Fox Sports is reporting that California will soon be the first state to require all auto insurance companies to use the “automobile insurance definition” of “car insurance.”
The news comes on the heels of a similar California law in Arizona.
In that state, insurance companies are required to follow the same standards for coverage that are applicable to drivers in most other states.
The California law, signed by Gov.
Gavin Newsom in December, takes effect in January.
It also includes a requirement that insurance companies offer coverage based on the “cost of living,” which would have been the case in most states prior to this rule.
The change would also allow insurers to limit claims based on a person’s “income,” but it would not affect coverage based solely on a family size, such as those that exist in other states, or coverage based purely on age.
“There is no limit to what insurers can do with this,” Newsom said.
“It’s not about how much money you have, but it’s about how many people are with it.”
The new definition will likely be the last change to the California law before it takes effect.
The state is expected to take the lead in enforcing the change.
Newsom said the new rule was made necessary because California was “getting hammered by a massive surge in car insurance claims” and “we’re not doing enough to prevent them.”
The California insurance industry has seen a massive spike in claims since the start of the year.
The number of car-related claims in the state more than doubled in the first seven months of 2017 compared to the same period last year, with an average of nearly 10,000 car-specific claims per day.
California Insurance Commissioner Tom Steyer is not concerned about the number of claims coming out of the Golden State.
He said there is already enough consumer data showing that auto insurance is a valuable insurance policy.
“We’ve got to get more people insured,” Steyer said.
He noted that the insurance industry was working on a plan to provide universal coverage and that he was confident the rule would be implemented in time for the state’s January 1, 2019, elections.
California will also begin enforcing its new “cost-of-living” definition for car insurance, which is set to take effect in 2020.