Auto insurance rates decline in California

Insurance reform, safer roads lead to price cuts

Thanks in part to Proposition 103, a 1988 initiative that closely regulates insurance companies, California residents have seen significant savings in their auto insurance.

Fewer accidents and competition within the insurance industry are also factors in the price reductions.

And those reductions are significant: due to a provision of Prop 103 requiring insurers to justify the rates they charge, drivers saved $60 billion between 1988 and 2008, estimates a 2008 study by the Consumer Federation of America. The study says that California has the lowest insurance premium growth, at 12.9 percent versus a national average increase of 50 percent).

Before the passage of the initiative, insurance rates depended heavily on Californians' ZIP codes. But Prop 103 requires insurers to calculate premiums based more on customers' driving records than where they live.

California drivers are legally required to carry auto insurance, so the cost savings are welcome. Industry experts say that consumers can save even more by shopping around for their insurance and keeping their policies current - removing teenage drivers who no longer drive the family car, for example.

California's auto insurance mandate is not unique. Forty-nine states currently require drivers to carry auto insurance, with New Hampshire the lone holdout.

Learn how easy and convenient shopping for auto insurance can be. Get your free auto insurance quotes today!

Posted: Octobor 22, 2009

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