New California Law Adjusts Charges to State’s Car Insurers

California trafficThe California Department of Insurance (CDI) applauded a new law late last month that that adjusts two “special assessments” charged to car insurers in California.

Chapter 347, instituted by SB 476 that Gov. Jerry Brown signed off on in late September, “revises and recasts provisions” relating to those assessments.

California coverage providers are charged an Auto Consumer Assessment that had been 30 cents for each of their insured vehicles annually; the assessment was set to end on January 2015.

The new law shrinks the assessment to 25 cents and will be charged beginning July 2014. According to the law, the charge cannot exceed 25 cents after January 2016.

The CDI said that the fee amount was shrunk “to more closely align … revenues with their related workloads.”

The new law also allows the department to spend 5 cents of the 25 cent assessment “to notify” the state’s insurers and drivers about “the existence of any low-cost automobile insurance program.” CDI often publicizes the California Low-Cost Automobile insurance program, which this summer lowered the average premiums for a single vehicle to $249 a year.

Other revenue from the Auto Consumer assessment are used “to investigate, prosecute and for educational outreach activities related to auto insurance,” according to the CDI.

The law also changes the Organized Automobile Fraud Activity Interdiction Assessment. This assessment, which charges insurers up to 50 cents a year for each insured vehicle, funds the Organized Automobile Fraud Activity Interdiction Program and the Fraud Division within the CDI.

The CDI said the new law directs revenue from the charges to be allocated as follows:

  • 42.5 percent to the CDI
  • 42.5 percent to district attorneys
  • 15 percent to the California Highway Patrol

The assessment was set to roll back in January 2015, but the new law repealed that sunset date.

About Charles Nguyen
Charles Nguyen is an enterprising journalist who reported for Patch.com and the Desert Dispatch and was the editor in chief of the Guardian (the twice-weekly newspaper at the University of California, San Diego) before coming to Online Auto Insurance News.

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