Group Wants Better Insurance Discounts
Consumer advocates are asking a judge to overturn a new law that allows discounts for longtime auto insurance customers who change insurers. They say the statute violates Proposition 103 and discriminates against newly insured drivers.
Proposition 103 was approved by California voters in 1988. It requires auto insurers to base their rates mostly on a motorist´s driving record. It specifically bars using the fact that a driver has had a break in coverage or hasn´t had insurance before as factors in determining rates.
The state insurance commissioner has ruled that that prohibition doesn´t stop companies from offering so-called persistency discounts to their own longtime customers. The new law allows an auto insurer to offer those discounts to new customers who have a long record of maintaining coverage with a competitor.
Supporters say the change will help consumers by encouraging competition among insurance companies. But the law´s critics say the discounts for one group of motorists will translate into higher rates for others, mainly low-income drivers who have trouble paying for and keeping coverage.