Since 1988, when California voters approved Proposition 103, the rate you pay for your auto insurance has required the review and approval of the state's insurance commissioner. Insurance companies may use up to 16 factors to set the rate -- you're probably aware of many, including the good driver discount, the number of miles you drive each year, and a continuous coverage discount for those who have been customers for a long time.
MoreFollow the Money: Interactive database lets you look at who's funding both sides of the 2012 Automobile Insurance Discount Act
Read the Full Text: Read the proposed law as published in the state's Voter Information Guide
However, companies are not allowed to use such a discount to attract new customers away from their current providers. In other words, "continuous coverage" only counts when it is with the same company, so you are rewarded for staying.
Prop 33, the 2012 Automobile Insurance Discount Act, would change that by allowing a continuous coverage discount to anyone who wants to switch from their current insurance provider. As long as you have had insurance with any company in the past five years, you could get some level of discount with your new provider.
Anyone who does not currently have auto insurance or who has had a lapse in coverage would not be eligible, unless that lapse was:
- 90 days or less over the past five years
- no more than 18 months in the past five years because of unemployment due to layoff or furlough
- due to active military service
WHAT YOUR VOTE MEANS
Voting YES means that you would like to allow auto insurance companies to apply a "continuous coverage" discount in setting their rates for new customers who had previously been insured elsewhere.
Voting NO means that you want to keep the current rule prohibiting such discounts.
WHO/WHAT IT WOULD AFFECT
Drivers: Currently, if a driver switches insurance providers, she cannot take the continuous coverage discount with her. For those who want to switch, this measure would appear to offer that perk. However, it will not help most people who have had a long break in coverage.
Insurance Companies: Insurance companies would be allowed to increase rates on those who don't qualify for the continuous coverage discount in order to cover the cost of those who do.
WHO'S BEHIND IT
The Prop 33 campaign is financed almost solely by George Joseph, the chairman of Mercury General Corporation. Mercury was behind a failed attempt to pass a similar ballot measure in 2010, Prop 17. Joseph has given more than $8 million of his own money to the campaign.
WHO'S AGAINST IT
Consumer Watchdog, a nonprofit organization founded in 1985, is the measure's primary opponent. Financially, the No on 33 campaign has so far been out-gunned, with less than $100,000 in campaign contributions raised to date.
ARGUMENTS BEING MADE FOR
- Corrects current law, which punishes you for seeking better insurance or a better deal by taking away your continuous coverage discount. You should be able to shop around for a better deal without losing this discount.
- Encourages uninsured drivers to obtain insurance, because it makes it easier for them to earn the continuous coverage discount. This makes our roads safer.
- Prop 33 will result in more competition between insurance companies and better insurance rates.
ARGUMENTS BEING MADE AGAINST
- Prop 33 deregulates the insurance industry, making big insurance companies less accountable.
- It penalizes responsible drivers who did not need auto insurance in the past.
- It leads to higher premiums and hurts California's middle-class families.
- It leads to more uninsured motorists, because the financial surcharge applied to those who don't qualify for the discount discourages people from buying insurance.