Miss. Motorists Can Expect Auto Rate Hike After Jan. 1

Thousands of drivers in Mississippi can expect their auto insurance rates to increase dramatically after Jan. 1, when the minimum required coverage in the state will double, increasing costs for even those who have less than the minimum coverage.

The amount of liability insurance coverage required to pay for damages to vehicles and other property in an accident will increase from $10,000 to $25,000; injury and death coverage will increase from $10,000 to $25,000 for one person, and from $20,000 to $50,000 for injury or death involving two or more people.

Earlier in 2005, the Mississippi Legislature increased the minimum coverage requirements when lawmakers agreed the old requirements were insufficient. At that time Mississippi had the lowest insurance minimum coverage requirement of any state, followed by Florida and Louisiana.

The state Legislature increased the minimum coverage earlier this year when some lawmakers said the old requirement was insufficient. Mississippi has had the lowest insurance minimum coverage requirement of any state, followed by Florida and Louisiana.

“Car insurance is complicated, so we want to help Mississippi drivers better understand what this change means for them,” Brad Granger, a product manager for Drive Insurance from Progressive told the Jackson Clarion-Ledger. “If you have vehicle insurance liability limits less than the new minimum … you will most likely pay more for your policy at your next renewal.”

Progressive provided The Associated Press with examples:

A 38-year-old married female living in Jackson, driving a 2004 Nissan Altima with no tickets or violations, would pay about $505 for a six-month policy, but that would increase to $572 after the law takes effect.

A 35-year-old single male living in Jackson, driving a 2004 Toyota Camry with no tickets or violations, would pay about $527 today for six months coverage, increasing to $604 after the new year.

“How much more you will pay depends on three things: Your current level of liability limits, the new limits you choose, you can choose the new minimum limits or an amount greater than the new minimum limits, and the coverages you buy,” Granger said.

Insurers say the higher minimum requirements will cause an increase in pay-outs, and that’s why they have to pass along the cost to the customer.

“You’ve got a marketplace out there which may be sensitive to a rate change they think is coming because of (Hurricane) Katrina,” Granger said. “Rates may go up due to Katrina in the medium or longer term, but this is a separate event.”

Motorists won’t see rate changes until a policy is up for renewal.

“When your policy comes up for renewal after Jan. 1, it will automatically be changed to have the new minimum limits,” Sanjay Vyas, product manager for Progressive Direct said. “And if you buy a new policy after Jan. 1, you’ll automatically be offered the new limits.”

Jeanie Salvador, a spokeswoman for the Insurance Information Institute, said drivers should have more insurance than is required by the state, including uninsured/underinsured motorist protection. The institute recommends having at least $300,000 in insurance for injury or death and $100,000 for property damage protection.

“What’s important from an individual point of view is that you protect yourself,” Salvatore said. “If you’re seriously injured by an uninsured motorist, you’re going to be stuck unless you go and buy liability protection.”

An unintended consequence of the legislation could mean some people will opt to take their chances without insurance. Motorists found without proof of insurance can be fined up to $1,000. The fine can be reduced or waived if drivers later show a judge they have insurance.

The amount of liability insurance coverage required to pay for damage to vehicles and other property in an accident will increase from $10,000 to $25,000. Claims paid out under this coverage can include the other person’s medical bills and repairs to the other person’s automobile or property.

The coverage needed to pay for injury or death will increase from $10,000 to $25,000 for one person, and from $20,000 to $50,000 for injury or death involving two or more people.