Caltrans’ vehicle insurance premiums have more than tripled in recent years, increasing from $4.2 million in 2014-15 to $14.6 million in 2017-18. The Supplemental Report of the 2017-18 Budget Act directed our office to (1) examine the causes of these recent cost increases, and (2) present options for containing costs, such as a safe driver training program.
Our review finds the department’s premium cost increases are almost entirely due to a few recent multimillion dollar claims that have cost far more than any other claim over the last decade. These exceptionally large claims could be the result of the chance occurrence of a few extremely serious collisions, though administration officials suggest a changing legal climate could be responsible for the higher costs.
Given the cost increases are due to exceptionally large claims, one option for the Legislature to consider to contain costs is to establish a statutory limit on the amount of damages for which the state can be held liable for collisions. According to a recent study, two-thirds of states have set such a limit. Establishing a limit, however, likely would result in some claimants receiving less than the full amount to pay for their injuries and economic damages. A second option to contain costs is for Caltrans to take steps to bolster its driver training and vehicle safety practices, though the department already appears to be adhering to many best practices to minimize collisions.
This report is available using the following link: http://lao.ca.gov/Publications/Report/3721?utm_source=laowww&utm_medium=email&utm_campaign=3721
This article was released by the California Legislative Analyst’s Office.