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Jan 15, 2003
by Jim Lamb, San Francisco
Cheap car cover for LA driversAs of this month, more low-income Los Angeles and San Francisco residents will qualify for cheap, bare-bones automobile insurance, and on March 1 the cost will drop even more, writes Jim Lamb, San Francisco.
California's Low-Cost Auto Insurance Programme has been in effect since mid-2000, but only about 4,000 policies have been sold, mostly in the Los Angeles area. Under the original plan, good drivers were able to purchase no-frills coverage liability only for as little as $410 a year in San Francisco and $450 in Los Angeles.
To qualify, drivers had to have an annual income no more than 150% of the federal poverty level, or about $20,000 for a family of three. "Most people who were poor enough to qualify generally did not own cars," said Doug Heller, senior consumer advocate with the Foundation for Taxpayer and Consumer rights.
After a year, former insurance commissioner Harry Low called the programme a failure. In response, the state legislature this past year raised income limits and lowered the cost.
Consumers can now earn up to 250% of the federal poverty level, which means the same family of three could earn up $37,550. And on March 1, cost of the liability only policies will drop to $314 and $347 annually in San Francisco and Los Angeles, respectively. For bodily injury or death, the low-cost policy provides up to $10,000 coverage per person per accident, and $20,000 total for all people in one accident. It also provides up to $3,000 in property damage coverage.
Rates were able to come down because claims were not as great as originally anticipated, according to the California Department of Insurance (CDI).
There are other restrictions: the policies do not cover cars worth more than $12,000, college students claimed as a dependent are excluded, no household may have more than two low-cost policies, and unmarried men 25 years old or less pay a 25% surcharge.
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