California Proposition 33, Automobile Insurance Persistency Discounts (2012)

Automobile Insurance

The way it is now:
In California, the price of car insurance is based on three main factors:
1) a driver’s safety record;
2) the number of miles driven each year; and 3) the number of years a person has been driving. Insurance companies are not allowed to use a driver’s history of insurance coverage as a factor in setting prices.

What Prop 33 would do if it passes:

Allow insurance companies to include a driver’s history of insurance coverage as a factor in setting prices. Insurance companies would be allowed to give discounts to new customers who had a history of continuous coverage with their former insurer. Insurance companies would also be allowed to increase prices for new customers who did not have continuous coverage.

  • Changes current law to allow insurance companies to set prices based on whether the driver previously carried auto insurance with any insurance company.
  • Allows insurance companies to give proportional discounts to drivers with some history of prior insurance coverage.
  • Will allow insurance companies to increase cost of insurance to drivers who have not maintained continuous coverage.
  • Treats drivers with lapse as continuously covered if lapse is due to military service or loss of employment, or if lapse is less than 90 days.

Effect on the state budget:

There would probably be no major effect on the state’s income from taxes on auto insurance.

People for Prop 33 say (www.yesprop33.com):

  • Prop 33 will make it easier for drivers to shop for better insurance deals, without losing their loyalty discounts for continuous coverage when switching companies.
  • Prop 33 will increase competition between insurance companies,

People against Prop 33 say (www.stopprop33.org):

  • Prop 33 will allow insurance companies
to increase the price of insurance to drivers who have not had continuous coverage.
  • Drivers with perfect driving records would pay an unfair penalty if they have not had resulting in better insur- ance prices for all drivers.
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