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Press Release Wednesday, June 28, 2000 |
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San Francisco, CA - Beginning on July 1, low-income residents with
good driving records will be eligible for a low-cost auto insurance
policy in San Francisco and Los Angeles counties. These new policies
are the result of landmark legislation enacted in 1999 to provide
low-cost automobile insurance to uninsured drivers through a
four-year pilot program administered by the California Automobile
Assigned Risk Plan (CAARP).
"Many low-income drivers have been forced to gamble with the risk
of driving without coverage because of the high cost of auto
insurance," said Harry Snyder, Senior Advocate of Consumers Union's
West Coast Regional Office. "This program offers them a unique
opportunity to obtain the insurance they need to drive legally."
The low-cost auto insurance policy was sparked by the dilemma
faced by hundreds of thousands of uninsured low-income motorists who
are required by law to carry auto insurance, but cannot afford to do
so. California has an estimated 5.3 million uninsured vehicles, and
2.2 million to 3 million of these are in regular use. Uninsured
motorists face criminal penalties when they drive to work or job
training. Their neighbors face a higher risk of having no way to pay
medical expenses after being hit by an uninsured motorist.
The policy covers two vehicles per household at an initial annual
rate of $410 for San Francisco County and $450 for Los Angeles
County. There is a 25 percent surcharge if the person named on the
insurance policy is an unmarried male between the ages of 19 and 24,
or if an unmarried male between the ages of 19 and 24 lives in the
policyholder's household and will be a driver of the insured
automobile.
The low-cost policy is only available to good drivers where the
household income is 150 percent or less of the federal poverty line.
This is an annual income of $25,575 for a family of four. Eligible
drivers can pay the entire premium upon purchase of the policy or pay
an initial $100 followed by six monthly installment payments.
The low-cost policy would provide coverage of $10,000 for
liability for bodily injury or death to one person, subject to a
cumulative limit of $20,000 for all persons, and $3,000 for liability
for damage to property. The policy would satisfy California's
financial responsibility laws, which require drivers to carry minimum
amounts of third-party liability.
"California needs sensible solutions to reduce the number of
uninsured motorists on our roads," said Snyder. "We hope this pilot
project will help convince the Legislature to expand the low-cost
auto insurance program statewide in the future."
Consumers Union is launching a community outreach campaign to
publicize the program to potentially eligible drivers. To find out
more about the low-cost auto insurance program, drivers should call
CAARP at 1-800-622-0954.
Consumers Union, publisher of Consumer Reports, is an independent, nonprofit testing and information organization, serving only the consumer. We are a comprehensive source of unbiased advice about products and services, personal finance, health, nutrition, and other consumer concerns. Since 1936, our mission has been to test products, inform the public, and protect consumers.
