Bill aids uninsured, poor drivers

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Low-cost policies could be offered in Fresno Co.

Fresno Bee (California)

SACRAMENTO, CA — Fresno County drivers with low incomes and few accidents might soon be able to buy basic car insurance at bargain prices.

Gov. Schwarzenegger is considering a bill that would expand a program offering low-cost insurance in Los Angeles and San Francisco counties to six more counties, including Fresno.

Under Senate Bill 20, Fresno drivers who qualify could get liability coverage for less than $350 per year. Under the program, drivers in Los Angeles pay $347 per year and drivers in San Francisco pay $314 per year.

In 2000, nearly 78,000 vehicles in Fresno County were not insured, accounting for about 17% of all registered vehicles, according to statistics from staff of Lt. Gov. Cruz Bustamante, who worked to include Fresno County in the program.

Low-cost insurance could be offered to drivers in Fresno County as early as April if the bill becomes law.

“Most people would get insurance if they could afford it. It’s not something people really want to do without,” said Steve Green, a spokesman for Bustamante, a Dinuba native.

The California Low Cost Automobile Insurance pilot program was created in 1999 to provide good drivers with low incomes an affordable auto insurance option so they can drive legally.

State law requires drivers to have proof of insurance.

The program started slowly, but it picked up once drivers in Los Angeles and San Francisco counties learned it was available.

Since the program was founded, about 16,900 policies have been issued. More than 9,000 policies were in force as of February.

To qualify, a driver’s annual household income cannot exceed 250% of the federal poverty level. In February, the annual gross income threshold was $23,275 for one person and $47,125 for a four-person household.

Applicants must be at least 19 years old and continuously licensed for three years.

They must also be good drivers — having no more than one at-fault property damage accident or no more than one point for a moving violation and no at-fault accidents involving bodily injury in the past three years.

The policies are simple, providing $10,000 for each person injured with a maximum payout of $20,000. Up to $3,000 in property damage coverage also is included.

Policies don’t cover a driver’s own medical expenses or car damage. For a higher premium, drivers can get limited medical and uninsured motorist coverage.

In comparison, basic regular policies typically offer $15,000 for each person injured up to a total of $30,000 and $5,000 in property damage coverage.

The legislation to expand the program also allows two low-cost policies per person and increases the maximum value of each covered vehicle to $20,000 from $12,000.

“Under the law, you are obligated to have liability insurance to protect the person you might hurt,” said Doug Heller, executive director of the Foundation for Taxpayers and Consumer Rights, a sponsor of the legislation. “Now, they are protected in case you cause an accident.”

The bill calls for the program to end in 2011, giving lawmakers an opportunity to evaluate its effectiveness.

Schwarzenegger hasn’t taken a position on the measure but supporters expect him to sign it.

Originally, the bill’s author, Sen. Martha Escutia, D-Whittier, wanted to extend the program indefinitely — an idea the insurance industry didn’t like because it wants the program to be evaluated periodically.

Escutia scaled back her plans and made other small changes to win support.

In addition to Fresno County, she chose San Diego, Orange, San Bernardino, Riverside and Alameda counties for the expanded program because they have many low-income residents and uninsured vehicles.

Michael Gunning, senior legislative advocate with the Personal Insurance Federation of California, an insurance trade group, likes the program because drivers get used to paying premiums and eventually might switch to regular policies.

Eventually, premiums on regular policies could go down if the number of uninsured motorists decreases. “That’s the general belief, but I think we’re a ways from it,” Gunning said.

Insurance companies work with the California Automobile Assigned Risk Plan, a state-created group that administers the program, to offer the low-cost policies to qualified drivers.

The program pays for itself through insurance premiums.

After April, the insurance commissioner could expand the program to additional counties at his discretion under Escutia’s bill. Sen. Jeff Denham, R-Merced, requested that provision.

Denham said the program could benefit the entire Valley, noting its high unemployment rates.

“If it is such a great low-cost insurance program, it should be expanded to all parts of California,” said Denham, whose district includes Merced and San Benito counties and parts of Madera, Monterey and Stanislaus counties.

“Low-cost insurance would be beneficial in my district.”
The reporter can be reached at [email protected] or (916) 326-5541.

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