Initiative to Raise Auto Insurance after Lapse in Coverage Could Reach 2010 California Ballot

A major auto insurance company is making plans to place an initiative on the California ballot in 2010 that would require those who have had a lapse in coverage to pay hundreds more once they resume that coverage. This is according to the nonprofit organization, Campaign for Consumer Rights, a campaign affiliate of Consumer Watchdog, which released a press release on Wednesday explaining that initiative being set forth by auto insurance giant Mercury Insurance.

What’s This Initiative About?

The nonprofit’s press release said that Mercury Insurance was pushing forward an initiative that would surcharge drivers – including soldiers and seniors – who had a lapse in car insurance coverage during the past five years. Under the proposal, those who stopped driving for any reason (i.e. no car, left the country, in the military) would be required to pay hundreds of dollars more for insurance when they sought to restart their coverage.

If the measure were to follow through, it would completely change the 1988 insurance reform measure Prop. 103, which prohibits companies from raising rates on drivers because they didn’t have insurance in the past. According to the nonprofit, Mercury Insurance is submitting signatures this week to place its initiative on the ballot.

Higher Rates for Californians

According to the nonprofit, if the initiative gets to the 2010 ballot and passes, Californians would undoubtedly suffer higher insurance rates. This would also unfairly penalize troops serving their country, senior citizens who may have stopped coverage due to an injury that didn’t permit them to drive and families struggling from the recession who may have all needed lapses in coverage over a five-year span. It would also punish those who simply decided to take public transportation for a while to save on gas costs.

The nonprofit is hoping to spread the word so that this initiative, if made to the 2010 ballot, does not pass. For more information about this issue, visit ConsumerWatchdog.org.