Auto insurance customers with coverage gaps may face higher rates

auto Insurance bill

Battle over automobile coverage law in California rages on for two decades.

The auto insurance war that regarding the laws in California are now entering their second decade between George Joseph, the billionaire Mercury General Corp. executive, and Harvey Rosenfield, the consumer advocate.

The latest battle in the war will occur in November, when the two will face off over a ballot initiative.California auto Insurance

The initiative could bring the auto insurance law in California back to the way that it was before a provision was implemented in 1988. This would allow insurers to charge drivers based on the consistency of the coverage they hold.

The auto insurance initiative that is at the center of this battle is the controversial Proposition 33.

That ballot measure states that anyone who has maintained their auto insurance coverage for a span of five years, without any gaps, would be able to qualify for a “continuous coverage” discount, regardless of whether their policy remained with the same insurer or was switched from one company to another within that period.

Those opposed to Proposition 33 have pointed out that this means that drivers who have gaps in their coverage within the last five years – for whatever reason – would be forced to pay higher premiums, if the measure should pass.

Two years ago, a measure that was nearly identical to the current one was defeated. This was, in part, out of concern that it would cause military personnel to have to pay higher premiums if they should cancel their policies while they are deployed overseas, as it would cause a coverage gap.

The most recent version of the measure has been changed in order to give service members an exemption to the rule, and would also provide those who have lost their jobs with a grace period of 18 months.

Supporters of the measure, such as Joseph, say that the rates would be lower for 85 percent of the drivers on the road who are already covered by auto insurance. According to Yes on Proposition 33 campaign consultant Rachel Hooper, the ballot measure will provide a win-win situation for both consumers and businesses. Consumer groups are saying the opposite about the auto insurance bill, claiming that it would cause harm to those who are unemployed over the long term, recovering from illnesses, students, and those who have other valid reasons for dropping their coverage.

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