What Is the California Cheap Auto Insurance Program?

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

Insurance companies that participate in the program must offer auto liability insurance at a reduced rate. Every insurance company in the state that gains admission to the program agrees to take its fair share of cheap auto insurance applications. The current legal requirement for auto insurance in California is 15/30/5, which translates to $20,000 of bodily injury liability per person, $35,000 bodily injury total per accident, and $8,000 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.

How cheap auto insurance Program Works

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.

Paying for the Insurance Is Made Easier Due to Five Options for Payment Plans

Drivers may pay the full annual premium in one installment; a small deposit of $125 with the balance paid in 30 days. They may also pay a $100 deposit with the balance spread over six bi-monthly installments. Pay $125 deposit with the balance spread over five bi-monthly installments, or 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 Cheap Auto Insurance Program?

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

As an example, the basic costs for liability insurance in the program for 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 motorist for $43 extra. In Los Angeles County, basic liability is $368, with $52 for medical payments and $67 for uninsured motorists.

One of the typical items that push up the cost of regular insurance is extra fees tacked on by the insurance company. Insurance companies that participate in the LCA program are prohibited from charging any paperwork fees, broker fees or motor vehicle report fees, as per California’s insurance code 11624.5. 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

Guidelines exist for drivers who qualify; they must have good driving records and a gross annual income that is less than 250 percent of the poverty level nationwide. That boils down to about $50,000 a year for a family with four members. Drivers who wish to take part in the program must have at least three consecutive years of driving experience. Drivers must be at least 19 years of age. Applicants for the program may not have more than one moving violation point. Drivers must be with no more than one insurance claim for at-fault property-only damage in the last three years.

The vehicle a driver wants to insure under the program may not have a cash value of more than $25,000. Additionally, the person insured cannot be a student in college that is claimed on someone else’s federal or state income tax as a dependent. The driver is also not allowed to have any current liability insurance coverage on another car. 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.

Drivers must also have a driving record free of vehicle code misdemeanor or felony convictions. Drivers must be with no accidents where they were at fault, involving bodily injury or death, within the past three years.

Applying to the Program

If a driver meets the eligibility requirements, they should contact an insurance agent from their insurance company of choice. 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 the state of California, which means the private market for auto insurance can provide insurance 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.