A highly controversial proposal in the state of California is being met with criticism and support from to opposite sides in the California auto insurance market. Californians are divided over a pending bill that some say would result to lower premiums for policyholders who have had continuous coverage. Consumer rights advocates like Consumer Watchdog, however, decried the initiative, saying that it would only result in struggling motorists paying hefty penalties and fines.
On the opposite side of the legal debate, Californians for Fair Auto Insurance Rates (CalFIR) believes that the new legislation would benefit a large majority of car owners and policyholders in the state. According to representatives from CalFIR, the changes would give providers the prerogative to give substantial discounts to policyholders who have had continuous car insurance coverage even if they switch insurers.
However, the group is asking for some changes in the referendum language it has used for the said proposal. The referendum, which is set to take place by June of next year, will let Californians decide whether to accept the new changes or revert to the traditional insurance policies. Representatives from CalFIR say that the new changes in the language will better define the scope of the proposal. Critics have called for the removal of certain phrases, alleging that they would give insurance companies the power to impose penalties and punish car owners that have filed for claims before.
The latest draft will remove the sentence, “When calculating the discount or determining the eligibility for a continuity discount an insurer may also take into account the applicant’s or insured’s claims experience.” Consumer Watchdog says that the inclusion of the said sentence can give providers unlimited power when it comes to punishing policyholders that have file for insurance claims, even if they were not held at fault.
The consumer advocacy group also argues that the entire initiative is unjust since it will penalize Californians who have chosen not to drive for some time. They also add that policyholders who make late payments will also be charged hefty penalties for missing payments. All these will result in a substantial number of car owners becoming victims of the new proposal, Consumer Watchdog explains.
CalFIR, on the other hand, is poised to restart its signature campaign to gather as much support for the proposal. The group had abandoned earlier attempts to gather signatures but is expected to begin another signature campaign. Some 433,971 signatures are being targeted for the campaign.