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Mobile or Single ColumnAllows Auto Insurance Companies to Base Their Prices in Part on a Driver’s History of Insurance Coverage
- Pros & Cons -
Proposition 17
Allows Auto Insurance Companies to Base Their Prices in Part on a Driver’s History of Insurance Coverage
Initiative Statute
The Question:
Should insurance companies be permitted to reduce or increase the cost of auto insurance depending on whether a driver has a history of continuous insurance coverage?
The Situation:
California regulation of auto insurance was established by Prop 103 in 1988. It requires that rates and premiums be set mainly by three factors: driving safety record, number of miles driven each year, and number of years of driving experience. Prop 103 prohibits insurance companies from using a previous lack of insurance as a factor in rate-setting. Insurance companies can offer a discount to their long-time customers. Companies who give this discount are allowed to increase the premiums of customers who do not qualify for the discount.
The Proposal:
Proposition 17 would allow auto insurance companies to offer a “continuous coverage” discount to new customers who switch their coverage from a different company. Drivers would be eligible for this discount if, during the past five years, they had paid all premiums and had no lapse in coverage of more than 90 days. Drivers with lapses in coverage due to military service abroad could still qualify for the discount.
Fiscal Effect:
California insurance companies pay an insurance premium tax instead of the corporate income tax. Prop 17 would probably not have a significant impact on state revenue, since auto insurance premiums are largely based on other factors.
A YES Vote Means:
Auto insurance companies could offer a discount to new customers who had maintained “continuous coverage” with another company, as well as offering this discount to their long-term customers.
A NO Vote Means:
Insurers could continue to offer a discount to their long-term customers.
Supporters Say:
- Prop 17 allows drivers to save money by continuing to receive “continuous coverage” discounts when they change insurance companies.
- Prop 17 will benefit consumers by increasing competition.
- Prop 17 will not change our strong consumer protection laws.
Opponents Say:
- Prop 17 will result in new insurance surcharges for millions of drivers.
- Prop 17 means drivers will have to pay a penalty to restart coverage following a lapse.
- Prop 17 changes our laws to favor Mercury Insurance, the initiative's sponsor.
Official Contact Information:
Supporters: Yes on 17—Californians for Fair Auto Insurance Rates
916.325.0056 • www.YesProp17.org
Opponents: Campaign for Consumer Rights
310.392.0522 • www.StopProp17.org
Related General Announcements
Updated on May 19 2010 - 5:15pm
The League of Women Voters of Cupertino-Sunnyvale produced this 30-minute video explaining the five statewide ballot measures on the June 8, 2010 Primary Election ballot, as well as the local measures in their communities.
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