Low-Cost Auto Insurance Expands to Six Calif. Counties

From Insurance Journal



December 27, 2005



A state law taking effect in 2006 will allow low-income residents in Alameda, Fresno, Orange, Riverside, San Bernardino and San Diego counties, to get driver's insurance for less that $400 beginning April 1, according to the Alameda Times-Star.



Until now, a pilot program has been limited to San Francisco and Los Angeles county residents. But next year it will expand to six more counties under a bill written by state Sen. Martha Escutia, D-Whittier.



In 2000, a bill was imposed as a counter-measure to earlier legislation that made car insurance a requirement for all California drivers. The program, administered by the California Automobile Assigned Risk Plan, has provided car insurance for low-income San Franciscans at a rate of $314 a year. Drivers 19 or older with an income level at 250 percent of the poverty line -- about $23,000 for singles and $47,000 for families of four -- that have been licensed for three years could qualify for a discount.The program also broadens the value of a car that can be insured increases from $12,000 to $20,000.



Coverage includes $10,000 in bodily injury or death per person, $20,000 bodily injury per accident and $3,000 property damage per accident ? all of which are below the state's established coverage minimums. No coverage is provided for the applicant's vehicle.



When the bill was first introduced, the program was opposed by State Farm, the Association of California Insurance Companies and the Pacific Association of Domestic Insurance Companies, according to the paper. The groups questioned how well it was working in the two pilot counties, noted that some participants already had insurance and were just taking advantage of the cheaper rates and suggested that a significant percentage of enrollees were dropping out once they got their cars registered.



The three groups dropped their opposition, however, and the Personal Insurance Federation of California got behind the plan, when Escutia agreed to have the program expire in 2011.



"We still have some concerns with the program, but at the end of the day, Sen. Escutia made a good-faith effort and we're willing to see how it works for the next few years," ACIC President Sam Sorich told the paper.



The program does not involve any state subsidies, but it does force insurance companies to offer the program to qualified applicants on a "fair share" basis, tied to the level of business they're doing in the state.