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California zip-code auto insurance rating

Notwithstanding the irrational straitjacket imposed years ago by Proposition 103, it remains the current practice for auto insurers in California to base their rates on a driver's geographical location -- that is, to charge less to drivers who live in localities with low rates of theft, vandalism, accidents or litigation. This policy has never sat well with trial lawyers, who prefer that the costs of litigiousness, especially in counties and cities where they are accustomed to doing well, be disguised as much as possible rather than feeding back to drivers in a direct way that might mobilize political resistance. Since what passes for a consumer movement in California is closely allied with trial lawyers, it is not a complete surprise that most of these groups formally oppose "geographic rating", and now the state's Insurance Commissioner, Democrat John Garamendi, has proposed banning the practice, a step that would ensure sharp rate increases in low-claim parts of the state. George Wallace and Martin Grace discuss; a Feb. 24 hearing is scheduled in San Francisco.



Rafael Mangual
Project Manager,
Legal Policy

Katherine Lazarski
Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.