How Continuous Coverage Laws Could Impact California Drivers

continuous coverage

After several months of debates in 2010, a controversial California auto insurance proposal that would allow drivers with continuous coverage to receive discounts was shot down before reaching the ballot. Now, just one year later, a very similar proposal has been introduced and could be placed in front of voters next year. So what exactly is the deal with this continuous auto insurance coverage proposal?

The Debate Over Continuous Auto Insurance Coverage Discounts

If you followed the debates over Proposition 17 last year, you know that much of California either strongly supported or opposed the proposal known as the Continuous Coverage Auto Insurance Discount Act.

The foundation of the proposal was to give drivers the opportunity to receive significant discounts on their auto insurance coverage as long as they never dropped their insurance.

This is similar to persistence auto insurance discounts offered by some companies that reward customers for sticking with them. The main difference with continuous coverage is that drivers can switch companies and still receive a discount as long as there is no lapse in coverage.

The downside of this coverage option was that drivers who did not maintain some type of coverage would not only fail to qualify for auto insurance discounts, but would suffer a penalty when they finally did become insured again.

Opponents of the proposal felt it was unfair to a large segment of consumers, including low-income drivers who didn’t own cars, military who wouldn’t need to pay for coverage because they would be overseas, drivers who suffered some form of disability and let go of their insurance while they couldn’t drive and even individuals who had yet to acquire a driver’s license.

Despite the downside to the proposal, supporters, including troubled auto insurer Mercury Insurance, insisted that the benefits outweighed problems because the act would have allowed drivers to take advantage of a 90-day grace period for insurance cancellations and even enjoy lower rates thanks to increased competition.

In the end, Prop 17 got shot down when voters decided that they did not want to suffer a penalty if they were unable to maintain coverage.

Supporters Give Proposal another Shot with Noted Changes

While the entire process is still in the preliminary phases, reports have been released that lawmakers are trying to give the continuous coverage proposal another shot.

In mid-August, the California attorney general issued a title and summary for the proposed initiative, which would clear the way for backers to begin the signature-gathering process and move it toward the ballot in 2012.

However, drivers who are worried the bill is more of what they didn’t want to see last year, the new proposal does have one noted change that helps it differ from California Prop 17: The definition of “continuous coverage” has expanded. This time, it includes individuals who have short lapses in coverage, or drivers who have lapses due to unemployment, injury or military service.

While this adjustment may suit drivers who fall under these categories, opponents of the proposal still say the changes don’t do enough to protect individuals who have never carried their own coverage or low-income families who have not been able to afford a car and therefore, will be penalized for being uninsured.

The Santa Monica-based nonprofit group Consumer Watchdog recently issued a statement claiming that the proposal “authorizes a currently prohibited surcharge on millions of California motorists who did not purchase insurance at some point in the prior five years, even if they had not been driving or did not own a car.”

Lawmakers who support the continuous auto coverage proposal will be responsible for acquiring 500,000 signatures to ensure it qualifies for inclusion on the ballot. If all of the signatures are not acquired, those pushing the bill will not have a chance to get it in front of the eyes of voters in 2012.