Insurance: Emphasizing Driving Records Over Zip Codes Will Cost Certain People Money, Experts Say.

The Press Enterprise (Riverside, CA)

With California changing the way drivers are charged for auto insurance, consumers will face a dizzying combination of factors that will determine when — and if — they can expect to pay lower rates in the future.

After battling state Insurance Commissioner John Garamendi, insurance companies last week began filing new rate plans that match the requirements set forth in Prop. 103.

The changes are designed to put less emphasis on where drivers live and more on how they drive.

Although some companies have announced forthcoming rate reductions for most customers at the same time they have said they will switch the new rating system, the savings for consumers could be weeks, if not months, away. Other companies have not said whether the new rules will result in savings at all.

The state required insurers to file new rate plans by last week if they had not applied for an extension. The state has 45 days to review the plans to ensure they comply with state law. Once approved, it must be implemented within 90 days, meaning changes at some companies will not take effect until early next year, said Gary Gartner, a Garamendi spokesman.

The rates go into effect when a policyholder receives an annual renewal notice. Insurers have two years to fully implement the new rating policy and are required initially to offer it only to about 15 percent of their customers, Gartner said.

Several companies, including State Farm and the Automobile Club of Southern California, have promised rate cuts for most customers. But it will be up to companies to determine which drivers will pay more.

“It is becoming even more important for people to shop around,” Gartner said.

That will be especially true for drivers who are young, have long commutes or imperfect driving records, experts said.

“That ticket is going to cost you a whole lot more than it does today,” said Sam Sorich, president of the Association of California Insurance Companies, one of three trade organizations suing to overturn the regulations. “If you are an 18 year old driving a great distance and have a couple of tickets, I can’t imagine what your premium is going to be. It’s just going to be off the charts.”

Placing less emphasis on a driver’s zip code is designed to help safe drivers, especially in urban areas such as Los Angeles, where insurance typically costs more. But the change also could affect Inland drivers.

Under the old system, a Temecula driver, for example, could expect to pay $1,355 a year for car insurance, while a San Bernardino resident with the same background, vehicle and driving record could pay $1,779, according to the Consumers’ Union, the non-profit organization that publishes Consumer Reports.

Opponents of the new rate system say it will result in drivers in suburban areas such as Riverside and San Bernardino counties paying more so that drivers in more urban areas such as Los Angeles can pay less.

“Not only are people in Riverside and San Bernardino going to continue to commute, we’re going to subsidize the lower rates,” said Leslie Atchley, owner of Atchley Insurance Services in Riverside.

Proponents of the changes said the emphasis on miles driven is fair.

“If you are on the road more than the average driver, some of the savings will be less for you,” said Doug Heller, executive of director of the Foundation for Taxpayer and Consumer Rights. “That is the way the rules should be.”

Since many Inland drivers commute long distances to work, a history of safe driving will become even more important to ensuring a low rate.

“Mileage is going to get the attention it deserves,” said Mark Savage, a senior attorney at Consumers’ Union in San Francisco. “Good drivers will pay less, and a good driver who drives a low number of miles will pay even less.”
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INSURANCE PRACTICES

– Driving record

– Miles driven each year

– Driving experience