The Prop 103 Enforcement Project Brings Lawsuits to Stop Insurers From Illegally Overcharging Previously Uninsured Drivers

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Should Reduce Premiums, Number of Uninsured Motorists on the Road

The Proposition 103 Enforcement Project (a project of the Foundation for Taxpayer and Consumer Rights (FTCR) the non-profit consumer advocacy organization) filed lawsuits yesterday in Los Angeles Superior Court, Central Division, on behalf of the general public of California against three insurers — SAFECO, GEICO and the Interinsurance Exchange of the Automobile Club. The lawsuits seek to enjoin these insurance companies from illegally increasing automobile insurance premiums for drivers who lack prior auto insurance coverage. The lawsuits allege that these companies violate the mandates of the 1988 voter-enacted law, Proposition 103, by calculating premiums in a manner not approved by the California Department of Insurance. The result has been higher premiums for drivers, including safe drivers who would otherwise be eligible for Prop 103‘s Good Driver Discount.

“Charging higher premiums to good drivers who have not had prior coverage, or who had a lapse in coverage, makes insurance unaffordable to many of these drivers,” stated Pamela Pressley a FTCR staff attorney. Pressley added, “This, in turn, penalizes insured drivers who are forced to pay higher uninsured motorist premiums. These lawsuits are aimed at enforcing the will of California voters who outlawed these practices with the passage of Prop 103.”

Among other insurance reforms enacted by Prop 103, California law requires that consumers who are entering the insurance market not be penalized for the absence of prior insurance coverage, especially in light of industry practices such as red-lining and territorial rating, which render insurance unavailable and unaffordable for many Californians.

The lawsuits also allege that these insurers have not disclosed their actual underwriting practices to the California Department of Insurance, a requirement under California law.

The Project is seeking an order from the Court that will require insurers to stop the allegedly illegal, unfair and deceptive business practices and to return overcharges to consumers.

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The Proposition 103 Enforcement Project (“Project”) was formed in 1993 and is a project of the Foundation for Taxpayer and Consumer Rights, at 501(c)(3) non-profit, non-partisan public benefit corporation organized to represent the interests of consumers. The Project is dedicated exclusively to the promotion of insurance reform and the protection of the interests of all insurance consumers in matters before the Legislature, the courts and the California Department of Insurance.

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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