Car insurance companies would find it much easier to cancel or not renew motorists' coverage for what are now considered minor traffic violations under proposed state regulations that received their first public hearing Monday.
The proposals--already sparking heated debate between insurance industry interests and consumer advocates--would change the way insurers can count speeding tickets and other violations against a driver's record and would allow immediate cancellation for a list of offenses related to alcohol, speed modifications and one-car accidents.
Motorists dropped under such rules would probably be forced to scramble for more expensive, harder-to-find, high-risk coverage.
Insurance companies and the California Department of Insurance say the new regulations are needed to ensure that good drivers do not subsidize bad drivers, and that they should result in lower premiums for better drivers.
Insurers say the new regulations would give them a chance to write coverage that appropriately reflects the risk they are taking with motorists who drive too fast, drink and drive, or modify their cars for greater speed.
"There's a substantial increase in the risk of insuring that driver . . . far beyond the risk that the insurer originally undertook," said Jeff Fuller, general counsel for the Assn. of California Insurance Companies, a trade group. "Giving the insurers legitimacy to non-renew or cancel forces a renegotiation" so that a driver's premiums accurately reflect the risk.
Consumer advocates, however, say the changes give insurance companies too much freedom to cancel or not renew policies.
"This really doesn't have to do with bad drivers; it has to do with ordinary drivers," said Lillian Salinger, staff attorney for the Proposition 103 Enforcement Project, a consumer advocacy group. "And once you've been canceled, it's a lot more difficult to find insurance and, if you do find it, it will be at a lot higher cost."
Insurers already can choose not to renew policies of those convicted of drunk driving. In addition, insurers can opt not to renew any driver who accumulates three "points" in three years--with a moving violation such as a speeding ticket counting for one point and an at-fault injury accident for two points--if two of the three points are earned in the past year.
