The Need for Lifeline Auto Insurance

Published on

The Lifeline Plan provides a low-cost automobile insurance program which will make affordable auto insurance available to hundreds of thousands of low-income Californians in Los Angeles and San Francisco counties.

Today, millions of Californians are forced to drive uninsured while many others are forced not to drive at all because no affordable insurance policies are available. Low-income Californians are caught between the rock of being required to purchase insurance and the hard place of being unable to afford it. For them it is illegal to drive.

The uninsured motorist crisis creates problems for all Californians:

  • Uninsured drivers are subject to steep fines and car impoundment. The financial responsibility laws which mandate these penalties are up for legislative renewal this year.

  • Proposition 213 places strict limits on the accident claims of uninsured motorists when they are hit by another driver.

  • Presently, insured drivers subsidize the uninsured by purchasing “Uninsured Motorist” protection. Every uninsured motorist on the road increases the cost of the Uninsured Motorist premium insurance consumers pay. When more uninsured motorists drive, the cost of “Uninsured Motorist” premiums rise for those who do buy insurance.

The Facts1:

  • California State Law requires all motorists to carry auto insurance or other proof of financial responsibility to maintain their right to drive.

  • Approximately 2.2 – 3 million vehicles, owned by approximately 2.5 million drivers, are uninsured cars that are regularly used and, according to financial responsibility laws, should be insured.

  • For millions of low income Californians, insurance policies can cost anywhere from 10 – 30 % of their annual income. When no affordable insurance can be purchased, the financial responsibility law either prohibits people from driving or forces the working poor to break laws to keep themselves employed.

  • Uninsured motorists are disproportionately poor. 71% of those reporting income to the Department of Insurance earned less than $20,000 per year.

  • 87% of uninsured motorists qualify as “good drivers.”

  • Los Angeles County includes areas with more than 80% of motorists driving uninsured.

  • Uninsured motorists are disproportionately African American and Latino.

  • 83% of uninsured motorists are under 40 years old.

  • Uninsured motorists’ primary reasons for not buying insurance are affordability and availability.

1. according to California’s Uninsured Policy Research Bureau of the California Department of Insurance (September 1998)

Consumer Watchdog
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