Mercury Auto Insurance Initiative Will Massively Hike Insurance Premiums

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By Doug Heller
Consumer Watchdog

Motorists pay surcharges of 73% or more for auto insurance in states where Mercury Insurance is allowed to penalize people for not having prior insurance coverage, according to Mercury’s own web site.

The Campaign for Consumer Rights released a video at http://StopTheSurcharge.org that shows how a deceptive 2010 ballot initiative sponsored by Mercury Insurance would legalize such surcharges in California, despite claims by Mercury that its proposal will not lead to higher premiums.

The video shows that Mercury Insurance charges Nevada drivers a $1,200 surcharge if they are not carrying auto insurance when they apply to Mercury Insurance.

While Nevada law allows for these surcharges, a provision of the 1988 insurance reform measure Proposition 103 prohibits companies from raising rates on Californians because they did not have auto insurance in the past. The proposed Mercury Insurance initiative seeks to gut that provision and allow insurance companies to surcharge people who have not driven previously, had a lapse in coverage, or have even missed a single insurance payment. It would force Californians to face the same steep hikes seen in Nevada and other states without California’s protections.

In the video, Harvey Rosenfield, the author of Prop 103, applies for auto insurance on the Mercury Insurance website two different ways. He begins by entering a Nevada address on both applications. On the first application, he answers yes as to whether he currently has automobile liability insurance and the second time he answers no.

The results are startling. When Harvey answers yes, his quote is $835.00 for six months, or $1670.00 per year. When he answers no, he does not have auto insurance, his quote jumps 73% to $1,448.00 or $2896.00 per year.

Contrary to the company’s claims, the Mercury Insurance initiative is a rip off, there is no question about it. This evidence confirms what California courts and other independent experts have concluded: that California drivers will pay more if Mercury’s initiative passes.  That means soldiers, seniors, college students and California families could all face huge penalties. This is more proof that you can’t trust Mercury Insurance.

Watch the video at StopTheSurcharge.org and look at the results. Or try it at home and see how much you will lose if this initiative wins.

Californians across the spectrum will be affected by this initiative.

*A senior citizen who stops driving for several months after surgery would be penalized when she tries to restart insurance coverage.

*A soldier serving on base in the United States would be penalized when he returns to civilian life in California and needs auto insurance again.

*A family whose coverage was canceled after missing just one auto insurance payment would be penalized even if they tried to restart coverage immediately after they were canceled.

*Anyone who gives up driving for public transportation or to bike to work would be penalized when they need a car and insurance again.

If insurers are allowed to penalize millions of Californians when they try to buy auto insurance, the number of uninsured motorists on California roads will go up and everyone’s premiums will increase as a result.

Mercury Insurance, California’s third largest insurance company, has already spent $4.5 million on the initiative and it’s executives refuse to engage with the media by directing questions to a front group, called Cal-FAIR, run by PR operatives and spokespeople.

Mercury has been prosecuted in civil courts for violating the provision of Proposition 103 that it now seeks to override. In another matter relating to Mercury overcharging customers, the Department of Insurance has written:

Mercury’s lengthy history of serious misconduct, and its attitude – contempt towards and/or abuse of its customers, the Commissioner, its competition, and the Superior Court – are all relevant to determining the penalty needed to best ensure the protection of the public from future violations and wrongdoing…Among Department [of Insurance] staff, consumer attorneys, and consumer victims of its bad faith, Mercury has a deserved reputation for abusing its customers and intentionally violating the law with arrogance and indifference.

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Doug Heller is a consumer advocate with Campaign for Consumer Rights, the campaign affiliate of Consumer Watchdog, opposing the Mercury initiative.