Low-Cost Auto Insurance Program in California is Gaining Popularity

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Several Californians enjoy the benefit of enrolling in the
state’s Low
Cost Automobile Insurance
Program (CLCA).

Since its inception in July 2000,
the program has provided ‘low-cost liability insurance’ to car owners
with good driving records that do not have the financial capability to
avail of market-rate insurance.

The economic recession in the previous year along with a state
initiative to promote the CLCA has successfully encouraged more
participation last year. The program’s policies are agreed upon by
licensed insurance companies while the state administers it.

Two years ago, Shasta County reported 175 successful sign-ups. It
became first county to adopt the new measure since October 2007.

In 2009, California’s participation rate increased by 19% compared to
2008 figures.

Some 7,500 residents were approved in 2009 with 727 applications filed
in April of the same year. 6,306 residents signed up and were approved
in 2008.

In the state, drivers are compelled to have a minimum of $15,000
(bodily injury liability coverage per person), $30,000 (per incident),
and $5,000 (for property damage). To offer more affordable policies
through the program, eligible drivers are permitted to avail of lower
standard limits: $10,000, $20,000 and $3,000.

Interest spiked in the state as TV advertising proliferated in
countless households.

Department of Insurance spokesman Mark Billingsley revealed that the
program is not at all subsidized by taxpayers. He explained that each
insurance policies sold includes a 30-cent assessment. This goes to the
coffers of the Department of Insurance to fund auto-related programs,
including the CLCA. 5 cents goes into operations and marketing costs for
the program.

Rates are adjusted and set per year in each county in the state.

Northern California Insurance owner Kelly Bickett said that some
brokers and agents hesitate from writing CLCA policies since there are
‘little return’.

Bicket is still optimistic for her business though. She admits that
there is much paperwork to go through since collaborating with the state
requires a special license.

Billingsley admitted that there were reports of complaints dealing
with paperwork even since the inception of the program. However, with
the automation of the application process online, agents will only have
to work through 20 minutes to successfully encode all essential

In typical automobile policies, agents usually get around 15% to 20%.
But for writing CLCA policies, agents only receive a 12% commission.

Billingsley said that more money can be raised ‘through volume’ if
companies are able to actively promote more residents to sign-up.
However, Billingsley clarified that the intention is not for ‘agents to
make a lot of money’ but to help consumers.

Consumer Watchdog
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