Mercury Insurance shows their approval for newly proposed auto discount in California

Car Insurance NewsMercury General Corp. has just announced its support of an auto insurance initiative comparable to last year’s Proposition 17, which was turned down by voters in June 2010.

Supporters of this initiative are thrilled with Mercury’s backing, and are hoping that this second effort will make the difference.

Insurance trade group, American Agents Alliance’s executive director, Mike D’Arelli, submitted the proposed initiative’s summary to the California attorney general’s office; taking the first step toward a vote on the initiative.

Mercury had previously been a supporter of Proposition 17, having spent approximately $16 million on a media campaign across the state. Similar to that proposal, this one would permit insurers to offer discounts to drivers who have had several consecutive years of coverage, regardless of whether they were all provided by the same insurance company.

D’Arelli released a statement that explained that the current wording of the law favors the insurance companies, but that they feel that providing consumers control over the discounts they receive “will increase competition between insurance companies, lower costs and insure more people.”

On the other hand, consumers groups have stated that this recent initiative may increase the cost of insurance for those who struggle the most to pay for it: the working poor, those who have previously been uninsured, and new drivers.

Consumer Watchdog, a group based in Santa Monica, said that the proposal provides consent to a surcharge to millions of drivers in the state who have not purchased auto insurance within the last five years, regardless of whether they have owned a car or driven. Until now, this type of surcharge has been prohibited.

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