California Auto Insurance Ballot Measure Moves Forward

A proposed car insurance initiative that would reward some California drivers for “continuous coverage” is one step closer to being on the November 2012 ballot after being assigned a title and summary by the state attorney general’s office.

The action allows backers of the measure—which would enable auto insurers to give discounts for prior coverage, no matter what company provided it—to begin gathering the signatures required to put the issue before voters.

Proponents say the measure would reward consumers who have maintained policies for years when they make the switch to a new California auto insurance provider.

Opponents of the proposal—and a similar effort on last year’s ballot—say it would punish consumers who have not had policies, including low-income Californians and new drivers.

Santa Monica-based nonprofit group Consumer Watchdog issued a statement claiming the proposal “authorizes a currently prohibited surcharge on millions of California motorists who did not purchase insurance at some point in the prior five years, even if they had not been driving or did not own a car.”

Attorney General Kamala Harris’ office states that the measure, which is being pushed by the American Agents Alliance, would allow providers to give discounts for continuously insured drivers but that it would also allow them “to increase cost of insurance to drivers who have not maintained continuous coverage.”

Current state law allows insurers to give discounts to new or renewing policyholders who were already insured, but they must have had that coverage from the same or an affiliated company in order to qualify.

The proposal is similar to the unsuccessful Proposition 17, which was on the June 2010 ballot and was boosted by a multimillion-dollar promotional campaign involving funds from Mercury Insurance.

Supporters of that measure said it would have saved insured drivers “up to $250” when they switched companies.

Critics said it would have hurt the previously uninsured and raised premiums for other drivers.

The American Agents Alliance proposal differs from the earlier effort in several ways, however.

Drivers would still be considered to have been “continuously covered” if they:

  • dropped coverage due to an absence for military service
  • have been uninsured for no more than 90 days in the past five years
  • have been uninsured for up to 18 months in the last five years because of loss of employment or
  • are children living with parents who are eligible for the discount

Supporters of the proposal must now get more than 500,000 signatures to qualify for inclusion on the ballot.

The attorney general’s office stated that the state’s legislative analyst and director of finance have determined the measure would have “probably no significant fiscal effect” on tax revenues.

About Gregor McGavin
Gregor McGavin is an award-winning journalist who has reported across the country for such publications as The Associated Press, the Arizona Republic, the Pittsburgh Tribune-Review and the Press-Enterprise.

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