OAI: Calif. Ballot Could Have Opposing Auto Insurance Measures

The California secretary of state announced at the end of last month that residents of the Golden State would be able to vote on whether car insurers should be able to change rates based on a policyholder's coverage history, but a new proposal that could also make it on the ballot would keep that from happening, according to Online Auto Insurance.

The already qualified initiative is practically identical to Proposition 17, a proposal that would have given greater access to cheap car insurance in California to drivers who have maintained continuous coverage. Voters rejected that proposal in 2010. The current proposal would let coverage providers look at an applicant's five-year coverage history to help them assess risk and price policies.

Supporters of that initiative say it would benefit drivers by providing more incentive for car owners to stay insured.

But the backers of another initiative who are currently gaining signatures to get it on the ballot say that letting insurers price policies based on coverage history unfairly raises rates for motorists who, for example, dropped their policies because they were unemployed or decided to go car-less for a period of time.

The yet-to-be-approved initiative mainly deals with health insurance providers, but within the initiative is a section stating that "the absence of prior insurance coverage, or a person's credit history, shall not be a criterion for determining eligibility for a policy or contract, or generally for rates, premiums or insurability." That means insurers would be barred from using coverage history to help set rates.

Source: http://1.usa.gov/x9TV4o

That proposed initiative-like all other initiative statutes-has to get almost 505,000 signatures to qualify it for inclusion on the ballot.

As the law currently stands, insurers have 3 mandatory and 16 optional factors that they can use to assess risk and price policies.

Of those 16 optional factors, one is "persistency," which basically allows insurers to give drivers a discount if they are renewing a policy rather than beginning a new one. If a driver switches from one insurer to another, they cannot take advantage of the persistency discount, since it's a new coverage provider.

For more about this and other coverage issues, go to http://www.onlineautoinsurance.com/california/ to find informative resource pages and a helpful rate-comparison generator that can be used to get the best price on a policy.