Have you been into a situation where you are being charged with high rates because of lapses in your insurance payments? Well, there is nothing new to that, and sadly, it is becoming a standard procedure for insurance companies to reprimand their consumers for late payments.
Late payments such as a day or two are usually “forgiven” by most insurers and some of them even offer a “grace period” before they cancel the policy for non-payment. And while you stay with the same company, nothing will be changed or even if you switch to another company, the same circumstances may be used to justify their actions of giving you such high rates.
Regular lapses prompted many companies to impose a penalty for two possible reasons. First, this reflects that you are being irresponsible legally and socially and second, is to avoid conflicts when claims are filed for liability and damages and only to find out that the vehicle is not insured.
On the other hand, if you have disposed or sold your car but no present replacement, then it is not considered as a “lapse in coverage”. After all, it is pointless to carry auto insurance with no car to drive around.
With this scenario in place, it is typical for any company to try to change the whole setup – not to mention that many people are becoming irritated and have started to backlash.
The defeated Proposition 17
Mercury Insurance was the Proposition 17’s primary sponsor with millions of dollars of contribution to the “Yes on 17” movement. If Proposition 17 had passed, it will allow the consumers to receive “persistency discounts” even if they switch to new insurers if they have unbroken coverage for the longest time.
The current law states that Company “A” will be able to offer discounts to its existing customers but not their new clients who just came from Company “B” regardless of how long they have been with that company. Proposition 17 attempted to correct this methodology by allowing the insurance company to offer “persistency discounts” no matter where they came from as long as they are qualified. In order to quality, a potential client must have a clean record and no lapses over 90 days within the period of 5 years.
Will the new law encourage lower rates?
The insurance company who backed up the Proposition 17 law does not hold the cleanest record in history. In fact, this particular insurer is known for its deceptive pricing, unreasonable penalties for lapses and alleged illegal business practice. Surprisingly, this law was not initiated by the citizens themselves but by a corporation.
It is worth mentioning that for people who dumped their cars without any replacement and in the end cancel their policies because of that, could still receive a penalty due to lapses. This is just one of the many concerns that people are raging about.
Apart from the vested interests seen on both sides and hindering the real issues, the question still remains as to why a corporation is meddling in creating legislations, which are supposed to be in the hands of natural persons.