Calif. Commissioner Praises Signing of New Low-Cost Auto Insurance Program

California Insurance Commissioner John Garamendi announced Wednesday that SB 20, designed to expand the geographic availability of the California Low Cost Automobile Insurance Program, has been signed into law by Gov. Schwarzenegger. The passage of SB 20 reportedly moves the state one step closer to significantly reducing the number of uninsured drivers on California roads.

The legislation, introduced by State Senator Martha Escutia and sponsored by the commissioner, addresses one of the most difficult problems facing low-income communities and California drivers in general – the 14.2% of all drivers who have no insurance coverage.

“Insurance prices are simply out of reach for many of our residents who earn lower than average wages in our state,” said Garamendi. “Yet many find that improving their employment situation is dependent upon having a car and driving to work. This new law gives them a chance to afford the insurance that can lead them and their families to a better quality of life.”

The California Low Cost Automobile Insurance program was created in 1999 to provide low-income good drivers with access to affordable liability automobile insurance.

The program was originally established for residents of the County of Los Angeles and the City and County of San Francisco with 21,796 policies sold to date. Eighty-five percent of all Low Cost Auto policyholders were uninsured when they purchased the policy and a like amount of policyholders had incomes less than $20,000 a year.

SB 20 extends the program’s sunset date to 2011, eliminates two barriers that currently deny many applicants eligibility for the coverage, and expands the program statewide at the discretion of the commissioner.

Effective April 1, 2006 the program will become available to low-income good drivers in Alameda, Fresno, Orange, Riverside, San Bernardino, and San Diego Counties.

The program’s policies are issued by California licensed insurance companies and the program is administered by the California Automobile Assigned Risk Plan; it is not subsidized or otherwise supported by government funding.

For $347 in L.A. County and $314 in San Francisco (subject to change) the policy covers liability only and at reduced limits of $10,000 for bodily injury or death per person; $20,000 maximum per accident; and $3,000 for damage to property of others.

California statute allows the lower liability limits to satisfy the state’s financial responsibility laws. Optional coverages for uninsured motorists and medical payments are also available at additional charge.