Consumer Federation of California

SACRAMENTO, Calif. (KGO) — A new initiative on car insurance sounds like it gives drivers a break when it comes to continuous coverage with the same company and rates, but critics aren’t so sure.

The 2012 Automobile Insurance Discount Act allows California drivers to get a break in price for continuous coverage, even if they decide to switch companies. In other words, your discount is portable. State law currently prohibits insurance companies from looking at past coverage when quoting premiums.

"If this initiative passes, consumers own that discount. It allows prices to be more competitive. It allows agents and brokers to be able to shop for better deals for California consumers," said Rachel Hooper, a campaign consultant.

Hooper says it’s much like the cell industry when consumers could not move their phone number to a different carrier to take advantage of a better price, now that it’s allowed, she says rates are more competitive there.

"This is not about discounts, this is about surcharge," said Richard Holober from the Consumer Federation of California.

Consumer Federation of California says the initiative isn’t good for people who have been uninsured for a time, even if because they gave up their car. The cost of getting reinsured will jump. Coverage doesn’t determine whether you’re a good driver.

"Simply the fact that you had a break in coverage in the last couple of years will be held against you and you will face massive surcharges of 40, 50 percent or more," said Holober.

Mercury Insurance spent $16 million to try to pass a similar initiative in 2010, but it failed. This time, the measure includes changes to appease critics, and the billionaire CEO of Mercury personally donated more than $8 million to the effort, not the company — a move that government watchdog groups say may mean the campaign is trying to hide something.

"It looks like they are. It looks like they don’t want voters to know its Mercury Insurance company behind this measure," said Derek Cressman from California Common Cause.

The campaign says those allegations are false and that the CEO George Joseph is just trying to leave a legacy.

"He’s a great guy, 90 years old, World War II vet, and he really wants to do what’s best for California," said Hooper.

It’s unclear how much influence the Occupy movement will have on the November election, but clearly members have questioned the motives of billionaires.