Auto Insurance Rates Diminishing, Decade-Old Law Gets Credit


A recently published report by California auto insurance regulators reveals that premiums have significantly gone down during the past two years. Observers note that regulatory efforts along with several economic factors contributed to downshifting rates.

Auto Insurance Rates Diminishing, Decade-Old Law Gets Credit Fewer road accidents, lesser driving by Californians because of increased gas prices, and competition among insurers are some of the factors specialists attribute to decreased insurance rates.

As further noted by observers, insurers have placed greater value on attracting consumers because of the very competitive insurance industry in California.  They say policyholders are more aware of their options largely because of Internet advertisements. Consumers are continually lured by auto insurance providers by outdoing each other in terms of offerings, experts continue. Experts say the trend began three years ago when independent company studies found out that many policyholders prefer staying with their old carriers.

The California Department of Transportation (CalTrans) recorded lesser accidents since 2008 which is another reason for carriers to decrease rates. However, the greatest credit goes to an auto insurance reform law initiated by voters way back in 1988. The law, labeled

Proposition 103, mandates insurers to base rates on driving records instead on charging clients based on where they live. Industry specialists recall that Prop 103 succeeded only after two years of deliberation because of the strong opposition by insurance providers.
California Department of Insurance spokesperson Darrel Ng explained that the provision could have resulted in either higher or lower premiums for drivers but it has helped pushed overall costs down. Prop 103 also prevented insurers from making excessive profits by requiring them to justify rates they present.

As recorded by specialists, auto insurance rates have gone down since 2006 also because of the improved cooperation among carriers, consumer advocates, and California Department of Insurance. Since that year, premiums were reduced to a total of $832.1 million. Downshifts only stopped when economic recession reached its heights in 2008. The review process is credited for 67 percent or about two-thirds of those savings.

Lower premiums helped Californians meet the 30-15-5 coverage formula, consumer analysts say. Under state laws, $30,000 to cover death or injury to more than one person, $15,000 for one person, and $5,000 for property damage.

Consumers are further encouraged by experts to shop around when renewing policies since it could save them 30 percent worth of premium. They add that discount policies could also cut costs down so they advise motorists to inquired about them. Finally, the remind drivers that having a clean driving record is very helpful.