Low-cost auto insurance program getting more attention
By David Benda
Donna James says the value of California’s Low Cost Automobile Insurance Program (CLCA) to her is priceless.
“It’s been a godsend,” the 57-year-old Redding resident said. “I would either have to drive illegal(ly) or park my car” without it.
Launched as a pilot program in July 2000, CLCA provides low-cost liability insurance to good drivers who don’t have the financial capability to afford market-rate insurance.
The Great Recession and a focused effort by state officials to get the word out significantly increased participation in CLCA in 2009. The program is administered by the state, but policies are written by licensed insurance companies.
Last year in Shasta County, 175 people signed up for the program, up from 49 in 2008. The low-cost insurance program first became available in Shasta County in October 2007.
Statewide, the program saw a 19 percent jump in use in 2009 compared with the year before. Approximately 7,500 applications to the CLCA were approved in 2009 compared to 6,306 in 2008. The most active month was April 2009 with 727 applications filed.
State law requires that drivers carry a minimum of $15,000 per person for bodily injury liability coverage, $30,000 per incident and $5,000 for property damage.
In order to offer affordable policies through CLCA, legislators allowed eligible drivers to carry lower standard limits of $10,000, $20,000 and $3,000, respectively.
“We saw a huge jump in interest when they started advertising on TV,” said Kelly Bickett, who owns Northern California Insurance in Redding with her sister, Pam Severtson.
James saw the TV pitch and ultimately bought a policy through Bickett’s office. James drives a 2000 Honda Civic and pays just under $300 a year.
“I did have coverage but it outgrew my income,” said James, who was paying about $800 annually for her previous coverage.
Mark Billingsley, a state Department of Insurance spokesman, said CLCA is not subsidized by taxpayers.
There is a 30-cent assessment made on all auto insurance policies sold that is used to fund Department of Insurance auto-related programs such as CLCA, Billingsley said.
“Of that 30 cents, 5 cents is used for the operation and marketing of CLCA,” Billingsley said in an e-mail. CLCA’s annual marketing budget is $1.4 million.
Program rates are set and adjusted annually in each county. The average premium under the program in Shasta County is $242. James pays a little more because she has opted for two additional coverages.
Troy Rauh of Redding pays $242 for his 1969 Ford pickup to be covered under a CLCA policy. Rauh, 49, also bought his policy through Bickett’s office.
“I have been out of work for a long time, I am taking 14 units at Shasta College and I don’t have a lot of money for insurance,” said Rauh, who worked construction for three decades before he was laid off two years ago. “The coverage is not that high - it’s just bare bones - but it’s a great opportunity for me to keep food on the table.”
Bickett said some agents and brokers shy away from writing CLCA policies because they do a lot of work for little return. But Bickett considers it a way to increase business in these tough times.
“One of the cons would be the massive paperwork shuffle because it involves the state and you have to get a special license,” Bickett said.
Billingsley acknowledged there were complaints about the paperwork when the program first started.
“With the online application process, it now takes agents less than 20 minutes to go through the entire process of entering information,” Billingsley said.
Agents only get a 12 percent commission writing CLCA policies - compared with 15 to 20 percent with a typical auto policy - but if companies actively market the program, there’s money to be made through volume, Billingsley said.
“It depends on the mind-set of the agent,” Billingsley said. “The program is there to help consumers, not to make agents a lot of money.”
Reporter David Benda can be reached at 225-8219 or at dbenda@redding.com.
“I am pleased to announce this great program is available in these twenty additional counties,” continued Commissioner Poizner. “I’m working hard to make this affordable insurance option available to all California counties.” Commissioner Poizner has already begun conducting community meetings to expand the CLCA program to the remaining 16 California counties.
Well, he has a goal, even if it is to expand a gov program. At least it is supposed to NOT be subsidized from the taxpayers, that means hopefully we are not spending too much.
You can also get auto insurance rates here: http://www.4carinsurancequotes.com/rates.html
Grady Alan.
To be eligible for the program, an applicant must be a “good driver” – no more than one at-fault property damage only accident, or one point for a moving violation 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 for a violation of the Vehicle Code.
Should you cancel your auto insurance? http://www.4carinsurancequotes.com/cancel.html
Jerr67
The California Low Cost Automobile Insurance Program is good if you can’t afford full, comprehensive coverage, nothing is perfect. If you have few $$, it can be a God send.
Thank you!
People don’t automatically get enrolled into the California Low Cost Automobile Auto Insurance Program (CLCA), to qualify:
The income requirements for CLCA are as follows:
- A Single Person Earning $26,000 or less per year
- A Two-Person Family Earning $35,000 or less per year
- A Family of Four Earning $53,000 or less per year
- A Family of Eight Earning $89,000 or less per year
Other Factors
The following factors will also be considered:
- No at fault accidents causing bodily injuries or a fatality in the past three years
- At least 19 years of age
- Owning a vehicle worth $20,000 or less
- No loss of license during the previous three years
Compare California auto insurance companies now!
You don’t automatically qualify for the California Low Cost Automobile Auto Insurance Program (CLCA).
The following factors will also be considered:
- No at fault accidents causing bodily injuries or a fatality in the past three years
- At least 19 years of age
- Owning a vehicle worth $20,000 or less
- No loss of license during the previous three years
Insurance companies in California offer the CLCA program to help good drivers afford insurance coverage. For those people who find it hard to get the coverage they are required to carry by law, it’s a good option.