State Farm said yesterday that it filed for an 8 percent reduction in auto insurance rates with the California Department of Insurance, in addition to the initial pricing changes required by the new auto rating regulations.
Under the new regulations, which insurance trade groups are continuing to challenge in court after an unsuccessful attempt to stay their implementation, carriers when rating customers must give less weight to where they are domiciled.
State Farm said when combined with the company's $212 million decrease in 2004 and $110 million in 2005, the $204 million from the current rate reduction will bring the company's total savings for its more than three million California auto insurance policyholders to over a half-billion dollars since October 2004.
On Wednesday, the state Court of Appeals rejected insurance groups' effort to enjoin Insurance Commissioner John Garamendi's regulations, which emphasize a motorist's driving records as a rating factor over geography. A lower court rejected the stay request last week.
Approximately 2.8 million drivers will see premium decreases from the rate change. State Farm credits the series of rate reductions to improved loss trends.
If approved by the insurance department, a driver with three years continuous coverage will see his or her loyalty discount increase from 8 percent to 10 percent.
A policyholder with at least six years of continuous coverage will see his or her discount go from 16 percent today to 20 percent under the revised plan.
The discounts for insuring homes and autos with State Farm will increase from 10 percent to 12 percent for renters, 12 percent to 14 percent for condo owners and 15 percent to 17 percent for homeowners. Homeowners who also have a Personal Liability Umbrella Policy with State Farm will received a 20 percent discount, up from the current 18 percent.
State Farm is the third insurer to reduce rates in recent months. Carrier advocates who oppose the new regulations say the rate drops are due to good loss experience and are unrelated to the new scheme for rating drivers to set their premiums.
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