The District of Columbia city council is reviewing legislation that would raise mandatory minimum auto insurance limits for property damage and third-party liability and require insurers to offer enhanced underinsured motorist (UIM) coverage.
The proposed changes are outlined in the Motor Vehicle Insurance Modernization Act of 2024.
The legislation proposes increasing mandatory minimum limits from $25,000 to $50,000 per person injured in an accident and from $50,000 to $100,000 for all persons injured. The minimum coverage amounts would be tied to the Consumer Price Index to adjust for inflation, according to the bill.
The act would also require carriers to offer enhanced UIM coverage, which provides the same protection as standard UIM but prevents insurers from offsetting payments by factoring in the at-fault driver’s insurance, according to a report from AM Best.
Policyholders would be required to select a UIM coverage option, removing the ability to waive this coverage, according to Council of the District Chairman Phil Mendelson, who introduced the bill.
Mendelson said that the last update to the District’s auto insurance minimums occurred in 1986, and the current limits no longer reflect the costs of accidents. He pointed to increases in neighboring Maryland and Virginia as evidence that the District is falling behind.
In comparison, California recently enacted higher auto liability minimums under legislation passed in 2022. New limits include $30,000 for bodily injury or death of one person, $60,000 for all persons injured, and $15,000 for property damage, tripling the previous amounts.
Mendelson noted that the value of the current $25,000 limit in 1986 equates to $70,483 in today’s dollars, and the rising cost of medical care now exceeds $117,000. He argued that current limits are not aligned with inflation or the actual costs of accidents.
Critics of the legislation, including the Consumer Federation of America (CFA), argue that the changes could disproportionately affect low-income residents. The CFA stated that requiring higher coverage limits could increase premiums and lead to more uninsured drivers, exacerbating affordability issues.
The group urged lawmakers to address factors such as credit scores and occupations, which they claim disproportionately impact low-income drivers during the underwriting process. A 2020 study cited by the CFA showed that drivers with poor credit paid 134% more for auto insurance than those with excellent credit.
The CFA also recommended that the council consider a "lifeline" low-cost auto insurance program for low-income safe drivers, similar to one in California that covers nearly 50,000 drivers and offers policies for approximately $400 per year.
If enacted, the legislation would increase minimum limits by $5,000 starting on Jan. 1, 2028, with further increases every five years. Mendelson acknowledged potential resistance from insurers, who have historically opposed similar measures in other states, citing concerns about higher premiums.
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