California insurance laws and regulations are often changing.

In August 2006, amendments to regulations regarding the use of certain auto insurance rating factors went into effect in California.

CarInsurance.com believes that consumer protections should be in place for all California residents. When the government tries to create protections sometimes it removes competition and quickly raises car insurance rates instead of protecting consumers. In effect, some consumers rates are higher to fund the protections of others.

With the latest changes. the new revised regulations require insurers to base their auto rates more on an insured’s driving record. No longer can insurers look at the ZIP code which is typically used to base rates upon the amount of accidents and claims incidents that occur in that area.

Under Proposition 103, auto insurance rates are required to be based on a driver’s safety record, mileage driven per year and years of driving experience. In addition, insurers are allowed to use 16 optional rating factors that have been approved by the California Insurance Department. Companies look at many factors when calculating insurance rates. Optional rating factors include things such as the type of vehicle driven, vehicle characteristics (for example, the car’s safety features), marital status and where the vehicle is garaged.

With the changed regulations the California Insurance Department says the required rating factors must be given more weight than the weight assigned to any one of the individual optional rating variables, in the premium calculation. This is a change from the former regulations, which provided that the optional rating factors that insurance companies use, averaged together, had to be given less weight than the three required rating factors of driving record, annual mileage and years of driving experience. Therefore, driving record, annual mileage and years of driving experience will affect the insurance rate more than factors that are currently used.

Like all regulatory effects toward insurance, although rates will decrease overall in the short term, in the short term there will be as many individual policyholder increases as decreases. In the long term, rates typically increase.