Consumer Watchdog Seeks to Enforce Good Driver Discounts

Farmers Insurance

A recent release from the Consumer Watchdog revealed that a petition regarding car insurance rates has been filed for a public hearing in front of an administrative judge. It called upon Farmers Insurance to clarify the methods in effect that ensures Farmers and its subsidiaries are complying with a long-established California law, Proposition 103.

Consumer Watchdog Keeps a Close Eye on Good Driver Discounts

Proposition 103, designed to ensure fair car insurance rates, among other consumer protections, dictates that insurance companies must offer a 20 percent good driver discount to those who meet the law’s standards.

A “good driver” generally has at least a three-year driving history with no more than a single violation and no at-fault accidents on their record. However, this simple requirement becomes complicated to regulate when insurance companies create subsidiaries or affiliate companies that fall outside of the law’s requirements.

The watchdog group hopes to change that.

Advocacy Group Closes in on Tiered Car Insurance Rates

The watchdog organization also wants Farmers Insurance to offer greater transparency in how they ensure compliance related to a 2011 petition addressing tiered pricing under its affiliate company, Coast National Insurance Company. Based on the company’s filings, Consumer Watchdog claims that the auto insurance company has still failed to demonstrate how they’re ensuring all good drivers receive the auto insurance discount Proposition 103 promises.

The company has also instated another pricing tier called Farmers Specialty, under affiliate Mid-Century Insurance Company. According to the petition, Farmers Insurance already has three different rating tiers, which offers discounted car insurance rates to business managers and professionals.

The advocacy group said this tiered practice may lead to unfair discrimination, because it offers discounts to a specific group that does not necessary have a low-risk profile compared to other customer groups.

Consumer Watchdog has requested documentation of Farmers Insurance’s underwriting practices as evidence that it will comply with Proposition 103.

Photo credit:Jeremy Brooks