SACRAMENTO — A state judge handed major insurance companies a setback late Wednesday, saying he was prepared to reject their drive to block new regulations on automobile insurance.

At issue are new rules from the Insurance Department that require that premiums be based on motorists driving records and experience, rather than their neighborhood or ZIP Code. They are to take effect Monday.

On Wednesday, Sacramento Superior Court Judge Loren McMaster issued a tentative ruling denying a request for a preliminary injunction from a trio of insurance industry trade groups and the California Farm Bureau Federation.

The groups argued that imposition of the new government regulations prohibiting so-called ZIP Code ratings were arbitrary and would cause "irreparable harm."

Insurers failed to show that the rules by state Insurance Commissioner John Garamendi were illegal, McMaster wrote.

The tentative ruling, which will be discussed and probably reaffirmed in a court hearing this afternoon, marks another victory for Garamendi and the consumer groups who contend that current industry rating practices punish urban drivers with unfairly high rates.

Garamendi says that Proposition 103, an automobile insurance initiative approved by voters in 1988, requires that premiums be based primarily on an individual's Department of Motor Vehicles record, number of years behind the wheel and annual miles driven.

"I'm obviously very, very pleased with the way the court has analyzed the lawsuit," Garamendi said. He predicted that all auto insurers would have new rating plans in place by the end of the year.

Two companies, the Auto Club of Southern California and USAA, have already submitted new premium schedules to the Insurance Department. Other companies face a Monday deadline.

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By Marc Lifsher, Times Staff Writer

Copyright 2006 Los Angeles Times