Since the poverty levels have peaked in recent years, the Governor Schwarzenegger has approved a bill for low-cost insurance for Californians who belong to the lower income groups and thus rewarding Californians who have a good track record and driving habits. Car insurance has been provided to approximately 50,000 Californians by the CLCA (California Low Cost Auto insurance) and it would have expired this year without the extension it got from AB 1597’s extension for a 5-year period. With CLCA there was an increase in policyholders despite high poverty and recession in the economy.
It’s a no-frills program where the policy comes at half the price of what other policies have to offer. This has ensured that more than 85% of the drivers, who were previously uninsured, have taken up the CLCA policy. The cost is determined by the Insurance Commissioner and it may vary from about $161 to $368 varying between different counties. There are no taxpayer costs and a subsidy from the drivers with standard auto insurance is not required. This way, the government has struck a balance in finding solutions to a major problem without draining the taxpayer’s money.
Awareness programs are being carried out by Consumer Watchdog along with insurance agencies and consumer groups. There are still a good number of uninsured drivers on road due to the lack of awareness of such policies and often the insurance agents fail to educate and inform these people about the program. Hence, the Consumer Watchdog has tied up with these consumer groups and agencies in order to promote these programs.
Drivers who can qualify for this program will need to have on their driving records, not more than one point. They should be 19 years of age or more and need to have driving experience of about 3 years at least. They should belong to the low-income group with income below $27,075. Also, in addition to this the vehicle should be valued below $20,000. This policy comes with coverage of $20,000 per accident, $10,000 for bodily injury per individual, and $3000 in property damage. The law makes it mandatory for insurers to inform the prospective policy holders about this program.
Ever since the program has started, statistics have shown a sharp increase in the number of policy holders with around 70,000 applications received, around 57,000 being accepted. In 2010 alone around 5,700 have been cleared for the CLCA program. Since 3 years about $8 million has been paid in claims, & 3,000 accidents have been covered by CLCA. They would have probably remained uninsured if not for this program.
