Legislation that would allow insurers to more accurately base auto insurance premiums exactly on how many miles a motorist drives passed the California Senate Appropriations Committee.
Proposition 103 requires insurers to set automotive insurance rates and premiums using specified factors, including the number of miles the insured drives annually and any factors the commissioner may specify that have a substantial relationship to the risk of loss.
Assembly Bill 2800, sponsored by Jared Huffman, D-San Raphael, in determining how many miles a person drives, would allow insurers to apply different rating factors for voluntary insurance-verified annual mileage and applicant-estimated annual mileage.
Insurers generally support the bill. According to the Personal Insurance Federation of California, which represents insurers who write approximately 50 percent of the auto insurance sold in the state, the bill “addresses the dual goals of emission reductions through incentives and ensuring fairness in automobile rates as required under current law … AB 2800 would ensure true mileage verification and allow low-mileage, low-polluting drivers to pay less for auto insurance,” the association said.
The Association of California Insurance Companies said it supports the bill.
However, consumer advocacy group Consumer Watchdog said “AB 2800 would force drivers to choose between fair insurance rates and protecting their privacy.”
“No driver should have to make that choice,” said Carmen Balber for the group. “Where I drive, when I get there and whether I stop on the way is not the business of my insurance company, or any other corporation who wants to place eyes in my car.”
According to the group, nothing in the bill prohibits insurance companies from tracking whatever information they choose — including speed, acceleration, location and time of day, in addition to mileage. The bill allows insurance companies to give discounts for driver participation in a tracking program, but does not mention discounts for drivers who actually reduce their mileage, the organization said.
“Insurance companies fought mileage-based insurance rates for 18 years after the voters mandated them in Proposition 103,” Balber said. “The industry didn’t change its mind overnight. Insurers back this plan because it will get their spyware into Californians’ cars while doing nothing to make them more closely tie insurance rates to how far a motorist drives.”
Thus, the group predicted it will draw a lengthy court challenge if enacted.
Sources: California Courts, Consumer Watchdog, PIFC
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