Proposition 17 Means Car Insurance Companies Would Keep Discounts

By: Shannon Brown, Car Insurance Analyst
CheaperCarInsurance.com

Car insurance companies could soon be required to honor continuous coverage discounts that were earned under other companies. Proposition 17 will be voted on June 8th, 2010. The Continuous Coverage Auto Insurance Discount Act, if passed, will leave drivers free to seek out cheaper car insurance without being penalized.

At the moment, those who have earned a continuous coverage auto can’t take it with them when they switch car insurance companies. This means that:

• Drivers who do switch actually pay a penalty
• Most drivers won’t leave their existing company because they want to keep the discount
• New drivers are getting cheaper insurance because they can afford to look around

The other discount that is currently available is the safe driver discount which insurance companies offer to those who haven’t had any accidents in years. This discount can be carried over to a new insurance company already.

If Prop. 17 passes, all this could change. Drivers will be able to move to a cheaper car insurance company and still maintain the same discount that rewards them for insuring their vehicles over a long period of time.

Other Benefits of Proposition 17

Not surprisingly, if Prop. 17 goes through on the 8th, it will change many things. It may be a slight change to the existing law, but the impact is going to be huge. Here are just a few things that will change:

• People will start shopping for cheaper car insurance companies
• Insurance companies will begin offering more competitive rates
• Overall, people will pay less in auto insurance

With the possibility of more competition, insurance companies will be forced to provide more competitive prices for their coverage. This means the prices will be fairer and lower overall, making car insurance more affordable.

It’s estimated that drivers could save up to $250 annually on their car insurance simply by keeping their discount and making the switch to a cheaper insurance company.

The current law states that if a driver cancels their insurance even for one day, they will have to forfeit their continuous coverage discount. Unfortunately, there are circumstances where this is impossible to avoid, so Proposition 17 is going to cover more than just the switch between insurance companies.

If someone loses their job and is unable to renew their insurance, they can still receive a discount. The new law would allow for drivers to let their insurance lapse for up to 90 days. After that, if car insurance companies choose to allow a longer grace period, they can.

Others who would be protected under this law include those in the military who may have to let their insurance lapse due to being deployed. Many companies are supportive of the act and are working to help get it accepted. After voting is complete on the 8th, we’ll know whether or not it has been approved. If so, car insurance companies will have to change rapidly to fit the new protocols and to stay competitive.

Posted: June 03, 2010