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State Agency Approves Change In Car Insurance Law

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Sacramento, CA — A state review panel has approved changes to the way car insurance rates are calculated in California.

The change pushed by Insurance Commissioner John Garamendi will force insurers to base rates on driving records rather than ZIP codes.

It´s meant to comply with 18-year-old Proposition 103. It required rates to be tied to a person´s driving record, number of years licensed and total miles driven each year, rather than the ZIP code where a vehicle is registered.

California´s largest insurers have spent millions fighting the change. They say where a driver lives is a major factor in the risk of an auto crash and suburban and rural residents will pay more.

The Association of California Insurance Companies says it might sue Garamendi over the change.

Insurance companies will have two years to fully implement the premium changes.