Insurance Space

Mercury General Corp. announced Tuesday that it will cut auto and homeowner insurance rates for about 1.7 million customers this year, projecting the savings at $61 million.

Most of the savings comes from a 3-percent reduction in auto insurance rates that took effect last month. Mercury, which is the third-largest auto insurance in California, reduced annual rates by about $30 per vehicle for 1.5 million customers.

Mercury also planned to drop its homeowner insurance rates by 10 percent as of August, saving 224,000 customers about $80 to $100 a year, depending on where they live in the state.

Renter insurance rates will drop 33 percent for savings of $80 to $85 a year. Mercury insures 20,000 rental units in California.

“Faced with skyrocketing food and gasoline prices, Mercury’s policyholders won’t have to worry about the cost of their insurance,” Mercury Chairman George Joseph said in a statement.

The cuts were announced at a news conference by Mercury and California Insurance Commissioner Steve Poizner, who already approved the auto rate reductions and said he planned to approve the others.

“These rate reductions could not come at a better time,” Poizner said. “The economy is sour, California’s economic engine is sputtering, and these rate reductions will make a big difference to folks that are struggling to make ends meet right now.”

The rental reduction may benefit the estimated 40 percent of Californians who rent, including people who may have lost their homes to foreclosure because of the subprime crisis, insurance officials said.

The reductions might also put pressure on other companies to lower their rates, officials said.

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Tags: Auto Insurance, Home Insurance