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Press Release |
Contact: Sally Greenberg, greesa@consumer.org |
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WASHINGTON – Consumers Union, publisher of Consumer Reports magazine, has alerted lawmakers on Capitol Hill to their opposition to the so-called "Auto Choice Act" which, they say, puts consumers at risk.
"We believe this measure offers consumers a false choice that will result in their trading away important protections in exchange for a modest reduction in insurance premiums," said senior product safety counsel Sally J. Greenberg in a letter to members of the House Subcommittee on Finance and Hazardous Materials. "Consumers cannot know ahead of time what coverage they may need for injuries resulting from an automobile accident, and many will only realize they have no coverage after it is too late."
In a position paper distributed to lawmakers on the committee, which held a hearing on the matter Wednesday, Greenberg called the "Auto Choice Reform Act" proposed by Rep. Dick Armey, R-Texas and others a "bad idea". The savings Rep. Armey predicts his proposal will generate have been debunked as flawed and based on faulty assumptions by the National Association of Insurance Commissioners. What’s more, there is no guarantee consumers get lower, affordable insurance rates under the proposal because the legislation does not mandate lower insurance premiums.
Rep. Armey’s measure, instead, provides consumers with a substandard insurance option, which generally puts them at the mercy of the choice of other motorists. Because drivers who chose the substandard plan will be immune from suit, consumers have no assurance the costs of the accident will be fully covered. The measure also takes insurance companies off the hook for paying legitimate claims that are covered under the current system.
Consumers Union also called the bill a recipe for "dizzying" complexity and confusion, citing insurance industry experts who predict a paperwork explosion if the bill becomes law.
As they tackle auto insurance reform, CU urged Congress to put consumers first, keeping five principles for reform in mind: (1) a fair price for adequate coverage, (2) an end to long waits and other abusive insurance industry practices and no legal immunity insurance companies, (3) an end to policies that discriminate, (4) coverage for medical and rehabilitation expenses as well as wage loss and death benefits if needed, and (5) a crackdown on confusion and complex paperwork.
CU suggests the committee study the Michigan no-fault law as a better remedy to address auto insurance ills. That state’s law has kept premium costs down while allowing accident victims to go to court only if they have serious injuries.
NOTE: For a copy of CU’s four page position paper on the Auto Choice Act, please dial our faxback line at 202/238-9258 and request doc. no. 3917.
