Back in June 2010, a special-interest Proposition 17 appeared on the ballot papers. It was pushed through the electoral process by Mike D'Arelli of the Alliance of Insurance and Brokers. Before it got on to the ballot, there was a court case - a rite of passage for anything affecting consumer rights in California. Both the "for" and "against" camps pushed for changes in the wording of the proposition and of the rebuttal. Judge Allen Sumner tweaked the wording on both sides leaving no one satisfied, but the Proposition went to the voters. There was a major advertising campaign paid for by Mercury Insurance. It's estimated it provided a war chest of $16 million. There were ads everywhere and, when the dust had settled, the Proposition was defeated by 52 to 48% - not the most convincing of rejections. So what's the issue?

Mike D'Arelli argues insurers should be allowed to look at your past coverage history to decide on the premium rate. So, for example, if you currently enjoy a loyalty discount from your current insurer, and you are looking around the market to decide whether to switch, all potential insurers should be allowed to match that discount. The expectation is that this will improve price competitiveness and, in the long run, reduce rates for drivers. But, let's say there's a gap in the coverage history. Perhaps you moved into an inner city area where it was inconvenient to garage your car and there was good public transport. Giving up your vehicle while living there looked at good option. From the point of view of insurers, this means you are losing experience. When you practise a skill every day, you consolidate what you know and adapt to the evolving behavior on the road. Take a break and there's a slight increase in the risk of an accident while you get back into the groove.

The "no camp" seized on this as an excuse to raise premium rates during a recession without having to explain or justify premium hikes. Young drivers going off to college, members of the military going overseas, and seniors could all face rate increases if there was a gap in coverage. This could be hundreds of dollars at a time when everyone was facing financial hardship.

Well, Mike D'Arelli is back again with a newly worded initiative. He claims to have listened to all the objections raised last year. The new wording will ensure more people see rate reductions than increases. If this survives a review by California's Attorney General, the next step will be collecting half-a-million signatures from registered voters to qualify for the next ballot.

So think about the issue as it might apply to your state. Would you like discounts to be fully transferrable when you switch insurers? This would force more competition on auto insurance rates. Or do you think insurers would just use any gap in cover, no matter what the reason, to justify an increase in premiums? Remember what gets tried out in California often finds its way across borders into your state. Perhaps a gap in your cover during the last five years might see your rates rise when the next round of car insurance quotes comes to you.