New car insurance rules in works
A plan to require insurers to place more emphasis on a motorist’s driving record than ZIP code would create a fairer auto insurance system, especially for urban residents, supporters say. But opponents warn it could cause higher premiums for six out of 10 California drivers.
That was the upshot of the debate at a public hearing Friday of the new regulations announced last December by Insurance Commissioner John Garamendi.
Garamendi contends that the regulations are needed to carry out the intent of Proposition 103, the insurance reform initiative passed by voters in 1988. The current regulations, approved in 1996 by then-Insurance Commissioner Chuck Quackenbush, fall short of what Proposition 103 intended, according to Garamendi. The insurance industry says current regulations are fair and based in part on risk factors such as higher accident and theft rates in cities.
Garamendi hopes to have the new regulations in place by the end of the year.
They would require a person’s driving record, number of miles driven annually and years of driving experience to be the mandatory factors when setting premiums, as called for under Proposition 103. Insurers would still be able to use a driver’s ZIP code and other optional factors such as gender and marital status as long as they were given less weight than the three mandatory factors.