Auto insurance rate legislation pushed by a major campaign contributor has been approved by an Assembly committee despite arguments that it would violate voter-approved Proposition 103 and hurt many low-income drivers.
The bill would allow auto insurers to offer so-called persistency discounts to try to lure long-time customers away from their competitors. Governor Davis vetoed a nearly identical bill last year at the urging of then-Insurance Commissioner Harry Low.
Supporters say the legislation would spur competition and help motorists shop around for the lowest insurance rates. Opponents say it would violate Proposition 103Â´s ban on basing rates on lack of prior insurance and would result in higher premiums for drivers who have gaps in their coverage. Often those drivers are among the poorest in the state.
The billÂ´s chief supporter is Mercury Insurance, which has handed out nearly $2-million in campaign contributions since the start of 2000.