According to recent reports from California, lawmakers behind the auto insurance premium rates initiative have already submitted signatures and are now waiting for results as to where their signatures will take their cause. As of Monday, December 14, 720,000 signatures have been gathered, making this measure qualified for the 2010 ballot. Sources say that proponents of this proposed initiative believe that what they are doing will change rate-setting rules for car or vehicle insurance providers.
The vehicle insurance rates initiative or “The Continuous Coverage Auto Insurance Discount Act” aims to widen the ability of companies and providers to use motorist’s insurance coverage history to compute premium prices.
As per current laws on auto policies, providers are only allowed to give a persistency or a loyalty discount to policy holders who have continuously patronized the car insurance coverage under the plan of a certain provider. However, providers are not allowed to extend this same discount privilege to new customers who transferred from competing companies who previously insured them. According to backers of this discount act, amendments, when approved, will change the market – it will make the market more competitive for insurance companies, will push consumers to be more vigilant when shopping around for lower prices, and will be encouraging responsible drivers to maintain their coverage and stick to one provider.
Coalition promoting the “The Continuous Coverage Auto Insurance Discount Act” spokesperson Kathy Fairbanks said that the main purpose of this measure is to allow motorists to take advantage of the discount that they deserve to enjoy after they transferred to a different service provider. Fairbanks adds that their drivers deserve to retain discounted premiums since they were enjoying it previously, and some motorists only change providers because of unavoidable reasons, such as change of address, change of place of employment, and so on. According to her, the goal of the coalition is to make sure the market gives the best to its clientele. Fairbanks and her group of supports are confident that when all insurance companies start offering this discount, it will result to a stiffer competition in the market, and competition always works out for the benefit of consumers.
On the other hand, some experts are finding something wrong with this initiative and are saying that there is a “catch” behind the discount that companies will be extending. Experts speculate that this discount extension may create a backlash for motorists who have long coverage lapses.
In the mean time, all parties concerned carefully await for the results of the proposed measure.
