Filed Under:Markets, Regulation/Legislation

Calif. Voters Reject Auto Insurance Measure, Prop 17

NU Online News Service, June 10, 3:55 p.m. EDT

Voters in California rejected a proposition that would have allowed insurers to apply continuous coverage discounts to drivers in the state.

The proposition states that "an insurer may offer applicants or insureds an additional discount for a policy...applicable to each coverage provided by the policy, based on the length of time the applicant or insured has been continuously insured for bodily injury liability coverage, with one or more insurers, affiliated or not."

Proponents, who organized under the name "Yes on 17," contended that the proposition would have "fixed a flaw in current auto insurance law which penalizes 82 percent of drivers in California who maintain auto insurance for changing insurers."

Supporters said the proposition would have modified current California law to make continuous coverage discounts portable, "allowing drivers to shop for the lowest rate while keeping their discount. The measure would have increased competition in the auto insurance market, providing drivers with more choices and lower auto insurance rates."

Opponents, who organized under the name "Stop Prop 17," argued that those discounts would be offset by large increases to people with no prior coverage or those who had allowed coverage to lapse.

Doug Heller, a spokesman for the Stop Prop 17 campaign, said the initiative was written by Mercury Insurance Company lawyers who "cleverly chose words that were appealing, with meaning that voters understood to be less well-meaning."

He said people have many reasons for not having auto insurance, including military service, the economy and a desire to use alternative forms of transportation. Proposition 17, he said, would penalize these people through sharp increases to offset discounts given to those with continuous coverage.

"A price break to one customer has to be made up on the back of someone else in order to bring money in to pay claims," he said.

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