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Legislators tried to raise auto insurance liability minimums in 2001, but it didn’t happen.

Another attempt was made last year in the form of a Senate bill that would have raised the minimums—the amount your insurance company has to pay out if you’re at fault in a car crash—to 25-50-25. That means a minimum payout of $25,000 for property damage, $50,000 for everyone injured in an auto accident and up to $25,000 per person injured or killed.

Third time’s a charm, apparently: This year’s regular session produced compromise legislation from the House that will raise minimums on new and/or renewed policies to 15-30-25 beginning Jan. 1, 2010. If you’re among the 40% of Louisiana’s 3.8 million drivers who buy minimum coverage, expect to see your rates go up maybe 13%, according to one loose estimate.

But if you’re in the habit of girding yourself beyond the absolute minimum, don’t be surprised if your rates actually go down, though it won’t happen overnight. So says J.E. Brignac, chairman of the Louisiana Association of Fire and Casualty Companies and chairman of Imperial Fire and Casualty Insurance Company in Opelousas.

“Particularly with uninsured motorists,” he says. “Over time, you should have savings with people already carrying the higher limits.”

The reason is that—once the new minimums kick in—liability will pick up more of the slack and ease the burden on drivers’ uninsured motorist coverage. Brignac was in favor of raising minimums but didn’t like the original target of 25-50-25 with a Jan. 1, 2009, implementation date. That would have been too burdensome financially, says Brignac, who was instrumental in getting the lower minimums and one-year delay in implementation. Rate increases would have been significantly higher than 13% per the original target, he says.

“Obviously that’s still substantial, but two things: We’ve got the additional time before people have to bite that bullet and, of course, it’s not the full effect,” he says.

The auto insurance industry is traditionally opposed to raising liability minimums on the ground that they’ll force motorists who can barely afford insurance in the first place to drop it altogether when it becomes more expensive. Brignac, who says Louisiana has 750,000 to 800,000 uninsured drivers, says some motorists will drop their insurance but not as many had the requirement not been softened. Even so, the new minimums should be high enough to cover the majority of medical costs and property damage in most accidents, he says.

Insurance Commissioner Jim Donelon, who pushed for higher minimums as a state representative during his last term in 2001 but was foiled by the insurance lobby, predicts the problem of drivers dropping insurance will be minimal though it’s inevitable that a certain number will.

“Some will do that,” he says. “Every cost increase changes behavior, whether it’s gasoline cost or insurance cost or clothing cost. But I think the tradeoff for those of us who are victims of this minimum insured driver is being more closely compensated for our loss.”

The current minimums, established when Louisiana made auto insurance mandatory in 1980, are “woefully inadequate,” Donelon says. Only two states have not passed mandatory liability insurance laws for motorists: New Hampshire and Wisconsin. While insurance companies argue that higher minimums will force drivers to drop insurance, there’s actually another reason, Donelon says.

“The real reason is their belief that the incestuous relationship between the judiciary and the trial bar will result in the nine-month whippy [whiplash] that’s worth $10,000 today will become an 18-month whippy worth $25,000,” he says.

But Jeff Albright, head of Independent Insurance Agents and Brokers of Louisiana, says the agents in his organization are “all over the board on this issue.”

Most of them share the general view that anyone driving a car ought to have adequate insurance in the event of a wreck, and that current minimums don’t qualify as adequate, he says. That said, insurance companies that specialize in selling minimum liability insurance policies can’t be blamed for worrying about a loss of business if higher minimums create higher rates and thus fewer customers, Albright says.

If the choice is between insurance and groceries, most people are going to choose groceries. State Farm, for instance, had 340,000 minimum coverage Louisiana customers last year when it predicted raising the minimums to 25-50-25 would raise rates 22% on those customers and force many of them to drop insurance.

“Its a tough issue,” Albright says. “We have been kind of conflicted about it for those reasons.”

So who was on the other side of the issue, opposite insurers opposed to higher minimums? Trial lawyers and medical professionals—in that order, Donelon says.

“Doctors are driving it, chiropractors, hospitals, but primarily trial lawyers, because they represent victims who are left holding the bag,” he says. “Once they pay their emergency room costs, there’s nothing for them to claim and collect for lost wages and other damages. Or they have to go to their own underinsured policy for coverage.”

Donelon says he would have recommended phasing the higher minimums in starting Jan. 1, 2009. But he doesn’t expect lawmakers to revisit the battle over minimums again anytime soon.

“Once the Legislature deals with an issue, they consider it put to rest,” Donelon says.

And while those who carry deluxe coverage may see a break in their rates sometime after Jan. 1, 2010, the new changes won’t do anything to get uninsured drivers off the road. If anything, it will add to them. How is it that Louisiana—a state that requires you show proof of insurance to renew your tag or get a vehicle inspection—tolerates 750,000 to 800,000 uninsured drivers on the road, most of them in south Louisiana?

Brignac says he remembers when a statewide blitz of insurance checkpoints in the early 1990s resulted in his company writing three-and-half months worth of policies in a single month. Apparently that approach ruffled some feathers, because it was abandoned, he says. He blames a lack of follow-through on the part of the state bureaucracy for the high uninsured rate. The state acts tough on the front end, but penalties for driving without insurance apparently aren’t persuasive enough.

“Louisiana has the best reporting as far as insurance companies having to report to the state their activities every time a policy is written, canceled, lapsed or isn’t renewed,” Brignac says. “Louisiana has got the tightest reporting system, I believe, in the country. We also have the best computer system in the country. Where we’re missing is on the enforcement side.”