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home / insurance / in the media

Associated Press
Sep 19, 2002

by Simon Avery

Group says California auto insurance changes would hurt soldiers

LOS ANGELES: U.S. soldiers returning to California from overseas or out-of-state duty would be hurt by a proposal to let auto insurers raise premiums for drivers with lapsed coverage, consumer activists said Thursday.

A controversial bill awaiting the governor's signature would allow insurance companies to offer discounts to drivers with continuous coverage, and add a new surcharge on drivers who were previously uninsured or had a lapse in coverage.

Among those hurt would be reservists who cancel coverage while posted overseas, said Douglas Heller of the Foundation for Taxpayer and Consumer Rights, a Santa Monica-based consumer watchdog group.

The measure would add at least $200 a year to the cost of a policy for anyone with gaps in their coverage, he said.

Reserve soldiers tend to make less money when they are called up than at their regular job, so they try to cut whatever unnecessary expenses they can before leaving, including auto insurance, said Theodore Byrne, an Army Reserve major in the Judge Advocate General Corps.

Laws exist to help ease the financial burden. For example, reservists have a legal right to get out of a new lease when they are called up. But the proposed bill would not provide any protection for auto insurance, Byrne said.

"Soldiers who serve their country honorably - you don't put additional burdens on them when they return," he said.

The Foundation for Taxpayer and Consumer Rights singled out insurer Mercury General for lobbying Gov. Gray Davis to sign the bill. The Los Angeles-based insurance company has contributed $220,000 to the governor since his election, the group said.

"We were very troubled to hear that on Sept. 12 Gov. Davis received a $25,000 check from Mercury Insurance. It's totally without subtlety," Heller said. "It's an attempt to buy legislation."

George Joseph, chairman and chief executive of Mercury, denied the accusation and said the company has been active in the Legislature for years.

"We've regularly supported Gov. Davis going all the way back to 1995. I'm curious why they're not troubled by any other of our donations," he said.

The main purpose of the bill, Joseph said, is to allow people to take discounts earned over time to competing insurance firms.

Soldiers are not likely to be affected by the new rule because many of them have wives who maintain their car insurance, he said.

Those who do cancel their policies have the option of choosing another insurer, including the USAA, which provides insurance specifically for military personnel, Joseph said.

Russ Lopez, a spokesman for Davis, did not immediately return a call requesting comment.

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