A lot of drivers in California are about to get some very good news, as one of the state’s largest car insurance agencies announced their plans to reduce the rates for their auto insurance policies by 5.4%, starting with on April 1, 2009. This new reduction will affect current policies, as well as new policies signed from then on.
The agency in question is the Southern California Automobile Club, which currently is in fifth place in terms of clients in the state. Boasting around 1 million customers, the company’s 5.4% reduction will equal around $100 in savings for each car insured. According to the company’s senior vice president for public relations, Alice Bisno, the insurance agency is able to do this thanks to its decrease in policyholder loss claims as well as the smoothness of the entire operation over the past two years. The company has also been noted for its wise business practices, as well as friendly consumer interaction.
However, there are some that consider that the company can afford an even bigger reduction. According to Santa Monica Consumer Watchdog executive director Douglas Heller, the 5.4% decrease is only half of the percentage that the company should be cutting. All over the state of California there have been signs that the costs for an auto insurance policy are getting lower, even though they are getting more expensive in other states.
According to the Department of Insurance of the state of California, there are also other factors that have contributed to the decreases in car insurance rates on a state level. Amongst them is the success of the Prop 103 initiative, which was put in place 20 years ago, as well as the new cars which have the latest technologies that allows them to be a lot safer and fuel efficient.
Proposition 103 deserves a lot of credit for the decrease in insurance rates. Thanks to it drivers can get car insurance policies based on criteria like driving experience, number of accidents and miles driven annually. This is unlike other states where other factors such as the car owner’s credit score and the ZIP code of the place where the car was registered are taken into account and lead to significantly higher premium rates.
The online insurance agency Insurance.com conducted a survey that proved that indeed California drivers benefit from lower rates than drivers in other states. According to the survey, rates in the state dropped 2.7% between 2006 and 2008, while car insurance rates in the other states climbed 8% during the same two year gap. Another reason offered by the vice president of Insurance.com for the low rates in California is the sheer size of the state and its population. According to him, California has 27 million drivers and over 30 million automobiles. This creates a huge market for insurance companies, so it is in their best interest to lower their rates to attract more customers.
Finally, the reason for this reduction can be a sign of the times we live in. The current economic recession and the high price of fuel has simply caused a lot of motorists to drive less or to use alternative methods of transportation such as public transportation.