Suit filed to block what they say is an unnecessary change in
factoring insurance rates
Gilroy – The California Farm Bureau filed suit late Tuesday in Sacramento County Superior Court to block new rules from the state Department of Insurance they say would unfairly penalize rural drivers.
“Our rural communities have lower average incomes than the rest of California and now many residents could face double-digit insurance-rate increases, through no fault of their own,” said Doug Mosebar, president of the Farm Bureau.
The new rules would water down the effect of a driver’s zip code in calculating insurance rates for drivers. There are three primary factors insurance companies use to factor a person’s insurance rate: driving record, estimated mileage and experience behind the wheel. Geography can be added to the formula and there is no cap on the emphasis.
Gilroy drivers could see their insurance bills increase by 11 percent, while some San Jose rate payers should expect a drop of as much as 6 percent.
The Farm Bureau’s suit states the new rules would violate state insurance laws because it requires insurance agencies to place a higher weight on annual mileage and driving record in setting rates and gives low weight to where a driver lives.
“What you pay for auto insurance should be based on your risk of having an accident or filing a claim. That’s fair for everybody,” Mosebar said in the statement. “The state’s new rules use an arbitrary standard that ends up punishing rural drivers. It shouldn’t matter if you live in the country or the city: You should pay a fair rate for auto insurance.”
But representatives from the Foundation for Taxpayer and Consumer Rights group have said in the past that flawless drivers are paying higher rates because they live in areas deemed risky.
Carl Borden, associate counsel for the Farm Bureau, said that just because a person has a good driving record does not mean their exposure is diminished if they live in an urban area such as Los Angeles or San Francisco.
Borden said territorial rating factors have been the best predictor for the cost of a driver’s rate.
“We are confident … that our lawsuit will be successful,” Borden said.
