Auto insurance rates will rise Friday for more than 1 million Louisiana motorists as a law increasing the required minimum liability coverage goes into effect.
Though the change was approved by the Legislature in 2008, many drivers are expected to be caught off-guard because insurance companies weren't required to notify policyholders.
Insurance Commissioner Jim Donelon said the boost in car insurance bills may come at a tough time for some because of the economic slump. But he said it's needed to bring the nearly 30-year-old minimum liability requirement in line with rising costs associated with accidents, including higher costs for medical care, repairs and replacement vehicles.
"Certainly there are thousands of drivers out there who can ill-afford this additional cost. That's always the case. I think that's outweighed by the tens of thousands who are left uncompensated by the damage that minimally insured drivers do," Donelon said.
Nearly two dozen new state laws take effect Friday; most are unlikely to attract much attention.
Besides the car insurance increase, another new law slaps a 2 percent fee on prepaid wireless phone cards, with proceeds to go to statewide 911 system improvements. Cell and landline phone customers already pay a similar fee, but it hadn't been levied on those who buy packages of prepaid cell phone minutes.
The new law getting the most notice likely will be the auto insurance boost.
About 2.5 million vehicles are insured in Louisiana, and Donelon said 40 percent carry only the minimum liability coverage required.
Louisiana law currently requires car and truck owners to have at least "10-20-10" liability coverage. That's $10,000 coverage for injury or death to one person in an accident, $20,000 for injury or death to more than one person and $10,000 for damage of other people's property.
The new law changes the levels to "15-30-25."
The average minimally insured policyholder will pay about $71 more a year for car insurance, said Richard Piazza, chief actuary for the Louisiana Department of Insurance.
"Most people probably won't notice it because they don't pay attention to their insurance rates," Donelon said. "The people who are on fixed incomes and the ones who it will affect the most will notice it."
Republican Gov. Bobby Jindal didn't sign the insurance bill by Rep. Erich Ponti, R-Baton Rouge, but let it take effect without his signature. His predecessor, Democrat Kathleen Blanco, vetoed a similar proposal in 2007.
Opponents of the measure claimed some drivers might drop car insurance in a state where 12 percent of automobiles aren't covered under an insurance policy.
"There are a lot of people struggling right now, and this may be the straw that broke the camel's back," said Rep. Mert Smiley, R-Port Vincent, during debate on the bill.
Donelon said he expects the number of uninsured drivers to grow only slightly because of the increase.