AutoXpert
Administrator
WE have previously written about the need for auto insurers to change how they calculate insurance rates. Basing rates on ZIP codes is unfair and discriminates against people who live in cities and poor neighborhoods. Besides, Proposition 103, approved nearly 20 years ago, required the rates be linked to a person's actual driving record and miles driven each year.
So we were pleased to see at least one insurer making the change. Auto Club of Southern California, California's fourth-largest auto insurer, announced last week it will base rates primarily on safety and driving frequency instead of where the driver lives.
Unfortunately, the decision will not affect Bay Area drivers. But the fact one insurer broke ranks from the industry suggests others may follow suit.
The idea that rates based on ZIP codes are discriminatory is not new. Back in 1988, California voters recognized the system was unfair when they approved Proposition 103. The measure required the industry set rates primarily tied to a person's driving record, the number of years he or she has had a license and the number of miles driven annually. The ZIP code of the driver was not to be a primary factor in the rate paid for insurance.
Drivers have records. It only makes sense to base what they pay for insurance on how they actually drive, not generalized information about a large area surrounding their residences.
However, to date, insurers have resisted the change. They persuaded former Insurance Commissioner Chuck Quackenbush to let them continue to use ZIP codes in setting rates.
In December, Insurance Commissioner John Garamendi announced he planned to establish regulations to enact Proposition 103. He said the practice of using ZIP codes allowed insurers to discriminate against areas they didn't want to serve, a form of redlining. Garamendi, running for Attorney General in November, praised Auto Club's action, saying he hoped it would break the stranglehold insurance companies have had on drivers.
Drivers with good safety records should not be penalized because they live in cities. Other auto insurance companies need to stop the discriminatory practice and follow the lead of Auto Club of Southern California.
(c) 2006 Oakland Tribune. Provided by ProQuest Information and Learning. All rights Reserved.
So we were pleased to see at least one insurer making the change. Auto Club of Southern California, California's fourth-largest auto insurer, announced last week it will base rates primarily on safety and driving frequency instead of where the driver lives.
Unfortunately, the decision will not affect Bay Area drivers. But the fact one insurer broke ranks from the industry suggests others may follow suit.
The idea that rates based on ZIP codes are discriminatory is not new. Back in 1988, California voters recognized the system was unfair when they approved Proposition 103. The measure required the industry set rates primarily tied to a person's driving record, the number of years he or she has had a license and the number of miles driven annually. The ZIP code of the driver was not to be a primary factor in the rate paid for insurance.
Drivers have records. It only makes sense to base what they pay for insurance on how they actually drive, not generalized information about a large area surrounding their residences.
However, to date, insurers have resisted the change. They persuaded former Insurance Commissioner Chuck Quackenbush to let them continue to use ZIP codes in setting rates.
In December, Insurance Commissioner John Garamendi announced he planned to establish regulations to enact Proposition 103. He said the practice of using ZIP codes allowed insurers to discriminate against areas they didn't want to serve, a form of redlining. Garamendi, running for Attorney General in November, praised Auto Club's action, saying he hoped it would break the stranglehold insurance companies have had on drivers.
Drivers with good safety records should not be penalized because they live in cities. Other auto insurance companies need to stop the discriminatory practice and follow the lead of Auto Club of Southern California.
(c) 2006 Oakland Tribune. Provided by ProQuest Information and Learning. All rights Reserved.