Californians to Decide on New Auto Insurance Law by Ballot


Amidst efforts to contradict the Continuous Coverage Auto Insurance Discount, a group had stated that it had already submitted more than seven hundred twenty thousand signatures, succeeding for its inclusion in the primary election ballot. The group, Californians for Fair Auto Insurance Rates (CalFAIR), said that such a move would allow citizens of California to decide on whether car owners who religiously maintained motor insurance coverage are entitled to discounts or not.

According to California Secretary of State Debra Bowen, supporters of the ballot initiative had turned in at least 433,971 valid signatures. This qualifies the legislation to be included in the June 8, 2010 election.
CalFAIR explained that under the proposal, even motorists who had switched insurance companies must still be entitled to lower premiums so long as they had previously maintained “continued” coverage. Such discounts, however, is not applicable to those had lapses in payment. To date, auto insurance companies use driving experience, safety record and miles driven per year as the basis for their rates. Only loyal customers are given discounts.

But the point of contention is in the “continued” coverage provision and the disqualification of drivers who had lapses in payment.

In order to scrap said proposal, Californians for Real Insurance Reform was launched through the efforts of Campaign for Consumer Rights (CCR). Started last fall, the aim of the campaign was to promote a counter-referendum to what CalFAIR is pushing. However, with the approval for balloting, the campaign was recently halted.

Jim Conran, president of Consumers First, contended that under what CalFAIR is proposing, new customers would not be extended continuous coverage discount. Good drivers, as a result, are being punished because they wish to change insurers in effect lessening their ability “to shop around for more savings and with more options.”

On its website, CCR had put forward the issue that insurers would be allowed “to hike auto insurance rates for Californians” who had not continuously paid their premiums “for any reason.” It alleges that the “initiative would allow insurers to penalize people after missing one payment or decided not to drive for a time and let their insurance lapse.” Such increases would be permitted if the lapse of 90 days or more in the course of five years had been committed.

It must be noted that one of the main contributors of CalFAIR is Mercury General. State finance records revealed that it has financed at least $3.5 million to fund CalFAIR’s campaign. To date, Mercury General is considered to be California’s third-largest insurer by market share. Nevertheless, with the balloting set to take place, it is up to the citizens of California whether to approve or reject said law.