Preparing for Changes to Car Insurance in Washington State

Washington state legislators are considering several proposed bills that would impact car insurance requirements and costs starting in 2024. As these policies are debated and finalized over the coming year, drivers will want to stay informed on how their auto insurance needs may change.


Background on Washington’s Current Auto Insurance Regulations

Currently, Washington state has minimal requirements for car insurance coverage. Drivers must carry at least the following statewide minimum limits:

Bodily Injury Liability

  • $25,000 per person
  • $50,000 per accident

Property Damage Liability

  • $10,000 per accident

Personal Injury Protection (PIP)

  • Not required

Beyond these basic liability requirements, drivers are free to purchase additional optional coverage like collision, comprehensive medical payments (MedPay), and uninsured/underinsured motorist (UM/UIM) protection at varying limits depending on their needs and budget. There is no requirement for comprehensive personal injury protection (PIP), which covers the policyholder’s own medical bills after a crash, unlike some other states.

Premiums for car insurance in Washington have generally been lower than national averages due to minimal mandate requirements. However, as medical costs continue rising and the frequency of uninsured drivers grows, activists argue the status quo leaves many residents inadequately protected on the roads or burdened with high medical debt following an accident. This has prompted calls for reform to Washington’s auto insurance system going forward.


Proposed Changes on the Horizon for 2024

The Washington state legislature is considering a handful of bills that would revamp car insurance requirements starting in 2024. The leading proposals include:

No-Fault Personal Injury Protection

One bill calls for mandating $30,000 of no-fault personal injury protection (PIP) coverage to help pay medical bills and lost wages for the policyholder and passengers involved in a crash, regardless of fault. PIP is a coverage type several other states require to ensure all drivers are reasonably protected from their own injuries. Adding a PIP mandate aims to reduce uninsured motorist rates and prevent bankruptcies caused by medical debt from traffic accidents.

Higher Bodily Injury Liability Limits

Another proposal would raise the minimum bodily injury liability limits that must be carried. The suggested new limits are $50,000 per person and $100,000 per accident. These provide more financial protection in the event of severely injuring someone in an at-fault collision. Proponents argue the current $25,000/$50,000 limits have not kept up with inflation and higher medical costs.

Expanded Uninsured/Underinsured Coverage

Legislators may also mandate that uninsured/underinsured motorist (UM/UIM) coverage be offered up to the policy’s bodily injury liability limits (e.g., $50,000/$100,000). UM/UIM protects drivers if an at-fault uninsured or underinsured motorist cannot pay for damages. Expanding what insurers must offer aims to further protect victims of crashes caused by drivers violating the law by not carrying adequate insurance.

Rate Regulations

In addition to coverage mandate changes, regulators may place new restrictions on how much insurers can raise rates each year without approval. Caps around 5-7% are suggested to help slow premium inflation and keep insurance accessible for a wider range of drivers. Transparency rules around how insurers calculate rates may also be implemented.

The Washington State Legislature will continue debating these bills over the next year with the goal of passing reforms into law to take effect by January 1, 2024. Industry lobbying efforts and debates around their economic impact will influence which, if any, of the proposed changes ultimately become requirements. But changes do seem likely given the ongoing advocacy around insurance reform.

Implications of the Proposed Changes for Drivers

If passed, these insurance mandate bills would carry both benefits and drawbacks for Washington drivers that are important to understand. On the one hand, broader protection requirements aim to better safeguard more residents from financial ruin after a crash while holding uninsured drivers accountable. However, higher coverage mandates and rate regulations would also factor into increasing insurance costs to some degree for most. Let’s examine a few key implications:

Higher Premiums

Requiring additional types of mandatory auto insurance coverage like PIP and expanding UM/UIM minimums would mean financial protection is enhanced for those injured in vehicle collisions. But it also means insurers must account for paying out more claims, which gets passed on to customers in the form of higher premium rates. Exactly how much extra drivers pay monthly would vary based on individual risk factors and coverage selections, but on average, annual premiums are estimated to rise 10-15% statewide with the proposed changes. Higher-risk drivers may see even larger increases.

More Coverage Options

The expanded UM/UIM requirements would give drivers added options to purchase higher liability protection if desired since insurers must offer to match UM/UIM limits up to the new bodily injury liability minimums. This provides optional enhanced protection against reckless or uninsured motorists. The PIP mandate allows policyholders to forego uncertain and potentially extensive medical payment claims against their own auto policy after a crash.

