California Proposition 33: 2012 Automobile Insurance Discount Act

Proposition 33 is a controversial proposition in the state of California that affects drivers with a lapse in their insurance coverage.

Proposition 33 is being introduced as a law that would allow insurance companies to give drivers a discount for having continuous insurance, regardless of what insurance company they have been with. On the surface this sounds like a great idea, until you find this one paragraph in the proposition:

“1861.023. (a) Notwithstanding paragraph (4) of subdivision (a) of Section 1861.02, an insurance company may use continuous coverage as an optional auto insurance rating factor for any insurance policy subject to Section 1861.02.”

The above paragraph will allow insurance companies to start using whether a driver has continuous coverage or not as a rating factor when someone applies for insurance.

What’s the Problem with Proposition 33?

The problem with Proposition 33 is that it seems to be disguised as a discount being added to insurance policies. Yes, drivers would get a discount for having continuous insurance when they switch to another company, which apparently is not something that is done in California at this time.

However, there are two problems. One, the proposition seeks to reverse a California state law that makes it illegal for insurance companies to use continuous coverage as a rating factor. So insurance companies are saying that this is a bonus discount that they can now add, but it also would mean that they could charge people that didn’t have continuous coverage more for their insurance now.

This brings us to problem number two; the higher insurance rates for those not driving. People that choose not to drive because they walk or use their bike will face higher insurance rates if they ever do decide to get insurance. It also means that people who have had their vehicle totaled due to an accident would have to keep paying insurance on a nonexistent vehicle, just so they didn’t have higher rates when they did finally get a new vehicle.

Support for Proposition 33

Most of the support for California Proposition 33 is coming from insurance companies and insurance agencies. Mercury Insurance is leading the support with over $8 million in donations, with the next highest donation amount being $15,000 from Del Sol Group.

It makes you wonder with the insurance companies and agencies are spending so much money on this proposition, what’s in it for them? Why would they spend so much money just so their customers could get a discount on their insurance rates?

Opponents of Proposition 33

Opponents against Proposition 33 include Consumer Watchdog Campaign, Campaign for Consumer Rights, and the Consumer Federation of Ca., among others. Compared to the amount of money that is being contributed to see that Proposition 33 is passed; the opponents against Proposition 33 haven’t even come close to the amount. Opponents have raised less than $100,000 to try and prevent the proposition from getting passed by voters.

What are your thoughts on Proposition 33?

Source: www.kcet.org