Santa Monica, CA – Low-income motorists with good driving records will be able to purchase California’s innovative Low-Cost Auto Insurance Program online with the enactment of AB 1024 (Hueso), which was signed by Governor Jerry Brown this weekend. Under the new law, California’s Department of Insurance will work with the California Automobile Assigned Risk Plan (CAARP), which runs the Low-Cost program, to develop rules for selling the special low-limits auto insurance policy through the website www.MyLowCostAuto.com as well as other approved sites managed by certified insurance agents.
Eligible drivers pay between about $250 and $360 per year for the basic Low-Cost Auto Insurance policy.
"At a time when the economy has hit so many Californians so hard, an easily accessible low-cost insurance policy could make the difference for people desperately trying to avoid driving uninsured or having to give up their cars altogether," said Doug Heller, Executive Director of the nonprofit, nonpartisan Consumer Watchdog.
Consumer Watchdog sponsored the legislation in order to reduce the number of hurdles low-income drivers face when trying to get insured through the program. Until now a qualifying driver was required to find an agent certified to sell the policy and process the paperwork with the agent in order to join the program. While that often proved difficult enough, especially if the customer didn’t have all the necessary documentation when they arrived at an agent’s office, Consumer Watchdog also found that many insurance agents do not follow existing law requiring them to sell or even provide information about the low-cost program to customers.
Under California law, every insurance agent in the state is required to inform prospective insurance policyholders about the Low-Cost program if the driver seeks to purchase a basic auto insurance policy. Consumer advocates say that insufficient public awareness about the program and the unwillingness of insurance company agents to fulfill their obligations have left thousands of low-income, good drivers uninsured despite qualifying for the program. AB 1024 gives Californians a much more efficient way to get insured without having to go on a wild-goose chase to find someone who will sell them the policy, Consumer Watchdog said.
“We have tough laws in our state requiring people to buy auto insurance, but we haven't made it easy enough for low-income Californians to get a policy,” said Heller. “The Low-Cost Auto Insurance Program is a lifeline for families who need to drive but can’t afford the auto insurance advertised on TV. This new law will make it significantly easier for qualifying good drivers to buy California’s unique low-cost policy and comply with state insurance laws.”
Background on California's Low Cost Auto Insurance Program
Since the inception of this one-of-a-kind program, more than 60,000 Californians have purchased a Low-Cost Auto Insurance Program policy. The vast majority of those customers had been uninsured at the time they purchased the policy. The program is structured to be entirely self-sustaining; it is not subsidized by government funds, nor is it subsidized by other drivers who purchase traditional auto insurance. Consumer advocates note that there have been more than 3,000 auto accidents and more than $8 million in claims paid that were covered by Low-Cost Program policies and would likely have been uninsured accidents if it weren't for the program.
The California Low Cost Auto Insurance policy includes coverage for $10,000 in bodily injury per person, $20,000 per accident and $3,000 in property damage. Though it is less than the standard basic liability policy ($15,000/$30,000/$5,000), it is considered compliant with the state’s minimum coverage requirements. In order to qualify for the program, drivers:
* must have no more than one point on their driving record,
* must be 19 years old or over, with at least three years driving experience;
* cannot have an income exceeding $27,225 (or $55,875 for a family of four); and
* must drive a car valued at less than $20,000.
Although, the timeline for rolling out the new "buy online" program is not set, consumer advocates will call on CAARP to expedite the rulemaking process in order to make the online policies available as soon as possible. Drivers who want to find out more about the policy can go to www.MyLowCostAuto.com or call 1-866-602-8861.
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Consumer Watchdog is a nonprofit, nonpartisan consumer advocacy organization with offices in Washington, DC and Santa Monica, CA. Consumer Watchdog's website is: www.ConsumerWatchdog.org.