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Consumer groups battle over auto insurance ballot initiative

Consumer groups in California are debating the merits of a ballot initiative that would allow auto insurance companies to offer discounts to drivers who have maintained coverage

An auto insurance reform petition in California gained enough signatures to become a ballot initiative, and nonprofit group Consumers First has thrown its support behind the proposal.

The initiative would change a law that allows insurers to offer discounts only to policyholders continuously covered by their company. The law “punishes good drivers who want to change insurers,” Consumers First president Jim Conran said.

But Campaign for Consumer Rights, an affiliate of national consumer group Consumer Watchdog, is opposing the proposal. The group claims that it would invalidate a part of Proposition 103 that prevents insurers from imposing a surcharge on drivers who haven’t consistently maintained coverage.

Insurance rates could go up for inconsistently covered drivers, CCR warns.

The group that drafted the petition, Californians for Fair Auto Insurance Rates, said in response to the opposition that “providing an additional discount to lower auto insurance for more than 80 percent of drivers is a change that should be made.”

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Posted: January 25, 2010

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