In a win for policyholders, a California court upheld consumer-friendly regulations requiring California insurance companies to base rates primarily on policyholders’ driving records. 

Last year, Commissioner John Garamendi approved regulations requiring insurers to base insurance rates on driving records, rather than  on where policyholders live.  Seems reasonable, right?  A driving record should be a fairly good predictor of whether you are going to have more accidents.  You’d figure insurance companies would be in favor of this, right?

Wrong. 

Garamendi’s regulations replaced rules approved in 1996 by former Commissioner Chuck Quackenbush that allowed insurers to arbitrarily set rates based on an insured’s zip code.  Insurers fought hard for these regulations.  They funded the campaign of Commissioner Quackenbush, who secured a court order allowing insurance companies to continue to base rates on a motorist’s zip Code. The judge who wrote that decision resigned two days later and went to work for a firm whose principal clients are insurance companies.  Read more »