In late December of last year, the Court of Appeal of
the 1st District in the State of California ruled than an automobile insurer
could in fact use zip codes to determine automobile insurance rates. This ruling brings us back to good old
Proposition 103, the validity of which was upheld by a trial court in 1998.
The trial court issued a ruling indicating that where a motorist lives
cannot be used to determine how much auto insurance he should pay. The Court of Appeal reversed this
ruling. The appellate court noted the
contradictory nature of Proposition 103, indicating that while its goal is to
protect automobile drivers from arbitrary insurance rates, it requires that
where a motorist resides cannot be considered in the price of the auto
insurance charged to the driver.
Proposition 103 states that the driving history of the individual as
opposed to where he parks his car at night should be all that is considered
when deciding his insurance rate.
The Court of Appeal disagreed, holding that it is not
how a person drives, but actually where a person lives that is the most
significant factor in quoting a fair price for automobile insurance. Harvey Rosenfield, the activist who was
behind the passage of Proposition 103, indicated his extreme disappointment
with this ruling. His goal for
Proposition 103 was to lower auto insurance premiums for drivers, and he sees
this ruling as in effect undoing this law.
The theory behind the use of zip codes is that
accident rates are higher in big cities.
Rosenfield states that is prejudicial to those who live in the city. The counter argument is that those who live
in the suburbs should not have to unfairly pay a higher premium due to the fact
that most large losses take place in the city.
It seems to me that all the above should be taken
into consideration when determining an insurance premium. It should include the driver’s driving
history along with the driver’s residence.
I agree that the driving history is important but I also feel that one’s
location is important. I think that to
use one factor to the exclusion of the other is unfair to all who drive and to
all who pay automobile insurance. I
believe that a combination of factors as opposed to using one and excluding all
others will benefit all parties involved and is the most fair way to determine
what one should pay for insurance.
I do not like legislating through propositions. We elect assemblymen and senators to pass
bills and address issues and when “the people” attempt to circumvent that
process and legislate through poorly considered propositions, that which is
passed usually sounds quite appealing, but ultimately leads to problems such as
what we have here.