Low-Cost Auto Insurance Begins July 1st

More than a third of Los Angeles motorists drive without insurance. In San Francisco, nearly 25 percent of drivers go without the insurance required by state law.

California legislators hope to change those numbers with a new pilot program that provides low-cost automobile insurance to good drivers in financial need.

Beginning July 1st, the low cost auto insurance program will offer low income residents of Los Angeles and San Francisco a streamlined auto insurance policy at a discounted price.

California law currently requires that drivers carry a minimum of $15,000 in coverage for bodily injury per person, $30,000 per incident and $5,000 for property damage. In order to provide the low-cost policy, these standard limits were reduced to $10,000, $20,000 and $3,000, respectively. Residents of Los Angeles will pay $450 a year for this policy and drivers in San Francisco will pay $410. Young male drivers age 19 to 24, who pose an increased risk for claims, will pay a 25 percent surcharge. Eligibility for the program is based on several criteria, including:

• An applicant's household gross annual income must be 150 percent or less of the federal poverty level. For example, a four-person household must make less than $25,050 a year.
• Drivers must be at least 19 years old and have had a license for three years.
• The driver's personal automobile must be worth no more than $12,000.
• All applicants must have a clean driving record for the past three years, meaning they may have no vehicle code felony or misdemeanor convictions, no at-fault accidents involving injury or death and no more than one point for a moving violation.
• College students who can be claimed as a dependent of another person for federal or state income tax purposes are specifically excluded from the program.

The California Automobile Assigned Risk Plan will administer the program. CAARP is a non-profit organization whose purpose is to provide automobile insurance to those who have trouble obtaining it through the standard market. For more information on California's Low Cost Automobile Insurance Program, contact CAARP at (800) 622-0954 or ask your insurance agent.