New “Hands-Free” Law Impacts California Auto Insurance
August 18, 2008
At the beginning of this month, the state of California introduced its controversial “Hands-Free” law, which fines drivers up to $175 for using a hand-held cell phone (as opposed to a “hands-free” headset to talk on the phone) while operating their motor vehicles. According to statistics from the handful of states that have already started enforcing such laws, this new regulation might reduce the number of automotive deaths per year by up to 900. Now, the California Department of Insurance is starting to test the effects of the law. If the lawmakers’ optimistic prognosis pans out, California auto insurance policyholders might stand to benefit from reduced rates.
Steve Poisner, California’s Insurance Commissioner, explains that the predicted reduction in accidents will “make it less expensive for auto insurance companies to do business in California.” With the reduction in the number of accidents resulting from the new law, insurance companies “will have less clients,” according to Poisner.
It’s the responsibility of the California Department of Insurance to oversee the operations of insurance providers in the state of California, including auto insurance providers. The California Department of Insurance doesn’t directly control the rates charged by insurance companies, but it does have the power to limit what rates insurance companies can charge. In this way, the California is the state’s main liaison between auto insurance companies and legislators.
In this capacity, the Insurance Commissioner announced that the Department of Insurance intends to carefully examine next year’s accident statistics for evidence of a positive impact from the “Hands-Free” Law. Poisner pledged to “make sure those savings are passed on directly to the consumer” if the statistics do end up showing a positive correlation. At the same time, Poisner said, motorists who repeatedly violate the “Hands-Free” law will be penalized with increases in their auto insurance rates.
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