Rates Drop Again for Calif. Low-Income Auto Insurance Program

Officials for the California Low-Cost Automobile (CLCA) insurance program announced this month that they are dropping average premiums down to about $249 a year to insure a single car.

It is the second consecutive drop, following last year’s reduction, which officials said at the time was the largest since 2009. Last year’s statewide annual average rate was about $257.

The program, which is offered to low-income drivers with good driving history, is offered at county-specific rates throughout the state’s 58 counties.

Linda Yarber, a spokeswoman for California Department of Insurance (CDI), told Online Auto Insurance News that insurance rates were lowered due to improving claims numbers under the program.

The program is geared toward low-income drivers in need of cheaper insurance coverage.

Northern California Counties See Biggest Drops

Several counties in Northern California—including Alameda, Contra Costa, Santa Clara, Marin and San Francisco—will see rates drop from $287 down to $276.

Orange and Los Angeles counties, where the rates are highest, will see rates drop from $347 down to $338.

The lowest rates are available in Central California counties—including Fresno, Merced, Tulare, Santa Barbara and San Luis Obispo—where rates will be dropping from $231 down to $226.

The new rate structure took effect on July 1, according to the CLCA.

The rate decreases apply to liability coverage and not the optional uninsured motorist and medical payments types of coverage that are also available.

Eligibility Requirements Called an ‘Impedement to Participation’

Drivers accepted into CLCA must be at least 19 years old and meet other eligibility requirements, including having a “good” driving record with no more than a one-point moving violation in the past three years.

Also, no other vehicles in the household may be insured by a policy other than one from the CLCA program.

The insured car must also have a value of no more than $20,000.

Income eligibility requirements, which were pushed upward since last year, now stand at:
–$28,725 for a single-person household
–$38,775 for a household of two
–$48,825 for a household of three
–$58,875 for a household of four

Additional eligibility levels are available for larger households.

Households with a male, single driver between the ages of 19 and 24 years old will be surcharged for their liability premiums, according to the CLCA.

In its 2013 report to the state Legislature, CLCA officials said that current eligibility requirements are “very stringent” and can be a “major deterrent” to applicants.

Only 5 percent of the hundreds of thousands of drivers expressing interest in CLCA were found to be eligible, according to the report.

“If a working mother in the CLCA program has a teenage child who obtains a driver’s license, she and the entire household then becomes ineligible for the program,” the report stated. “The statistics clearly reflect that eligibility is an impediment to participation.”

The CDI is working “to increase communication with eligible applicants” to improve that percentage, according to the report.

Of those who were found to be eligible, 45 percent eventually purchased a CLCA policy.

This Year Includes ‘Aggressive Advertising and Outreach’

According to the CDI, the program is engaged in a “robust” marketing campaign through social media platforms like Facebook, Twitter and Youtube. Other advertising campaigns include television and radio spots.

The program is also “moving toward” an online application system, according to the report.

They are all part of an “aggressive” push for advertisements and outreach promoting the program, according to the CLCA report.

Program Report Shows Fewer Policies in Force

There were 9,068 insurance policies in force through the program by the end of 2012, according to the latest CLCA report to the Legislature, delivered in March. CLCA officials reported that there were 9,791 policies in force at the end of 2011, signifying a drop of about 7 percent in policies between 2011 and 2012.

However, higher enrollment figures aren’t stated as a “determination of success” in the CLCA’s report.

According to the California Department of Insurance’s evaluation of CLCA, the program met each measure of success this year:
–Rates were sufficient to meet statutory rate-setting standards.
–Program served underserved communities.
–Program offered access to previously uninsured motorists, thus reducing the number of uninsured drivers.
–CLCA advertising causes uninsured motorists to purchase a policy “better” than CLCA.

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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