The Mercury Insurance fully funded initiative which aims to increase auto insurance rates was assigned Proposition 17 on the ballot for the June 8 California elections, announced Debra Bowen, Secretary of State.
The Campaign for Consumer Rights, campaign affiliate of Consumer Watchdog, said in a press release that the proposition would penalize drivers, including seniors and soldiers, with surcharges if they are found to have a lapse in auto insurance coverage for ‘virtually any reason’ in the last five years.
The proposal will compel drivers to pay hundred of dollars more for auto coverage, especially when they stopped driving for a season or didn’t need car insurance for a certain stretch of time. Moreover, insurers will be permitted to levy higher rates to drivers who are found to have missed even just one premium payment.
Proposition 103, an insurance reform measure implemented since 1988, would be superseded if Proposition 17 gets a favorable result. The former proposition disallows insurers from increasing premiums on clients for the simple reason of not having previous automobile insurance. The measure had accumulated over $63 billion worth of savings for California motorists, since companies were banned from factoring in a driver’s coverage history when an insurance application is filed. The Mercury initiative may lead to surcharges which will compound expenses by as much as 40 to 227%,
Proposition 103 author Harvey Rosenfield urges Californians to be discerning and ‘not be fooled’ by the Mercury Insurance-funded proposal. Rosenfield warned that ‘Prop 17’ threatens the financial condition of seniors, soldiers and families who are already having a hard time.
The Department of Insurance (DI) confirms the implications of ‘Prop 17’. Meanwhile, Mercury insists that they will not increase their premiums.
The DI explained that if any insurance company offers continuous coverage discount for some clients, ‘it will result in a surcharge for other drivers’ to compensate for losses.
As of press time, Attorney General Jerry Brown is preparing the final Title and Summary of the Mercury initiative for inclusion in the June ballot before the February 5 deadline.
Rosenfield explained that the Insurance Commission will be able to guide Brown with ‘definitive analysis’ necessary to provide an accurate summary for ‘Prop 17,’ as well as the corresponding hikes which may follow. He added that the commission’s report will be helpful since voters will rely on the Attorney General’s observations before making intelligent voting decisions.
Mercury Insurance was reportedly ordered by the court to stop levying illegal surcharges in 2005. Rosenfield pointed out that in the past five years, the insurer forced surcharges on hundreds of thousands of its clients who have possessed ‘break-in insurance coverage.’