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ANNAPOLIS — Legislation that would increase insurance premiums for nearly all 61,000 Maryland Automobile Insurance Fund customers passed the House this week over the objections of Republican lawmakers who called it a tax hike that benefits trial lawyers.

The bill, which now moves to the Senate, would require policyholders to carry a minimum security of $30,000 for individuals and $60,000 for multiple drivers. The current minimums of $20,000 and $40,000 have not been changed since 1972 when MAIF, the carrier of last resort, was established after legislators made auto insurance mandatory.

But the House GOP leadership argued Tuesday the higher premiums would cause some MAIF policyholders to drop their coverage altogether and bump up other insurance carriers' rates.

"This bill is going to hurt people at the bottom end of the socioeconomic ladder," said House Minority Leader Anthony J. O'Donnell. "It's a tax increase. Call it something else. It's a burden that's going to come out of their pockets."

MAIF reported 99 percent of all claims are settled within the existing policy limits, which O'Donnell used to support his argument that the minimum rates do not need to be changed.

If the bill becomes law, average premiums in Baltimore city would increase by 9.3 percent, or $174, to $2,035. In inner Prince George's County, rates would go up by 8.2 percent, or $89, to $1,178, according to MAIF estimates.

That would put automobile insurance out of reach for some policyholders, said House Minority Whip Christopher B. Shank (R-Dist. 2B) of Hagerstown.

The bill, as well as a companion Senate version, will be heard Tuesday in the Senate Finance Committee.

Nearly 99 percent of MAIF policyholders have the minimum level of coverage. Premium revenues would increase by $8.1 million annually, according to the bill's fiscal note.

O'Donnell (R-Dist. 29C) of Lusby proposed amending the bill to take effect in June, rather than January 2011, "to make sure the wool is not pulled over constituents' eyes."

"Let's make this effective in June so when we're out there campaigning and shaking hands, everybody knows what we did to them by driving their insurances rates up by a significant amount," he said.

O'Donnell's amendment was rejected on a near party-line vote.

The effective date was instead moved from October to January at the insurance industry's request to ease implementation, House Economic Matters Vice Chairman David D. Rudolph said.

He also rejected O'Donnell's claim that all insurance premiums will go up, saying there is no evidence it would impact policyholders beyond those who carry the minimum amounts.

"It might cost a little bit more for MAIF customers, but the citizens of Maryland across the state will benefit because people have more insurance," Rudolph (D-Dist. 34B) of Rising Sun said.

Increasing the minimum security is long overdue, said Wayne M. Willoughby, a spokesman and immediate past president of the Maryland Association for Justice Inc., which advocates on behalf of trial lawyers.

"It's to make sure someone who gets injured by a negligent driver is compensated so they can pay their medical bills and receive their lost wages," he said.

When the current minimums were set in 1972, average household income was $11,800 and gas cost 50 cents per gallon, he said.

The $20,000 minimum security would be equal to $101,600 in today's dollars, said House Economic Matters Chairman Dereck E. Davis.

"The value of that coverage has gone down significantly," he said.

O'Donnell's accusation the legislation is a "payoff to the trial lawyers" is superfluous to the proposal, Davis (D-Dist. 25) of Upper Marlboro said.

The bill, which passed 97-36, made for some unusual alliances: 10 Republicans broke ranks to support the legislation, and 11 Democrats voted against the proposal.

"This is for the little guy because the little guy is the one who's the victim of an accident and then becomes a victim a second time when the funds are not available to take care of their medical needs," said Del. Patrick L. McDonough (R-Dist. 7) of Middle River, who voted in favor of the bill.

A personal experience convinced Del. Shirley Nathan-Pulliam (D-Dist. 10) of Baltimore to support the legislation. She told delegates of her involvement in a car accident 17 years ago in which the driver of the dump truck that rear-ended her was a MAIF policyholder. The $20,000 minimum coverage was not enough to cover her hospital expenses, and she remains rattled to drive on the interstate or between dump trucks, she said.