LOS ANGELES, July 10 (UPI) -- The fourth-largest provider of auto insurance in California plans to base rates on safety and distance driven, and other insurers could follow suit.
The Automobile Club of Southern California would abandon the traditional system of basing premiums on a customer's ZIP code. The change could reduce annual premiums by $133 million for the insurer's nearly 1 million policyholders, and could prompt other insurers to follow suit, The Los Angeles Times reported.
The auto club was expected to announce the change on Monday with California Insurance Commission John Garamendi.
Consumer advocates say rates based largely on ZIP Codes unfairly force urban residents to pay higher premiums than suburban and rural drivers with similar driving records pay.
The auto club expects the new rate-setting structure, set to take effect in December, will result in an average reduction of 7 percent in premiums for 88 percent of the 993,000 drivers it covers.