Slower Rate Hikes

If regulators set reasonable annual rate increase caps, it aims to prevent insurers from routinely jacking up premiums excessively when desired or following costly events like hurricanes that drive nationwide rate hikes. Capped rate changes may not offset increased costs from expanded mandates entirely but help curb volatility. Transparent rules around how premium amounts are calculated could curb some predatory pricing practices.

Safer Roads

Overall, the goal of hiking liability requirements and expanding PIP is to discourage more motorists from violating financial responsibility laws and driving without proper auto insurance in place, which is currently increasingly common. Stricter penalties and greater accountability may disincentivize some from operating vehicles without being able to pay damages, potentially leading to fewer crashes down the line.

In summary, changes would enhance protections for individuals but also raise some costs. Factors like driving record, location, coverage selections, and each insurer’s rate filings will continue to determine individual premium levels on top of the proposed mandate impacts. Advanced preparation and smart shopping will help offset higher rates as much as possible.

How to Prepare for Rate Changes by 2024

With reform proposals under serious consideration and a distinct possibility of new rules taking effect within two years, drivers should start taking proactive steps now to get ready and adapt financially. Here are some recommendations:

Review Your Coverage Needs

Meet with your agent to evaluate if you have sufficient liability protection for the suggested new minimums or if adjusting coverage selections now would be prudent. Consider adding optional PIP or higher UM/UIM if it offers needed protection and long-term savings over medical costs.

Maintain a Clean Driving Record

Clean records will remain a major factor in rates. Avoid tickets and accidents that drive up premiums when new mandates take effect to keep costs as low as possible.

Shop for Better Rates

Compare quotes every few years from multiple insurers online and through local agents. Saving even a few hundred annually over the next couple of years helps offset future rate bumps from expanded mandates.

Improve Your Credit Score

Insurers increasingly factor credit-based insurance scores into pricing, so monitor your report and make prudent financial decisions to maximize your score and leverage cheaper rates.

Consider Usage-Based “Telematics” Discounts

Some insurers offer premium reductions in exchange for installing devices tracking your driving habits, which can slash rates for safe drivers. Telematics data may garner bigger discounts under future scrutiny on rates.

Pay Annually Instead of Monthly

Insurers reward paying in full rather than installments, saving you a few percent on top of your base rate each renewal. Storing cash for a lump payment eases future rate increases as well.

Preparing proactively gives you time to adapt spending and savings habits gradually rather than getting surprised by abrupt increases by 2024. Staying informed on proposed legislation will also help anticipate potential ramifications accurately. Taking steps now provides the most control over insurance costs amidst upcoming changes.

FAQs About Washington’s Proposed Auto Insurance Reforms

1. Is there a public comment period for providing feedback on the bills?

Yes, the state legislature holds hearings where citizens and stakeholders can voice support or concerns over any proposed legislation. The insurance commissioner’s office also accepts written comments on regulatory proposals. Staying engaged helps lawmakers understand diverse perspectives when crafting final policies.

2. How would mandatory PIP coverage impact health insurance rates?

Some experts argue PIP may slightly reduce health plan premiums by shifting more minor medical injury claims to auto insurers, which are primarily responsible for covering driving-related injuries. However, increased usage of healthcare from additional accident victims would likely outweigh savings from offloading a small subset of claims. On balance, mandatory auto insurance changes are not projected to significantly impact overall medical rates one way or the other.

3. Are there exemptions from higher requirements for low-mileage drivers?

Draft bills currently do not propose exemptions solely based on annual mileage. However, insurers would still have the latitude to provide preferred rates to drivers classified as “occasional” users who meet other safe driver criteria like years of continuous insurance coverage and a clean driving record. Insurers may also recognize low-usage discounts independent of state law reforms by charging lower premiums based on documented fewer miles driven annually.

4. When would the changes actually take effect if passed?

The proposed effective date written into the draft legislation is January 1, 2024. This allows over a year for bills to be debated and finalized, insurers to file new rates and revise policies/documents, and drivers enough advance notice to prepare for adjustments. However, it’s possible compromise versions could push back the start date slightly if major provisions are significantly altered during the legislative process.

5. How would rates be impacted in the long run once changes take effect?

Once initial premium bumps accompany mandated coverage and liability expansions, rate increases should level off and potentially decline over the long haul. Greater use of PIP aims to reduce costly and litigious uninsured motorist claims for injuries. Stricter penalties on uninsured drivers may curb accidents as more drivers comply with financial responsibility laws. More consistent caps on rate changes may also restrain premium inflation. So while short-term rate shock is anticipated, over 5-10 years, impacts of reforms could stabilize or even slightly reduce insurance costs for groups like safe drivers, according to some experts. Of course, catastrophic weather events or economic downturns may still trigger increases.

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