OAI: Premium Drop Increases Value of Calif. Low-Cost Auto Insurance Program

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Program has also been increasing public profile recently with larger online presence, texting campaign.

The California Low Cost Automobile Insurance Program (CLCA) recently announced its biggest drop in yearly premiums since 2009, emphasizing the value of the program for low-income motorists seeking cheap minimum coverage, according to Online Auto Insurance.

The program’s premiums will decrease up to 9 percent across the state, amounting to an average annual price of about $258. No counties charge more than $350 for a CLCA policy. The program offers bare-bones low cost insurance with liability-only coverage for eligible drivers in order to keep them insured.

Premium rates were already expected to drop by an average of 4 percent by this spring, according to last year’s CLCA report to the state Legislature.

The CLCA also increased the maximum annual household incomes for eligible participants by about 2.5 percent. To qualify for the program, policyholders must now make less than $27,925 for a one-person household, $37,825 for two people and $57,625 for a family of four. The program instates a 25 percent surcharge for households with a single male driver aged 19 to 24 years old.

Current CLCA eligibility also requires that drivers have a “good driving record,” be at least 19 years old, have been licensed for at least three years and be insuring a vehicle worth $20,000 or less.

The program is a valuable fallback option for low-income motorists who might otherwise drive without proper coverage, and the most recent premium reductions “make [CLCA] a more viable option for uninsured drivers," commissioner Dave Jones said in a statement.

About 15 percent of drivers in the Golden State are estimated to lack proper coverage, slightly higher than the national average of 13.8 percent, according to 2009 data compiled the Insurance Research Council.

The program had a $1.4 million budget in 2011-12 that supported an “aggressive public relations campaign” of community outreach, education and advertising, according to last year's CLCA report.

Recent efforts to publicize the program included launching a website and a text-messaging-based campaign that began in November 2011. A Spanish-language version of the website is also available.

Motorists interested in the program can text “lowcost” to (65374) to get information about CLCA directly from an agent in their area. Those texters can choose to continue receiving CLCA information via text messages; the program got 1,280 opt-ins since the start of the texting campaign. Most opt-in consumers were from Los Angeles, San Diego and Sacramento counties and said they heard about the program online, according to the CLCA report.

CLCA began as a pilot program in 2000 for Los Angeles County and San Francisco County before expanding to all 58 counties in 2007. The vast majority of CLCA applications come from Los Angeles County, which had 2,701 applications in 2011, representing almost 40 percent of all CLCA applications that year. San Bernardino County followed with the second-highest number of applications, at 473.

Source: http://www.insurance.ca.gov/0100-consumers/0060-information-guides/0010-automobile/lca/CLCALegRpts.cfm

For more on this and related insurance issues, head to http://www.onlineautoinsurance.com/low-cost/ for access to an easy-to-use quote-comparison generator and informative resource pages.

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