Making Continuous Coverage Auto Insurance Discount Portable Is Good for Consumers

By Mike D'Arelli | April 5, 2010

The Alliance of Insurance Agents & Brokers supports Proposition 17 on the June 2010 statewide ballot because it will make the auto insurance market more competitive, offer drivers more choices and lead to lower rates for millions of California drivers.

As agents and brokers, California drivers seek our guidance finding the greatest value for their insurance dollar — the best combination of policy features, cost, service and company strength, to name a few.

In this sense, we are true consumer advocates, doing the right thing for consumers based on their individual needs. Part of this guidance may include answering questions about the impact of Prop. 17.

Prop. 17, the Continuous Coverage Auto Insurance Discount Act, allows drivers who qualify for the continuous coverage discount to take the discount with them from one insurance company to the next. Today this practice is prohibited.

Under current law, drivers who maintain continuous auto insurance coverage as required by California law qualify for this discount, but only with their current insurer. Current law prohibits consumers from receiving this discount if they change insurers.

This flaw in the law punishes the more than 80 percent of drivers in California who are responsible and maintain auto insurance coverage, resulting in a de facto surcharge of up to hundreds of dollars per year if they change insurers. Consumers shouldn’t be punished for shopping for lower rates.

Prop. 17 fixes this flaw, making this discount portable by allowing insurance companies to offer this discount to new customers as well as to existing ones. This will create more competition in the market.

Insurers that want to attract new customers and keep their existing ones will offer lower rates, more policy features and better service.

Increased competition and lower rates are good things, especially right now with so many individuals struggling to meet monthly expenses.

Prop. 17 also benefits drivers in other ways. Prop. 17 includes grace periods and additional consumer protections, which do not exist under current law.

For instance, under current law if drivers cancel their insurance for even one day, they lose their continuous coverage discount. Prop. 17 includes a provision protecting the discount for drivers who cancel their insurance for up to 90 days, protecting consumers who have to stop driving for short periods of time.

If the cancellation is longer than 90 days, Prop. 17 adds protections for those drivers by allowing insurers to grant the continuous coverage discount at their discretion. These provisions protect members of the military, seniors, students and all consumers. These protections do not exist under current law.

An additional provision expands the discount to ensure that members of the military do not lose the discount when they cancel their coverage to serve overseas.

The measure is strongly supported by the Alliance of Insurance Agents & Brokers and thousands of insurance and agents and brokers throughout California.

Prop. 17 is also supported by a broad-based coalition of groups like the California Chamber of Commerce, California Senior Advocates League, California Black Chamber of Commerce, California Hispanic Chambers of Commerce, California Taxpayer Protection Committee, Small Business Action Committee and many more.

Do not believe the scare tactics by Prop. 17 opponents. They say voters should reject Prop. 17 because those who don’t qualify for the discount will pay more for auto insurance. What they fail to acknowledge is that because the discount is already offered today, drivers who get it are already paying less for insurance because they receive the discount. And, those who don’t qualify for it are already paying more for their insurance, too. This system of discounts and surcharges exists under current regulation, and Prop. 17 will not change that.

Simply, no one will be worse off under Prop. 17 than under current law.

Opponents also like to demonize Mercury Insurance for supporting Prop. 17. But, that too is a straw man. The company wants a more competitive auto insurance market in California so it can attract new customers and increase its market share.

But the only way Mercury or any other insurance company will gain new customers is by offering those customers lower rates, better policy features and better service.

A “yes” vote on Prop. 17 means giving consumers the freedom to shop around and shift from one insurance company to another to find the best price and best service, without losing their continuous coverage discount. This is a simple, common-sense reform that will benefit millions of California drivers. Prop. 17 deserves your support.

About Mike D'Arelli

D’Arelli is executive director for the Alliance of Insurance Agents & Brokers. Web site: www.agentsalliance.com. Proponents of Prop. 17 can visit www.YesProp17.org for more information.

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