California Proposition 30, Referendum on Right to Sue Insurers (2000)
In 1999, the California State Legislature passed two laws (SB 1237 and AB 1309) to allow third-party claimants to sue insurance companies. SB 1237 and AB 1309 were set to go into effect on January 1, 2000. However, opponents of the laws circulated petitions to collect signatures to place the measures on the statewide ballot as veto referendums. Since these measures qualified for the ballot as Proposition 30 and Proposition 31, the laws were put on hold until the March 7, 2000 election. In that election, both measures were defeated.
Proposition 30 was about SB 1237. SB 1237 gave third-party claimants the right to sue an insurance company for unfair claim practices in certain liability cases and created a binding arbitration system for settling these liability cases.
Text of measure
The ballot title was:
A "Yes" vote approves, a "No" vote rejects legislation that restores right to sue another person's insurer for insurer's unfair claims settlement practices;
- allows such lawsuits only if insurer rejects a settlement demand and injured party obtains a larger judgment or award against insured party;
- bars such lawsuits against public entities; workers' compensation insurers; and professional liability insurers under certain circumstances; or if convicted of driving under the influence;
- authorizes requests for consensual binding arbitration of claims under $50,001 against parties covered by insurance. Insurers agreeing to arbitration cannot be sued for unfair practices.
- See also: Fiscal impact statement
The California Legislative Analyst's Office provided an estimate of net state and local government fiscal impact for Proposition 30. That estimate was:
- Increase in state insurance gross premiums tax revenue, potentially several millions of dollars each year.
- Unknown net impact on state court costs.
$4,584,593 was spent in favor of the measure. Nearly 10 times as much--$42,522,256--was spent opposing the measure. The opponents funding the opposition campaign were insurance companies, including Allstate Insurance and State Farm Insurance.
Legal history of third party lawsuits
- Official Voter Guide to Proposition 30
- Full text of Proposition 30
- Official declaration of the March 7, 2000 vote
- Smart Voter on Proposition 30
- Cal Voter on Prop 30
- Top Ten contributors