Oct. 16, 2006 — Lifting the cap on how much an individual can receive in certain accident-related damages would "adversely affect every individual" buying automobile insurance in the Virgin Islands, experts said Monday.
Arguments from the territory's legal and insurance communities came in response to comments made recently by St. Thomas attorney Robert King.
"The Senate said that we all need to have proper insurance," said attorney George H.T. Dudley. "They required all automobile drivers to have insurance, and put a cap on this narrow idea of liability so insurers would want to come here and write the policy. Without it, the insurance companies are going to pull out."
The Source recently reported that King has waged a battle to lift the $75,000 liability cap included in the territory's Compulsory Automobile Insurance Act. The cap represents the highest amount of money the victim of an auto accident could claim as compensation for non-economic damages, also known as "pain and suffering."
The current cap, King argues, limits the ability of the poor to receive reasonable compensation for any auto-related injuries they may suffer, particularly the elderly, the young and the underemployed. (See "Senators Should Be Accountable for Votes on Auto Liability Cap, Attorney Says.")
But King's assertion leaves out an important point, said John W. Harper, president of Marshall & Sterling St. Croix, an insurance company. The "key thing to remember," Harper said, is that there is "absolutely no cap on economic damages, which includes medical bills, lost wages and any other out-of-pocket expenses."
The cap was an "important part" of the Compulsory Automobile Insurance Law enacted locally in August 1999, Harper insists. "The cap is one reason why liability-insurance rates have remained largely unchanged for the last 20 years," he said.
According to Dudley, the Compulsory Automobile Insurance Law sought to resolve a "crisis" that occurred in the Virgin Islands concerning the availability and affordability of auto insurance.
Dudley referenced a letter written on Jan. 9 by Henry L. Feuerzeig, a St. Thomas attorney and former judge, to Senate President Lorraine L. Berry. Feuerzeig argued why the cap should not be repealed.
"… It was not until August of 1999," he wrote, "when it was estimated that more than 50 percent of the registered vehicles were being operated here without liability insurance that the Legislature … decided that compulsory auto insurance required a cap only on those damages that are characterized as non-economic damages, which include pain and suffering, physical impairment, disfigurement and other non-pecuniary damages …."
In addition, Feuerzeig asserted, the cap does not apply "upon a finding of gross negligence or willful conduct."
"The inclusion of the cap did, in fact, result in a number of insurers … deciding to write auto liability insurance in the Virgin Islands," he wrote.
Dudley agreed, and said that repealing the cap, which is what King had hoped to do by lobbying senators to repeal a gubernatorial veto, would result in insurance companies pulling out of the territory.
Dudley also described non-economic damages — "pain and suffering" — as "amorphous."
"I can't prove how much my pain and suffering is, or how much that pain is worth," he said. "And the law states that if I'm in an automobile accident and get hurt, the person liable for my accident would cover my lost wages and medical expenses."
If King got his way, Dudley said, another crisis might ensue.
"If, after those treatments, I'm still suffering from the pain, then the cap would put a limit on those damages that I can recover," Dudley said. "What attorney King is trying to do is remove the limit on how much the liable person, or insurance company, will have to pay for pain and suffering. And that could result in another crisis, where we could have no automobile insurance at all."
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