Calif. Commissioner Notes New Outreach Campaign to Insure L.A.’s Low Income Motorists

Standing at the reported second most dangerous intersection in the city of Los Angeles with previously uninsured motorists, California Insurance Commissioner John Garamendi recently announced a new, aggressive outreach campaign to enroll eligible L.A. drivers in the California Low Cost Auto Insurance Program (LCA).

“Why risk driving without insurance when you can afford it?” asked Garamendi. “The answer is, in short, you shouldn’t. Under the State of California’s Low Cost Auto Insurance program you may be able to get insured for as little as $347 per year. We’re going into the heart of L.A.’s communities – working with groups at the grassroots level, unions, local media and insurance agents – to make eligible drivers aware of this affordable auto insurance option.”

Eligible individuals must be at least 19 years old, reside in Los Angeles County or the City and County of San Francisco, and must be good drivers.

An LCA “good driver” has no more than one at-fault property damage accident or more than one point for a moving violation (but not both) in the past three years; and no at-fault accident involving bodily injury or death in the past three years; and no felony or misdemeanor conviction on an individual’s motor vehicle record. Motorists must also be continuously licensed to drive for the past three years; a foreign driver’s license and driving experience qualify as long as the past 18 months of driving experience are in the U.S. or Canada.

In addition, household income, before taxes, cannot exceed 250 percent of the federal poverty level. For example, an individual cannot exceed a maximum household income of $23,275, and a family of four cannot exceed a maximum household income of $47,125. Furthermore, the value of the car cannot exceed $12,000. Participation is limited to two low cost automobile policies per household.

Based on California Department of Motor Vehicle registered vehicle records, Los Angeles County has one of the highest uninsured motorist rates in the state. In 2000, the most recent data available, nearly one in four – or approximately 1.4 million – drivers in Los Angeles County were uninsured.

“Being caught driving without auto insurance could cost you twice as much as a one year LCA policy,” said Garamendi. “Driving uninsured is simply not worth it. By purchasing LCA, previously uninsured drivers will no longer need to look over their shoulders every time they get behind the wheel.”

Failing to establish proof of financial responsibility, a violation of California Vehicle Code Section 16029, may result in fines up to $500 plus penalties, impoundment of the vehicle (for which the owner must pay all storage and tow charges), and driver’s license suspension.

The LCA policy is a private insurance policy administered by the California Automobile Assigned Risk Plan; it is not subsidized or otherwise supported by government funding. For $347 in L.A. County ($314 in San Francisco), the policy covers liability only and at reduced limits of $10,000 for bodily injury or death per person; $20,000 maximum per accident; and $3,000 for damage to property of others. However, California statute allows the lower liability limits to satisfy the state’s financial responsibility laws.

By comparison, a “basic limits liability only” policy sold to a “good driver” in the private passenger automobile market is capped at $15,000/$30,000/$5,000 and costs up to $3,762 for a single male or up to $4,815 for a married couple, according to a 2003 Department of Insurance rate comparison survey of premiums for a basic limits liability only policy for a L.A. County resident living in Compton.

Optional LCA coverages for medical payments or uninsured motorist bodily injury are available for additional charges.

There is also a 25 percent surcharge for unmarried male drivers 19 through 24 years of age.

Several installment payment plans are available, some requiring as little as 15 percent down. Application forms are available in Spanish, Chinese, Vietnamese, Korean, Cambodian, Japanese, Armenian, Russian, and Farsi.

Agents/brokers receive 12 percent commission – approximately $37 – and no broker fees or other fees can be charged.

Since LCA’s inception, 13,557 policies have reportedly been issued. Thus far in 2004, an average of 550 policies per month have been issued with 98 percent sold in Los Angeles County.

“Our goal is to reduce the number of uninsured motorists on California roads by greatly expanding the awareness and availability of the LCA program,” added Garamendi.