Signature gathering begins this week on an initiative scheduled for the 2010 ballot which will fix an inconsistency in the law, expand a discount, and lower auto insurance rates for millions of California consumers who continually maintain auto insurance coverage.

Under current law, insurers can give their own customers a discount for having maintained continuous auto insurance coverage (sometimes called the loyalty discount), but that discount is not portable if the customer wants to switch insurers.

The Continuous Coverage Auto Insurance Discount Act ensures all drivers who maintain their automobile insurance coverage are eligible for this discount even if they change their insurance company. Who benefits? Consumers do. Eighty-two percent of California drivers have auto insurance as required by law. This includes working families, single parents, elderly and young drivers.

By allowing insurance companies to offer the same discounts to all customers, this measure makes the auto insurance market more competitive. To attract new customers and keep their existing ones, auto insurers will have to offer lower prices, better plans and better service.

The vast majority of states already allow insurers to offer this discount to existing and new customers. This measure will bring California in line with Texas, New York, Oregon, Washington and Florida, to name a few.

Insurance companies will continue to be required to base your auto insurance rates primarily on your driving safety record, miles driven annually and driving experience. And, other discounts, like the good driver or student discount, will remain in place.

The measure is supported by Consumers First, Consumers Coalition of California, California Alliance for Consumer Protection, California Black Chamber of Commerce, California Mexican-American Chamber of Commerce and others because we support more competition, lower prices for all, and giving companies the flexibility to reward continuous insurance coverage.

The measure is being spearheaded by Mercury Insurance, no doubt because it wants to offer this discount to lure new customers and increase its business in California. But the only way it – or any insurer — can gain market share is by offering better rates or plans than the competition.

And that, of course, means consumers will have more options and lower prices. That’s a very clear benefit and one that deserves voter support.