A California appeals court ruled Friday that auto insurers can calculate premiums based on where a customer lives, a ruling that could result in a California Supreme Court showdown. The decision from the 1st District Court of Appeal nullified provisions of Proposition 103, a 1988 initiative that required insurers to base prices on a driver’s safety record, years of experience, and miles driven.
The proposition provided for Insurers to consider ZIP code as an “optional” factor. The three-judge court agreed that insurers need to give significant weight to a customer’s ZIP code because risk factors that can affect the price of a policy vary from area to area.
“Territory is a more important determinant of the risk of loss than any other single factor,” Justice Daniel M. Hanlon wrote in the court’s decision according to an Associated Press report. The Foundation for Taxpayer and Consumer Rights, which sponsored Proposition 103, plans to appeal to the California Supreme Court decision.
Topics California Legislation
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