The San Francisco Chronicle

Starting this year, more low-income San Francisco and Los Angeles residents will qualify for cheap, bare-bones auto insurance, and on March 1, the price will fall even further.

Although the California Low Cost Auto Insurance Program has been around since 2000, only about 4,000 policies have been sold, mostly in Los Angeles.

That’s because most people who were poor enough to qualify under the original program generally didn’t own cars, says Doug Heller, senior consumer advocate with the Foundation for Taxpayer and Consumer Rights.

Another reason: The basic low-cost policy provides liability coverage only, no collision or medical benefits. If people have few assets to protect and are having trouble making ends meet, they’ll probably forgo liability insurance.

To broaden the program, the state Legislature last year agreed to raise the income limits and lower the cost.

To qualify, consumers can now earn up to 250 percent of the federal poverty limit, up from 150 percent under the original rules.

A single person earning up to $22,150 and a family of four with up to $45,250 per year in annual gross household income now qualify.

On March 1, the annual cost of the bare-bones policy will fall to $314 from $410 in San Francisco, and to $347 from $450 in Los Angeles. The coverage will remain the same. Rates were able to come down because claims were not as great as initially expected.

Unmarried men younger than 25 pay a 25 percent surcharge.

The policy is available only to residents of San Francisco and Los Angeles counties, although proponents want to expand the pilot program to other areas.

There are other strings attached: Policyholders must be “good drivers,” which means that they have been driving for at least the previous three years and have no more than one traffic violation or minor at-fault accident in the past three years.

College students claimed as a dependent are excluded.

The policy won’t cover cars worth more than $12,000.

No household may have more than two low-cost policies.

The policy provides less coverage than even the most basic standard auto insurance policy.

For bodily injury or death, the low-cost policy provides up to $10,000 liability coverage per person per accident and $20,000 total for all people in one accident. It also provides up to $3,000 in property damage.

The cheapest standard policy provides $15,000 per person and $30,000 per accident for bodily injury and $5,000 in property damage.

However, the low-cost policy will satisfy state financial responsibility laws, which require drivers to carry liability coverage.

In addition to meeting state laws, Heller says there’s another reason motorists who are uninsured should consider purchasing auto insurance.

“If someone hits you and you don’t have insurance, you have limited rights of recovery” against the at-fault driver, he says.

In 1996, a state law was passed that said “if a criminal, a drunk driver or an uninsured motorist is an innocent victim of an auto accident, the victim can only collect economic damages, not pain and suffering,” Heller says.

For example, if your child is killed in an auto accident, and you didn’t have insurance, you might not be able to collect anything from the driver at fault, because there are generally no economic damages when a child dies. If you have insurance, you could probably collect for pain and suffering.

People who buy the basic low-cost policy get no coverage for injury to themselves or damage to their own cars, no matter who is at fault. However, they can buy additional coverage that would pay a small amount for bodily injury and medical bills if they are hit by an uninsured driver. Last year’s law will set a fixed price for this additional coverage, but the price has not yet been set.

The low-cost policies are part of the state’s assigned risk program, which is mainly for high-risk drivers who can’t get regular insurance. Insurance companies take a certain number of low-cost and high-risk policies based on how much business they do in the state.

The program is regulated, but not financed by the state, so it should not be subject to budget cuts.

For more information, call (800) 622-0954.

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