Group claims that new auto insurance bills will reflect driving
records
Gilroy – The California Farm Bureau claims rural drivers would be penalized if zip codes are no longer a factor in insurance rates but a national political group that spent 15 years waging a campaign on the issue says the move will be beneficial to good drivers.
Californians with good driving records and low annual mileage will see their rates drop once residence is subtracted from the formula, instead of being punished for where they live, said Executive Director of the Foundation for Taxpayer and Consumer Rights Douglas Heller.
“If you’re a good driver and you’ve never caused an accident you shouldn’t have to pay more because of where you live,” he said.
Currently, insurance companies calculate rates using three primary factors including driving record, estimated mileage and experience behind the wheel. But they can also add geography to the formula and there’s no cap on the emphasis.
In some cases, when zip codes are weighted heavily, drivers with flawless records who rarely drive, are still paying high rates because they live in an area that insurance companies have deemed risky, Heller said.
But California Farm Bureau Spokesman Dave Kranz said rural and suburban drivers will be subsidizing city dwellers, because the proposal would water down the geography factor. He said this factor often lowers the cost for drivers who live in areas with less traffic.
And Gilroy drivers could see their rates increase by as much as 11 percent while rates for some San Jose residents are expected to drop by 6 percent, according to the California Department of Insurance.
Heller disagrees, saying that Farm Bureau is repeating scare tactics the insurance industry uses to gouge customers. Good drivers, no matter where they live, will benefit if California Insurance Commissioner John Garamandi implements the new rules. Insurance companies would still be able to add in the residency element but it might not be a major component, he said.
Californians already announced that driving records should override zip codes when they approved Proposition 103 in 1988. The new rules would simply insure that insurance companies are abiding by the rules, said Heller.
“The point was to make sure that a good driver in Gilroy wasn’t paying more than a bad driver in Hollister who commutes to Santa Cruz everyday,” Heller said.
