Rep. Randy Schobinger, R-Minot, was up against a “Do Not Pass” recommendation from committee, but he was determined to save his bill on the House floor.

“There are times when the insurance company and consumer interests are at odds,” Schobinger said. “Members of the House, this is one of those times.”

Schobinger explained that HB 1448 would prohibit “step-down” clauses in car insurance. The clause means that if someone who is not on the policy is driving the car and gets into an accident, that driver is only covered to state minimum liabilities instead of to the full extent of the policy. Schobinger, a real estate agent, said this is bad practice that hurts families, but insurance companies that offer step-down coverage in North Dakota say it protects policyholders.

Schobinger persuaded the House, earning HB 1448 passage with a 61-32 vote. But after winning the battle there, Schobinger ultimately lost the war in the Senate, his bill failing on a 9-37 vote. It’s a not uncommon example of conflicting testimony, sparring passions and wins turned to losses: the legislative process.

On the floor, Schobinger described hypothetical situations where children could get into an accident in their parents’ car when visiting home and the family could be left with large bills from the accident when insurance would not cover all the damage, meaning “bankruptcy is a real potential.”

After the bill was sent to the Senate, the insurance companies once again made their case in the committee room.

“The only people who have had a complaint are people who are deceiving us,” Robert Hovland, president of Center Mutual Insurance, testified, referring to policy holders who may have a regular “problem driver” driving their car without the insurance company’s knowledge. Hovland also said that children away at college would still be considered part of the family, even if living away from home temporarily.

Schobinger said that step-down insurance is an unusual policy, and that it is only allowed in North Dakota on a technicality. A 2001 law unintentionally created the loophole, he said.

Hovland disputes this, saying that while the 2001 law did explicitly allow the step-down clause, it wouldn’t necessarily have been prohibited in the state otherwise, and was indeed offered by companies extending back into the 1990s. Across the nation, Hovland said, these clauses are “overwhelmingly allowed,” either explicitly in the law or by default.

Only a handful of companies offer the clause in North Dakota. The two that testified against 1448, Center Mutual and Nodak Mutual, both said they rarely saw step-down clauses come into play. Hovland said Center Mutual put it into place after a policyholder was upset that his insurance premiums were affected when his son’s college friend got into a bad accident in his son’s car.

“The thing we see that’s so prevalent is college friends and roommates and boyfriends,” Hovland said in an interview. “What usually happens is not a matter of there not being enough insurance; it’s a matter of whose parents’ policy is going to pay.”

Much of the testimony for 1448 dealt in legal hypotheticals. According to Hovland, proponents “have never provided us and we have asked them for examples of these things happening which they claim.”

After Schobinger’s defense of 1448 in the House, attorneys Dave Schweigert, a past president of the North Dakota Association for Justice, and Lindsay Wilz, president -elect of the association, became aware of the bill and voiced their support.

Wilz said in an interview that members of her law firm, Maring Williams Law Office, have four current cases where this is happening, “and that doesn’t include the countless cases where it has come up before.”

A hypothetical brought up by Schobinger involved a farmer who asks an older neighbor to drive supplies or products into town for him. If that older neighbor gets into an accident, Schobinger said, the farmer could be left with large bills. Representatives from both Center Mutual and Nodak Mutual say that farm business should be covered under business insurance, but Wilz said that is not always the case in North Dakota.

“Most farming operations have not been incorporated; they are mom and pop operations that don’t run a business enterprise,” Wilz said. “We have a different opinion from the insurance companies as to how this plays out.”

The Legislature decided not to act on step-down insurance this time around, but Hovland said he has this advice for people who are uncomfortable with the policy: “There are a hundred companies that sell insurance in North Dakota. If anybody has a problem with (step-down provisions), they ought to go to the company that doesn’t do it.”