Court of Appeal Hears Case to End ZIP Code-Based Automobile Insurance Rates

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Lower Court Ruled Quackenbush Regulation Defective

San Francisco, CA–Twelve years after California voters passed Proposition 103 in 1988, the Court of Appeal heard oral arguments in a case today that could finally enforce the provision of that initiative requiring automobile insurance premiums to be primarily based on how people drive, rather than where they live. In June 1998, an Alameda County Superior Court judge had struck down a defective Quackenbush regulation that allowed insurers to continue the practice of basing premiums primarily on ZIP-code, ruling in favor of the Proposition 103 Enforcement Project (a project of the Foundation for Taxpayer and Consumer Rights) and other plaintiffs, including the Spanish Speaking Citizens Foundation, Consumers Union, Southern Christian Leadership Conference and the Cities of San Francisco, Oakland, and Los Angeles. Former Insurance Commissioner Quackenbush and insurers, Farmers and State Farm, appealed that ruling.

“We are confident that the Court of Appeal will agree with consumer groups and the superior court that the Quackenbush regulations that allowed insurers to discriminate against drivers simply on the basis of where they live cannot be allowed to stand,” stated Pamela Pressley, staff attorney for the Foundation for Taxpayer and Consumer Rights. (representing Proposition 103 Enforcement Project) “After twelve years of battle, California motorists will finally pay premiums according to how they drive rather than where they garage their cars.”

Proposition 103 contains Insurance Code 1861.02, which requires the Insurance Commissioner to issue regulations relating to the methodology for determining auto premiums. By law, the regulations must be written in a manner such that territory (where the driver resides) and other optional factors (gender, marital status, academic standing, etc) are given less weight than any of the three factors specifically mandated by Proposition 103: driving record, annual miles driven and years of driving experience. Quackenbush‘s regulations have allowed insurers to continue to determine premiums with the most weight given to territorial-based factors.

A decision from the Court of Appeal is expected by mid-December, 2000.

Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

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