Farm Bureau seeks fair auto insurance rates

» March 1, 2004 «

Saying that automobile insurance rates should be based on fair and equitable standards, the California Farm Bureau Federation urges rural residents to oppose a plan to be discussed at field hearings this month.

The plan--backed by the cities of Los Angeles, San Francisco and Oakland and by a number of consumer groups--would reduce auto insurance rates for urban drivers by raising rates for rural drivers.

The California Department of Insurance will hear public comments about the plan at workshops scheduled March 3 in Chico and March 9 in Fresno.

"We urge our members and other rural drivers to oppose this unreasonable plan," said CFBF President Bill Pauli. "We estimate that more than 60 percent of California drivers will see their auto insurance rates jump, if this plan goes into effect. It penalizes rural drivers--and many suburban drivers, as well--in order to reward drivers in the state's largest cities."

If the petition by large cities is adopted, rates would increase for drivers in 52 of the state's 58 counties, according to Pauli. A jump in rates would hurt rural residents, whose incomes are generally lower than those of residents in heavily urbanized counties.

"The drivers being required to foot the bill would be those who can least afford to pay higher premiums," said Pauli. "It is only reasonable to conclude that the risk of automobile accidents and costs associated with accidents depends on where cars are driven. Rural drivers have far fewer insurance claims compared to urban drivers."

According to a study by four large California private passenger automobile insurance companies, the impact of the petition could lead to sharply higher rates for rural areas. More than 60 percent of California drivers, about 13.5 million, would see a rate increase. Nearly one-third of all drivers would absorb rate hikes greater than 10 percent.

"Clearly the changes proposed in this petition are not based on costs or risks," said Pauli. "Large numbers of drivers would get an unexpected, unfair and substantial hike in their rates, which will damage family finances," said Pauli.

Pauli urged residents in rural and suburban areas to contact the California Department of Insurance, Consumer Communications Bureau, 300 S. Spring Street, South Tower, Los Angeles, CA 90013, or call (800) 927-4357. Comments can also be sent via the Web at www.insurance.ca.gov; click on "Contacting CDI," then on "Consumer Inquiries and Assistance."

More information about the insurance study and the impact on rural drivers can be found at www.cfbf.com. Information on the two public workshops:

• Wednesday, March 3
  • 6 p.m. California State University, Chico
  • Bell Auditorium, Room 210
  • Corner of 2nd Street and Hazel, Chico
• Tuesday, March 9
  • 6 p.m. California State University, Fresno
  • Craig University Business Center
  • Peters Building, Room 191
  • 5245 North Backer Ave, Fresno

Contact:
Phone: 916/561-5550
news@cfbf.com

Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item.