California Cheap Auto Insurance Program

What is the California Cheap Auto Insurance Program?

The state of California created a pilot cheap auto insurance program in July of 2000 for drivers in San Francisco and Los Angeles County. The program was designed to help reduce the number of uninsured drivers in the state and to provide affordable, cheap auto insurance for low-income families and individuals.

In December 2007, the cheap auto insurance program left the testing phase and was made available to all drivers statewide. The California Department of Insurance brought the program to consumers, and the California Automobile Assigned Risk Plan oversees and administers the program.

How the Cheap Car Insurance Program Works

Every insurance company in the state that gains admission to the program agrees to take its fair share of cheap auto insurance applications. Insurance companies that participate in the program must offer auto liability insurance at a reduced rate. The current legal requirement for auto insurance in California is 15/30/5, which translates to $15,000 bodily injury liability per person, $30,000 total bodily injury per accident, and $5,000 in property damage coverage.

To create a lower-cost insurance policy, state legislators allow the policy to carry lower standard liability limits of 10/20/3, which is:

• Bodily injury liability – $10,000 per person/$20,000 per accident
• Property damage coverage – $3,000

Drivers can also select two optional coverages: 

• Uninsured motorist coverage – up to $10,000 per person/$20,000 per accident
• Medical payments – up to $1,000 per injured person

The insurance program is being run on a limited-time basis, and a bill has been passed to extend the insurance program through January 1, 2019. The LCA insurance program does not include coverage for comprehensive and collision. Additionally, drivers may not choose which insurance company they are assigned to. Insurance applications are given out to companies by using a random process for assigning them.

Five Options for Payment Plans

1. Drivers may pay the full annual premium in one installment
2. A small deposit of $125, with the balance paid in 30 days
3. A $100 deposit with the balance spread over six bi-monthly installments.
4. A $125 deposit with the balance spread over five bi-monthly installments
5. A 50% deposit with the balance spread over six bi-monthly installments.

There is no outside premium financing allowed for this program.

How Much Are the Premiums for the Program?

The premiums for insurance purchased through the CLCA program vary from one county to another. Policies have a base rate, which depends on the gender and age of the individual, in addition to add-on insurance purchases such as medical payments and uninsured motorist coverage.

For example, the basic cost for liability insurance in the program in Humboldt County is $277. If a driver wants to add on medical payments coverage, they will pay $43 extra and $31 extra for uninsured motorist bodily injury coverage.

San Francisco County coverage starts at $331, with medical payments for $41 extra and uninsured motorists coverage for $43 extra. In Los Angeles County, basic liability is $368, with $52 for medical payments and $67 for uninsured motorists.

According to ValuePenguin, counties with the cheapest low-cost auto insurance rates are:

• Fresno
• Kings
• Madera
• Merced
• Monterey
• San Benito
• San Luis Obispo
• Santa Barbara
• Santa Cruz
• Tulare

The most expensive rates for low-cost California auto insurance are in the following counties:

• Los Angeles
• Fresno

The single male age group of 19 to 24 represents the highest-risk driving category. They carry a 25 percent surcharge on top of the basic insurance rate.

Extra Fees

One of the typical items that push up the cost of regular insurance is extra fees tacked on by the insurance company. Insurance companies participating in the LCA program are prohibited from charging any paperwork, broker, or motor vehicle report fees, as per California’s insurance code (116245). The insurance producer also may not keep any commission out of the premium payments. The insurance company assigned to the policy will pay a commission to the producer once the policy is issued.

How to Qualify for the California Low-Cost Auto Insurance Program

There are guidelines for drivers to qualify:

1. Applicants for the program must have good driving records free of at-fault accidents, vehicle code misdemeanor, or felony convictions within the past three years..
2. Must have a gross annual income of less than 250 percent of the poverty level nationwide. That boils down to about $50,000 yearly for a family with four members.
3. Drivers who wish to participate in the program must have at least three consecutive years of driving experience.
4. Drivers must be at least 19 years of age
5. Applicants may not have more than one moving violation point.
6. Drivers must have no more than one insurance claim for at-fault property-only damage in the last three years.
7. The vehicle a driver wants to insure under the program may not have a cash value of more than $25,000.
8. Additionally, the insured person cannot be a college student claimed on someone else’s federal or state income tax as a dependent.
9. The driver is also not allowed any liability insurance coverage on another car.

Applying to the California Cheap Auto Insurance Program

If a driver meets the eligibility requirements, they should contact an insurance agent from their insurance company. Divers should ask if the insurer is a certified producer with the California automobile assigned risk plan or the California cheap auto insurance program. If the insurer is certified, an agent can help process an application to apply for insurance through the LCA program.

The insurance agent can help complete the application and discuss payment options. The insurance producer will send the completed application, with the appropriate deposit amount and any documentation, to the program office.

Insurance rates are competitive in California, meaning the private auto insurance market can provide coverage with higher liability limits than the LCA program insurance for a reasonable and affordable cost. Drivers need to shop around and get the best insurance coverage for their money.