California Insurance Commissioner Ricardo Lara recently initiated a significant move to safeguard Californian drivers' rights to fair auto insurance coverage, in the wake of numerous complaints from consumers facing hurdles in obtaining proper auto insurance.
"These alleged passive-aggressive tactics by insurance companies to slow down drivers’ access to coverage are unacceptable, dangerous and will not be tolerated," Lara said. Lara aims to ensure insurance companies comply with existing laws and provide coverage at rates for which drivers qualify.
The California Department of Insurance has been inundated with consumer grievances about various obstructive practices by auto insurers. These include prolonged waiting periods, intricate questionnaires and other methods that potentially contravene California law, including Proposition 103. Such practices present obstacles for eligible drivers seeking to acquire or maintain auto insurance.
Central to the issue is the requirement for auto insurance companies in California to submit comprehensive rate applications for review and approval by the insurance commissioner before implementing rate changes. The complaints suggest some insurers might be engaging in activities not covered in their previously filed underwriting guidelines. Additionally, insurers must file new practices, like the use of questionnaires, with the department before implementation.
Another crucial requirement is for insurers to offer coverage to all individuals who qualify as “good drivers." This includes those licensed for at least three years, with no more than one point on their driving record, and not at fault in accidents resulting in injury or death. Unfortunately, it appears some insurers may not be providing “good driver” discounts to all eligible individuals and might be imposing unreasonable application requirements unrelated to set eligibility factors.
These unnecessary requirements include lengthy and confusing questionnaires, verification of employment or school information, and demands for extensive personal documentation. Such practices have the potential to discourage and delay eligible drivers from obtaining insurance and the discounts they deserve.
Lara's recent action sets the groundwork for future enforcement if needed. Bulletins issued by the department aim to clarify insurance law and regulations for insurance companies. Following this directive, several insurers have already ceased their obstructive practices, revised their underwriting guidelines and restored coverage to affected policyholders.
The department encourages California drivers facing issues with obtaining or renewing auto insurance to contact them at 800-927-4357. They also advise policyholders to comply with their insurer's requirements and retain documentation for any necessary complaints.
