Calif. Car Insurers Try to Get Second Shot for Discount Proposal

California voters could be experiencing deja vu the next time they head to the polls if the American Agents Alliance is able to collect enough signatures to get its proposed car insurance discount initiative on the next statewide ballot.

The initiative would slightly change the way that California auto insurance companies are permitted to price policies. It would do so by allowing car insurers to give policyholders a “continuous coverage” discount simply for having prior coverage, regardless of who provided that coverage.

Current 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.

So, as the law is now, a person who switches from 21st Century to State Farm would not be able to get the discount. But if he or she renews a protection plan or switches from 21st Century to a company affiliated with 21st Century, the discount could be given.

The proposal is very similar to Proposition 17, which was on the June 2010 ballot.

That time around, the effort was boosted by a multi-million-dollar promotional campaign involving funds from Mercury Insurance. But, in the end, the initiative failed by a small margin, with 48.1 percent voting in favor of its adoption.

Supporters of Proposition 17 said that it would have saved currently insured drivers “up to $250” when they switched companies. Opponents of the measure said it would have only hurt motorists who were previously uninsured and would have raised premiums for other drivers.

There are exceptions, though, in the American Agents Alliance proposal.

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 a period less than 91 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

A second round of voting on the idea is still a long way off. Supporters of the proposal will need to get more than 500,000 signatures to qualify for inclusion on the ballot.

About Ben Zitney
Benjamin Zitney has been covering the auto insurance industry for the past 2.5 years. Before coming to Online Auto Insurance News, he produced an extensive company history of the 30-year-old California Joint Powers Insurance Authority and worked at the Cal State Long Beach Daily Forty-Niner as a reporter, copy editor and news editor.

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