Insurers say reform costs Mid-Valley more

Insurance Commissioner John Garamendi wants to change how auto insurance rates are structured.

Rural insurers and Mid-Valley Assemblyman Doug LaMalfa say Garamendi's plan would overcharge rural Californians.

The change would decrease urban rates while increasing those in Yuba City and Marysville by as much as 15 percent. Rates in areas such as Colusa could increase 20 to 25 percent, said LaMalfa spokesman Willie Preston.

Under Garamendi's proposed changes, released in December, auto insurance would be based on three factors: a motorist's driving record, years of driving experience and miles driven.

Currently, agents help determine rates by also factoring in ZIP code, marital status and school grades.

“The idea is to make (auto insurance) based more on people's records. It benefits the Bay Area,” said Willows-based State Farm agent Lynda Kelly.

Under Garamendi's proposal, rural drivers could pay as much or more than urbanites, who are currently considered more crash-prone, said LaMalfa, R-Richvale.

Garamendi's plan does not account for the increased risk of accidents in more populated areas, Preston said.

“Our rates are already too high. We don't have the traffic or commutes people have in Sacramento, but our insurance is the same,” said Colusa-based State Farm agent Ralph Newlin.

Kelly said rates in Willows are already higher than those in Chico.

LaMalfa accused Garamendi of ignoring rural Californians in favor of the urban vote. Garamendi is running for lieutenant governor in 2006.

“He has brought this issue up time and time again and was shot down each time because everyone outside of LA and the Bay Area found out their rates were going up,” LaMalfa said in a statement.

Newlin said Garamendi should let the market place determine insurance rates.

“It should be based on what it costs to cover losses, plus a little profit,” he said. “And it should be set locally. To have a flat rate throughout the state is just ridiculous.”

Appeal-Democrat reporter Eve Hightower can be reached at 749-4724. You may e-mail her at ehightower@appeal-democrat.com.