A plan would allow auto insurers to hike rates significantly
higher for rural drivers
Automobile insurance rates for San Benito County drivers will
soon increase under a plan being studied by the state Department of
Insurance. But while Hollister drivers could face a jump of up to
12 percent, Gilroy drivers are looking at a maximum hike of 6
percent.
Are Garlic City drivers safer than their neighbors south of the
county line? No, but San Benito County is considered rural whereas
Santa Clara County is considered urban.
A plan would allow auto insurers to hike rates significantly higher for rural drivers
Automobile insurance rates for San Benito County drivers will soon increase under a plan being studied by the state Department of Insurance. But while Hollister drivers could face a jump of up to 12 percent, Gilroy drivers are looking at a maximum hike of 6 percent.
Are Garlic City drivers safer than their neighbors south of the county line? No, but San Benito County is considered rural whereas Santa Clara County is considered urban.
Not sounding fair? The San Benito County Farm Bureau certainly doesn’t think so. The Farm Bureau calls the new rates unfair to rural Californians and will join the statewide Farm Bureau Federation in opposing the changes during a public hearing at the end of the month.
Nancy Griffin, executive manager with the San Benito County Farm Bureau said that rural drivers seem to be singled out because they drive more miles, but what isn’t taken into consideration is the fact that the traffic those drivers face is not as heavy as their urban counterparts.
Few would argue that the chances of a being in an accident are far greater merging across lanes at the interchange of U.S. 101 and I-280 in San Jose than driving down Hwy. 25 to Tres Pinos.
The proposed increases were suggested following the release of a study commissioned by the state department of insurance. The study used data from eight large insurance companies that collectively write 55 percent of the private passenger auto insurance in California.
The study shows that average auto insurance rates would rise in 52 of California’s 58 counties. The California Farm Bureau Federation analysis of the information shows that the plan will raise auto insurance rates for most Californians, but that rural drivers would bear a disproportionate share of the increase.
The Department of Insurance was not able to comment on the proposal by press time.
The insurance department’s proposal would require insurers to give artificially high weight to driving record and annual mileage in setting auto insurance premiums, while giving artificially low weight to a driver’s place of residence, the Farm Bureau said. While rural drivers have far fewer auto insurance claims than drivers in cities, they also tend to log more miles than their urban counterparts.
“So, while the Department of Insurance didn’t set out to penalize rural drivers, that’s exactly what they did,” said Dave Kranz, a spokesman for the California Farm Bureau Federation.
The Farm Bureau’s main complaints are that the changes would balance the rate decreases in larger urban areas on the backs of the rural areas, forcing the rural and suburban drivers to subsidize the rates of urban drivers.
Compounding the issue is that statistically rural drivers have lower incomes than the urban drivers who would receive significant insurance rate reductions.
The move could have other pocketbook effects as well. If agricultural producers and delivery services have to pay for additional insurance, those costs get passed along to the consumers.
