California Continuous-Coverage Proposal to Get Statewide Vote

Residents of California will get a second chance to vote on a ballot measure that would allow car insurance companies in the state to give continuous-coverage discounts to policyholders regardless of who their previous insurer was.

California Secretary of State Debra Bowen announced on Wednesday that backers of the initiative have collected enough petition signatures to qualify the proposal for inclusion on the state’s November ballot.

Insurers can currently give Californians discounts for continuously maintaining car insurance coverage, but only if they stay with the same company. So if State Farm policyholders renew their policies with State Farm, they can get a discount for maintaining coverage. But if they jump ship and go to Progressive, for instance, Progressive would not be able to give them discounts for being insured previously.

This ballot initiative would change that.

It is extremely similar to Proposition 17, a proposal that was rejected by a slim majority of voters in June 2010. The main difference is the new proposal provides some exceptions that would allow drivers to get the discount even if they went uninsured for a period of time.

Motorists would still be eligible for the continuous-coverage discount if they were uninsured for 90 days or less, or if they were uninsured due to unemployment or military service.

The size of the price break would depend on how many of the past five years a driver had a policy in place.

Supporters of the initiative say that the continuous-coverage discount would make the state’s car insurance market more competitive and reward drivers for staying in compliance with state financial responsibility laws.

“It is ridiculous that the consumer loses the discount they have earned if they go to a new company,” said Mike D’Arelli, the executive director of the American Agents Alliance.

Opponents of the proposal point out that one man’s discount is another man’s surcharge, noting that passage of this initiative would likely mean higher coverage costs for residents who were previously uninsured.

“This ballot measure will affect millions by letting … auto insurers surcharge students who went away for college, Californians who previously used mass transit, seniors and the long-term unemployed,” Brian Stedge, a consumer advocate with the nonprofit Consumer Watchdog, said in a news release.

The summary of the initiative prepared by the state Attorney General’s office says it would “allow insurance companies to increase the cost of insurance to drivers who have not maintained continuous coverage.”

About John Pirro
John Pirro is a licensed fire and casualty insurance agent specializing in various aspects of the auto insurance industry. He worked in the auto body repair industry before taking a reporting position at Online Auto Insurance News.

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