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AAA Reduces Auto Insurance Rates

Oct 24, 2007

By Evangeline Mitchell

AAA of Northern California announced an average 6.5 percent rate reduction on Wednesday for its auto insurance policy holders, effective Dec. 15.

The rate reduction, which stems from lower claim costs and competition in the auto industry, will result in about a $106 annual savings for the average policyholder.

AAA has close to 1 million automobile insurance policyholders in Northern California, including 519,000 in the Bay Area, said AAA spokeswoman Jenny Mack.

"I'm very pleased to announce that thousands of California motorists will be seeing tremendous savings in auto insurance premiums," Insurance Commissioner Steve Poizner said in a written statement announcing the rate reduction sought by AAA that was approved earlier by his office.

AAA is the sixth largest provider of auto insurance in California.

AAA is also among 22 auto insurers now in compliance with Proposition 103, which requires insurers to give more weight to a motorist's driving record, annual number of miles driven and years of driving experience than other factors such as ZIP code, gender and marital status.

Insurers have until next July to be in full compliance with Prop. 103.

AAA expects to start writing policies under the Prop. 103 regulations by the end of the year, according to Mack.

Over the last year, other insurers have also announced rate reductions for California drivers as a result of lower claims costs and industry competition. In August, GEICO Insurance announced a 10.8 percent average rate reduction, or $150 per policy, for its 436,000 state policyholders.

In March, State Farm, the largest provider of auto insurance in California, announced a 10.1 percent average rate reduction, or $86 per policy, for its 3 million state policyholders.

On Wednesday, AAA also announced up to a 5 percent rate reduction for policyholders who drive hybrid and alternative fuel vehicles. That discount goes into effect immediately.

"This is something we are offering because of our commitment to promote awareness of alternative fuels," said Mack.

The discount applies to factory-built hybrid cars and vehicles that are capable of running ethanol, electricity, natural gas or propane.

The amount of the discount depends on the type of AAA coverage that is selected.

Other insurers have also jumped on the green bandwagon.

Travelers Insurance offers drivers of hybrid vehicles up to a 10 percent discount -- while Farmers Insurance provides up to a 5 percent discount to owners of a hybrid or alternative fuel vehicles.

For more information about the AAA rates, call 1-877-323-4222.

Evangeline Mitchell covers personal finance. Reach her at 925- 952-2690 or

Originally published by Evangeline Mitchell, BUSINESS WRITER.

(c) 2007 Oakland Tribune. Provided by ProQuest Information and Learning. All rights Reserved.

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