California Proposition #33

October 1, 2012
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Each week I will go over 1 of the 11 propositions that will be on the California Ballot in November. Today’s post goes over Proposition 33. All about insurance.  Are you ready? Let’s go!

California Proposition 33

TDL Description

Just as a little background, back in 1988, voters passed Proposition 103 (how do they come up with these numbers?) which asks that the Insurance Commissioner review and approve changes to insurance rates, like car insurance, before the changes go into affect. It also stipulates that car insurance prices are set according to the following factors:

  • driving safety record
  • number of miles driven per year
  • number of years driving.

However insurance companies can add other factors to the pricing of premiums and they can provide discounts for such things like lack of tickets, or mainting continuous insurance coverage. They are not allowed to give you a discount for leaving one insurance company for another.

Note: Insurance companies pay a insurance premium tax to the state which last year generated $500 million to the general fund.

Also Note:  This kind of legislation was brought to voters before, Proposition 17 which was defeated two years ago.

 Proposal

This measure will allow insurance companies to apply a discount for continuous coverage to new customers. Continuous coverage meaning uninterrupted automobile coverage  with any consumer. It will also allow insurance companies to increase the cost of insurance to those who have not maintined continuous coverage.

You can still get coverage if your lapse

  • Not more than 90 days within the past 5 years
  • If you had recently lost your job, your relaps isn’t more than 18 months.
  • Or if your lapse is due to military service.

In addition, children covered under their parent’s insurance can be eligible for discount.

The discount could be assessed on a proportional basis. For example if in the past 5 years you had coverage continuously for 3 years, the insurance can offer you 60% of the discount offered.

PROS and CONS

PROS

Mike D’Arelli, with American Agents Alliance (an insurance agency advocate group perhaps?) writes in SFGate that Prop 33 allows motorists to keep a discount..

  • Allows  you the ability to maintain your continuous coverage discount even if you switch to a new company!
  • You can even leverage a new deal with your current insurance company by saying..”Hey I can get a better deal somewhere else..”
  • This proposition would protect those who were unemployed, in the military or just needed a 90 day break in payments.
  • It is also a great incentive to bring the uninsured into the system.

 

CONS

A small  write up by SFGate ..(no  authors, so maybe it’s their editorial team?) calling Proposition 33 “A Bad Idea that won’t go away!”    

Only one main argument ..

  • The discounts will come at the expense of those who have not been previously insured, yes maybe they were deadbeats, but could also include those who live in urban areas and didnt’ need to drive (like myself..:( )

Some other arguments against found on Ballotpedia for Proposition 33.. (Ballotpedia has comprehensive pro and con coverage)

  • Will allow insurance companies to raise insurance even on those who have perfect driving records.
  • Can raise insurance for recently graduated students who now need to drive to their new job.
  • In states where props like 33 are legal, it has resulted in higher insurance premiums.

 

So what do you think?

Did you vote against Prop. 17 two years ago? What makes this proposition better? Do you think you will vote for it this time around?

Download and read.. Proposition 33 Summary Analysis.pdf

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