AAA sets pace for auto insurance companies

Should drivers have to pay dramatically more for auto insurance simply because they live in Palm Springs rather than La Quinta or Palm Desert?
They shouldn't. That's why we were heartened to hear AAA plans to base rates primarily on a person's driving record, miles spent annually on the road and years of driving experience rather than ZIP codes. We hope other insurance companies follow suit.

Monday's move - affecting about a million policyholders across the state - finally begins to fulfill Proposition 103's mandate. And state voters approved the proposition in 1988.

Insurance companies have long fought the change through the courts, saying ZIP codes are an essential factor in assessing risks and costs. Granted, where one lives has some bearing on the potential for an accident and auto thefts. Communities with more inexperienced drivers and heavily traveled roads often do see high accident rates. Some communities suffer higher crime rates.

But by far what determines if one will file an insurance claim are other factors. More experienced drivers usually have low accident rates as they are better able to avoid and respond to a road hazard, both state and national transportation statistics show. In addition, those who drive more miles usually have high accident rates as they put themselves in harm's way more frequently.

Indeed, many people go years without an accident despite living in an area where collisions are frequent. Requiring that good driver to pay a higher rate hardly is fair or equitable.

Under insurance companies' current policies, ZIP codes can dramatically affect rates. In a quick survey of one insurance company, annual rates were higher by $326 in Palm Springs than in Palm Desert's 92255 delivery area, even though the lone variable was the ZIP code of one's residence. Living in La Quinta alone resulted in rates $228 lower than Palm Springs.

The differences are even wider in other areas of California, with annual rates hundreds of dollars apart in adjoining ZIP codes.

Certainly ZIP codes need to play a role in the formula for determining insurance rates. But they shouldn't be the primary factor.

In our computer age, rates easily can be based on an individual driver's characteristics rather than on a simple, generalized factor like ZIP codes.
It's time for other insurance companies to quit fighting Proposition 103 and follow AAA's move.