkinson and other proponents of the bill.

Another criticism is that the program will cost around $800,000 a year to run in Nevada.   This will, in theory, be paid by the $1 assessment carried out on vehicles, but even if half of it is paid by these assessments, that still represents a shortfall of around $200,000 between expenses recovered and premium payments saved, and the amount the state has spent on the venture.   This shortfall grows as the actual savings move towards the estimate made by Farmers Insurance.

Poor should ‘Take the bus’

Atkinson has expressed his sincere belief that the bill will help Clark County’s poorest families.   He feels that it is not the state’s place to punish people for not being able to afford auto insurance, and rather to help them get some kind of minimum cover, so that they can continue to use the vehicle they need without fear of penalties, or having an uninsured accident.   He says that it’s very often not the owner’s choice to neglect to take out insurance, saying that “Many people have to choose between auto insurance and food and shelter.”

However, opponents of the bill have come out saying that the scheme will cost too much money, won’t save people enough money, and may leave some of the poorest families without adequate cover in the event of a serious accident.

The general stance of opponents to the bill in the Senate was that “those who cannot afford auto insurance should walk, or take the bus.”