Schwarzenegger Vetoes Extension of Low-Cost Auto Insurance Plan

Published on

SACRAMENTO, CA — Gov. Arnold Schwarzenegger vetoed bipartisan legislation that would have extended California’s Low Cost Auto Insurance program for low-income families.

With the Low Cost Automobile Insurance Program set to expire on Jan. 1, 2011, extending it through 2015 now would be premature, Schwarzenegger said in a veto message. The governor said he recognizes the need for low-cost insurance options for low-income drivers, but "the effectiveness of this program is questionable given the number of policies in effect and low participation rate amongst the uninsured."

A.B. 725 was sponsored by Assemblyman Dave Jones, D-Sacramento, and Assemblywoman Norma Torres, D-Ontario. "Low-income drivers with good driving records deserve the chance to obtain affordable auto insurance. The governor has turned his back on low-income motorists who now won’t be able to obtain low-cost auto insurance," Jones, a Democratic candidate for insurance commissioner in the 2010 election, said in a statement.

Approximately 25% of the state’s drivers are not in compliance with a law requiring automobile insurance, state officials have said.

Under the Low Cost Automobile Insurance Program, affordable liability insurance is offered to good drivers who earn an income that is up to 250% of the federal poverty level. For a family of four, the maximum income is $55,125.

Since its inception in 2000, when it was just a pilot program, through last month, 48,940 low-cost policies have been purchased by Californians, between 80% to 96% of whom were uninsured prior to enrolling, according to the advocacy group Consumer Watchdog.

"Why would a program that has allowed nearly 50,000 Californians to buy auto insurance instead of driving uninsured and doesn’t cost the taxpayers a dime be on the Governor’s chopping block?  It’s not just low-income families who benefit from this program but all the people who have had their claims paid because another driver was carrying this policy," Consumer Watchdog Executive Director Doug Heller said in a statement.

The state program is self-sustaining and funded by rates set in each county so that premiums are sufficient to cover losses and expenses, according to the state Department of Insurance. It was founded as a pilot program in Los Angeles and San Francisco; the department began expanding the program statewide in 2006.

Darrel Ng, a spokesman for Insurance Commissioner Steve Poizner, said the department will work toward a legislative solution next year. Poizner is a candidate for the Republican nomination for governor.

Contact the author, Sean P. Carr, Washington Correspondent, at: [email protected]

Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

Latest Videos

Latest Releases

In The News

Latest Report

Support Consumer Watchdog

Subscribe to our newsletter

To be updated with all the latest news, press releases and special reports.

More Releases