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Will Prop 17 save you money on auto insurance?

May 17, 2010 12:00:00 AM PDT
Proposition 17, the auto insurance measure on the June 8 ballot, is designed to lower auto insurance rates and increase competition, but opponents say it could actually raise rates.If you drive in California, you have to have auto insurance, and who doesn't want to pay less for that?

Supporters of Prop 17 say the measure will save you money.

"With this additional discount, it will be a great thing because competition will be even better. The consumer will benefit," said Joe Jimenez, who owns an independent insurance agency in Orange County.

He says Prop 17 will allow companies to consider a driver's history of insurance coverage. If you've been with your company for a while, you're probably getting a discount for continuous coverage or what is known as a persistency discount. Prop 17 would allow you to carry this discount over.

"Under current law, if you have insurance with a particular company and you go to another company, you lose the discount, and basically you get penalized," said Jimenez.

"I think this is a proposition that has no place on the ballot," said Harvey Rosenfield, founder of Consumer Watchdog.

Rosenfield wrote Proposition 103 back in 1988, which tied insurance rates to your driving record. He says while some drivers will get discounts with Prop 17, others are going to pay more. Those without insurance who want to get it will be hit with surcharges and it will also affect those who stopped their insurance for a while.

"You get the discount now because you've been with the same company for a period of years. What Prop 17 wants to do is allow insurance companies to punish you if you haven't been insured with some other company in the past," said Rosenfield.

One of the biggest supporters of Prop 17 is Mercury Insurance Group, which has already poured more than $7 million into the campaign. This has many wondering if the law is going to be good for insurance companies or for consumers.

"When was the last time an insurance company spent millions of dollars to save you money?" questioned Rosenfield.

"Let's be honest... Mercury will benefit along with many other companies. What they really want to do is get more market share. They want to insure more people," said Jimenez. "The people who are really going to benefit are the consumers, I mean, they're the ones that are going to benefit from being able to take the discount with them."

The voters will decide on the measure when they cast their ballots on June 8.


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