Up until recently there was a clause in most insurance policies that allowed the stacking of two different auto insurance policies in order for the policyholder to get a more substantial payout. In the past, this clause has proven itself to be very valuable, especially to people who lost a close relative like a husband or a wife in an accident. These staked policies allowed them to get a lot more money to help with the bills.
However, efforts have been made to remove this clause from the current insurance policies. On the 6th of April the state Legislature introduced new acts which completely repealed the “truth in auto” law and all the aspects it included. The only provision that remained active was mandatory auto insurance for drivers in the state of California. With this new repeal the minimum requirements for auto insurance dropped to the same level that it was back in 1982.
One group that fought hard for this new change in legislature was the insurance companies. Obviously, this new law will greatly lower the amount that they have to pay in case of serious accidents. However, their argument for supporting this new initiative was the fact that ever since the stacking clause was allowed in 2009 premiums for car insurance have gone up. In turn, this led to a lot more motorists who drove uninsured because they could not afford the auto insurance policies. According to them, no stacking clause leads to lower premiums which lead to more insured drivers, which ultimately lead to safer driving for everyone in the state.
On the other side of the argument are trial lawyers who have brought forth plenty of instances where the stacking clause allowed people who just went through a tragedy to deal with their financial troubles and even avoid bankruptcy in some cases.
Both sides feel that they are in the right so they have waged a serious battle over the decision of the new acts of the Legislature. MapLight is a non-partisan company that tracks money deals with a political agenda in the state of California. According to them, both sides spent around $330,000 for campaign that will get the public opinion on their side. Apart from that, another $1 million dollars was spent for lobbying campaign between 2009 and 2010 in order to appeal to the state legislators, as it was revealed by a study conducted by the Wisconsin Center for Investigative Journalism.
One the new law is placed into effect, insurance agencies will be able to reduce stacking clauses or remove them entirely from policies with underinsured coverage. Undoubtedly, this will allow the insurance companies to pay a lot less for accident claims. In theory, this will also bring on a reduction in the premiums that drivers have to pay. Whether this will truly lead to cheaper car insurance remains to be seen.