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Oct 08, 1999
CONTACT: Doug Heller - 310-392-0522 x309
Governor Davis Signs Anti-Low-Balling Law
Insurers Considering Referendum to Stop Consumer ProtectionSacramento -- Governor Gray Davis signed SB 1237 (Escutia) and a companion bill -- AB 1309 (Scott) -- today to provide accident victims a legal remedy when an insurance company denies delays or lowballs a claim due to the victim. Insurers of at-fault drivers will now be held accountable for unfair claims practices. This will lead to more equitable and timely insurance claim settlements, according to The Foundation for Taxpayer and Consumer Rights (FTCR), which had, in March 1999, issued a study of insurance claims patterns since consumers lost the right to in 1988.
"Low-balling innocent accident victims is now a punishable offense," said Doug Heller, consumer advocate with FTCR. "Insurance companies will have to learn to play fair, because ten years of grinding down claims without any real oversight has finally come to an end."
The March study by FTCR found that California insurance companies
The bill, modified from its original form to address Governor Davis' and insurers' concerns about the impact of the proposal, allows injured accident victims to sue the insurer of the at-fault party if the insurer does not pay a claim in a fair and timely manner. The bill and its companion contain several provisions which ensure that a fair-dealing insurer will not be a target of a bad-faith suit. Insurers cannot be sued, for example, if a company agrees to participate in binding arbitration in accidents valued below $50,000.
Insurance industry lobbyists have hinted that they will try to place a referendum on the March 2000 ballot to overturn the new consumer protection law.
"Consumers should contact their insurance company and tell them not to use policyholder money to fund a referendum campaign directed against the rights of innocent accident victims," said Heller.
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