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By: Jaime Lethrop, Car Insurance Guru
CheaperCarInsurance.com

Drivers in California may soon be able to get inexpensive auto insurance thanks to a proposition slated for voting this summer.

The Mercury General Corporation is an auto insurer out of Los Angeles that is putting out millions of dollars towards Proposition 17, which will allow auto insurance providers to offer incentives, such as inexpensive auto insurance and great discounts to lure in competitor’s clients in California.

Currently it is against the law according to Proposition 103 for an auto insurer in California to try take customers of other auto insurance companies. It also forbids surcharges for auto insurance lapses. Proposition 17 would permit insurance companies to offer inexpensive auto insurance incentives to all drivers including competitor’s customers. Moreover, Mercury General’s main focus is to bring in long-term policy holders who have been loyal for 5 years or more to an insurance company.

One concern expressed about Proposition 17 is that it would legally allow surcharges for a lapse in coverage. Those opposed to the Proposition believe Mercury’s aim is to charge higher premiums for drivers reinstating coverage upon the lapse of their auto insurance. Mercury’s argument is that the Proposition would serve as incentive for giving long-term policyholders inexpensive auto insurance coverage.

How would the Proposition Affect California Motorists?

It is believed that with the passing of this Proposition, over 70% of California motorists can qualify for inexpensive auto insurance rates. However, the State Insurance Department suggests that Mercury is known for having misdemeanors regarding overcharging drivers.

Despite the heated debate about Proposition 17, it is sure to raise competition among insurers in L.A. This could mean good news for California drivers as it offers:

• Inexpensive auto insurance rates
• More choices when choosing an insurance company
• Great discounts from the increased competition among other insurance providers

As the June ballot is nearly approaching, Mercury General has put $3.5 million towards the campaign to persuade California voters to agree to the Proposition. While the Association of California Insurance Companies has voted to support the Proposition, they would not campaign it as Mercury is not an associate.

The issue of the Proposition has been in conflict through court rooms and local media. It begins to get heated as allegations have come about regarding Mercury’s attitude and behavior towards drivers. Such claims as:

• Unfair denial of coverage
• Biased charges for auto insurance rates to drivers
• Critical behavior against customers

Supporters of Proposition 17 claim that these anti-consumers are trying to sling mud at Mercury General rather than discussing the advantages of the Proposition. They fail to recognize the purpose of the Proposition as a means for providing inexpensive auto insurance to California drivers.

Who is Against Proposition 17?

There are currently few groups that are opposed to the Proposition. one in particular is the United Services Automobile Association of San Antonio, or USAA. The USAA services members of the armed forces and their families to provide auto insurance coverage. Such clients would be the target of the alleged surcharges from the Proposition as military members withdraw auto insurance policies while serving duty. They would be charged considerably higher rates when reinstating their policies. Mercury claims that such members would be exempt from surcharges for coverage lapses.

Mercury has long been attempting to bring in more lifelong policy holders with discounts and offers for inexpensive auto insurance. Proposition 17 is the third attempt to bring in new policyholders. According to the Alliance of Independent Insurance Agents and Brokers who support the campaign, the competition could prove beneficial to the auto insurance industry.

This summer will determine whether California drivers will be able to get more inexpensive auto insurance.

Posted: March 10, 2010

Mercury Pays Large Sum for Proposition 17 to Draw Customers with Inexpensive …