Low-Cost auto Insurance expands to six Calif. counties

A new California law will allow low-income residents in Alameda, Fresno, Orange, Riverside, San Bernardino and San Diego counties, to purchase driver’s insurance for less than $400, beginning April 1.

Until now, a low-cost auto insurance pilot program has been limited to San Francisco and Los Angeles county residents. But the Legislature has expanded the program to six counties.

In 2000, a bill was imposed to help low-income residents purchase insurance because car insurance is mandatory for all California drivers.

The program is administered by the California Automobile Assigned Risk Plan. 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 qualify for the discount.

The program broadens the value of a car that can be insured 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. No coverage is provided for the vehicle.

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

The three groups have dropped their opposition, however, and the Legislature expanded the program expiration date to 2011.

“We felt the Legislature gave us a fair hearing and we’re not opposed to the program,”said Sam Sorich, president of ACIC. “On its face, it’s a sound idea; it does allow low-income drivers an opportunity to find insurance.” However, Sorich recommended drivers evaluate their options.

“In many communities, there’s already affordably priced car insurance available. We urge people to compare the price of the low-cost program with the cost they may be able to get in the voluntary market, because the low-cost program provides limited coverage,”he said.

Topics California Auto