According to Consumer Watchdog, California governor Arnold Schwarzenegger recently signed a bill called AB 1597 which will extend the California Low Cost Auto Insurance program (CLCA) designed to help people with low wages get affordable car insurance policies. This program was due to expire at the end of the year, but this new bill will keep it around for another 5 years, at least.
This initiative, also known as the Bare Bones program, allows people who otherwise would not be able to afford any car insurance to get a policy that is half the price of the cheapest policy available through normal channels. This can lead to a premium that can vary between $161 and $369 per year, depending on the county where the policy is signed. These prices have been calculated so they do not require any subsidies from drivers that have regular car insurance or any taxpayer funding. According to estimates from the California Department of Insurance, so far this program has helped over 50,000 Californian drivers get auto insurance. Out of those people, around 85% have declared that they would not have been able to afford any other type of auto insurance and would have remained uninsured drivers. The CLCA program not only allows those people to be in conformance with the law, but it also creates a safer environment for drivers all throughout the state of California.
Consumer Watchdog had nothing but praise for this initiative, claiming that it manages to help people in need without putting the burden on the taxpayers. In fact, the company sponsored this program when it was first developed in 1999 and worked closely with insurance companies, the California Department of Insurance and other Californian government branches to make sure that people who are eligible for the CLCA program are aware of it. According to Consumer Watchdog, the number of people who would use this program would be much higher if there were better campaigns to raise awareness for it and if the insurance agencies would make it clear to any potential customers that are eligible to request the low rate auto insurance policy. One of the current goals of Consumer Watchdog is to forge new alliances with outreach programs that will make more people aware of CLCA.
Now more than ever drivers could really benefit from this initiative as the poverty rate has reached its highest level in decades. According to a census, over five and a half million people in California make less than a combined total of $55,000 for a four person family in a year, which is the current poverty line.
For a driver to be eligible for the CLCA program, he would have to be over nineteen years of age and have a driver’s license for a minimum of at least 3 years. In addition to that, his family’s income must not exceed $22,000 per working member and the car which the policy will cover must be worth under $20,000. A history of safe driving is also required: no more than one point on their license is allowed. All drivers who meet these criteria can benefit from coverage that will provide up to $20,000 per individual accident and $10,000 to treat bodily harm. So far up to $8 million dollars have been covered by the CLCA program, money which otherwise would have come out of the pockets of people who couldn’t afford it. This year over 6,000 new applications have been filed with the initiative to add to the 56,000 that have already been approved during the last ten years.