Bill would raise mandatory auto insurance coverage by $1,500.

Rep. Víctor Parés Otero

By THE STAR STAFF

Rep. Víctor Parés Otero, who chairs the House Government Committee, announced Wednesday the filing of legislation that would increase the mandatory automobile accident coverage provided by Puerto Rico’s Joint Underwriting Association from $4,500 to $6,000, without raising insurance premiums for drivers.

In a written statement, Parés said the proposal responds to the growing gap between repair costs and the current limits of the compulsory liability insurance, known locally as the Seguro de Responsabilidad Obligatorio (Compulsory Auto Insurance).

“There is a reality in Puerto Rico that the vast majority of drivers face after being involved in an accident and beginning the claims process under the compulsory insurance,” Parés said. “In nearly every collision, repair costs exceed the funds available under the current coverage, which is capped at $4,500.”

He pointed to rising vehicle repair expenses driven by higher parts prices, limited availability of components, and increased labor costs in auto body and mechanical work. Together, he said, those factors make it increasingly difficult to repair cars and trucks after a crash under existing coverage limits.

Parés said the proposed increase reflects years of sustained growth in vehicle repair costs. He noted that the coverage limit was raised in 2010 from $3,000 to $4,000, followed by a subsequent $500 increase, but said those adjustments failed to keep pace with current market conditions.

“Sixteen years have passed since that increase, and even with an intermediate $500 adjustment, the coverage remains far below today’s reality on the island,” he said. “The time has come to increase this coverage, and that is the intent of the bill we will be introducing.”

The legislation would leave unchanged the current premium for the compulsory insurance, which is set at $99 for personal vehicles and $148 for commercial vehicles. Parés said the expanded coverage would be financed through a mechanism allowing for the declaration of extraordinary dividends by the Joint Underwriting Association.

“We want to emphasize that this initiative keeps the cost of the compulsory insurance premium unchanged,” Parés said.

He compared the proposal to a 2022 measure that relied on a similar approach, when a joint resolution imposed a 45-day moratorium on the so-called second fuel tax surcharge on gasoline and diesel. At that time, the Joint Underwriting Association declared an extraordinary $50 million dividend from its capital reserves, along with a 50% special contribution, resulting in a $25 million transfer to the General Fund.

The Joint Underwriting Association is the only entity authorized in Puerto Rico to offer mandatory automobile liability insurance. The coverage, which pays for damages to third parties, is automatically included and paid for when drivers renew their vehicle registration.