California’s Proposition 33 Auto Insurance Initiative Defeated

California Proposition 33

After a long day of voting on Tuesday, California residents decided the fate of California Proposition 33. The controversial California auto insurance legislation, which was heavily backed by Mercury Insurance Chairman George Joseph, was defeated with 54.6 percent of the population voting against it.

California Proposition 33 Fails to Pass

The 2012 Automobile Insurance Discount Act, also known as California Proposition 33, was a highly controversial auto insurance initiative that served to reward individuals who maintained continuous auto insurance coverage while penalizing those who allowed their coverage to lapse.

The proposition was a revamped version of an initiative proposed in 2010 that would also offer reductions in auto insurance costs to individuals who never went without coverage.

The 2010 initiative was on its November ballot, but failed to pass due to concerns from voters that an inability to pay for coverage due to extenuating circumstances (job loss, lack of a vehicle, etc.) would mean they would be penalized when they decided to restore their California auto insurance coverage.

It appears that 2012 voters maintained the same sentiment, strongly opposing the legislation.

How California Auto Insurance Will Be Affected

Individuals may wonder how California auto insurance will be affected by the vote. Because the legislation did not pass, coverage will remain the same in the state.

Currently, people who maintain auto insurance coverage with a specific company benefit from persistency discounts for not allowing their insurance to lapse.

California Proposition 33 would have granted the discounts to drivers who maintained coverage with their current insurers, but would have also allowed them to roll their persistency discounts over to another company so that they could still receive credit for having continuous coverage.

The initiative was strongly opposed by California-based Consumer Watchdog, which said the proposition would allow the insurance industry to discriminate against individuals who were unable to maintain continuous coverage.

Mercury Insurance‘s Joseph, on the other hand, noted that it would encourage competition among insurers, which would help lower auto insurance rates statewide. To date, Joseph and other supporters have not announced plans to push for more legislation in the coming years.

(Photo: neontommy)