California motorists with a Geico auto insurance policy will soon be spending less on monthly premiums.
According to Consumer Watchdog, a nonprofit advocacy group, policyholders will spend approximately 11 percent less on their auto insurance rates starting in August. The insurer had initially requested a 4 percent hike in rates.
However, Consumer Watchdog appealed to the California Department of Insurance, saying increasing the price hike violated Proposition 103, which bans insurers from charging excessive rates.
Ultimately, the CDI agreed with the nonprofit, saying Geico was improperly hiking rates based on future estimated costs the company believed it would experience.
"This massive decrease is a substantial victory for California [drivers]," said Consumer Watchdog in a statement. "Not only will Geico be decreasing its rates by $91 million per year, but the agreed upon reduction is actually $125 million less than the increased rates Geico originally requested."
The Consumer Federation of America says that since Proposition 103 was passed in 1988, California drivers have saved approximately $62 billion on auto insurance premiums. California is one of several states with boards that oversee the rate proposal process.