Santa Monica, CA — Mercury Insurance has begun its campaign to allow insurers to hike auto insurance rates for Californians who have had a lapse in their auto insurance for any reason. The initiative is a repackaging of Mercury-sponsored legislation invalidated by a California Court of Appeal in 2005, after the court determined the legislation would necessarily and illegally surcharge drivers who had a coverage lapse. In its decision to overturn the law, the court explained that an alleged discount given to drivers who have had continuous insurance coverage must be offset by a surcharge on people with a lapse in their coverage, writing:
"The premiums for policyholders who, because of their characteristics, do not qualify for a particular discount must be surcharged in an amount equal to the total of the discounts given to the policyholders that qualified for the discount." [Emphasis in original] 132 Cal. App. 4th 1354, 1367-1369
The Mercury initiative would allow insurers to penalize people after missing one payment or decided not to drive for a time and let their insurance lapse.
"Mercury is using the initiative process to raise rates on struggling families in the middle of an economic crisis," said Consumer Watchdog’s Executive Director Doug Heller. "Auto insurers shouldn’t be allowed to jack up your premium because you stop driving for a time, missed one payment or are simply struggling after losing a job."
Because the number of Americans letting auto insurance lapse during this economic crisis is skyrocketing, according to insurance industry data, Mercury’s proposed penalty for restarting insurance coverage will also force many drivers to remain uninsured. This will raise the cost of uninsured motorist coverage for everyone else and leave California roads much less safe.
For more information, please contact Doug Heller, 310-392-0522 ext. 309.
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