2005
Insurance Reference Manual
Personal Insurance Federation of California Insurance Reference Book
California Low-Cost Automobile Insurance Program
Administered by the
California Automobile Assigned Risk Plan (CAARP)
Summary
The Low-Cost Automobile Insurance Program policies are available to residents of Los Angeles County or the City and County of San Francisco only.
The Low-Cost Automobile Insurance Program was established by law:
Under the legislative terms of this pilot program, California Low-Cost Automobile Insurance Program policies are available from July 2000 until January 1, 2007 to residents of Los Angeles County or the City and County of San Francisco.
Frequently Asked Questions and Answers:
1. Who is eligible for the California Low-Cost Auto Insurance Program policy?
By law, only residents of Los Angeles County or the City and County of San Francisco are eligible for insurance through the pilot programs.
2. What other criteria, besides living in Los Angeles County or the City and County of San Francisco, do I have to meet to qualify to buy the policy?
To be eligible for the California Low-Cost Auto Insurance Program policy the law requires that you also meet ALL of the following tests:
- You must live in a household that has a gross annual income equal to or less than 250% of the federal poverty level.
3. What is the "federal poverty level?"
The federal poverty level is set by the federal government in February of each year, and varies by the number of family members in a household. Check the following chart for the number of people in your household. To qualify for a low-cost auto policy, your household's annual gross income cannot exceed the amount in the 250% federal poverty level column for the number in your household.
Number in Household |
Poverty Level |
250%
Federal Poverty Level |
One |
$8,980 |
$22,450 |
Two |
$12,120 |
$30,300 |
Three |
$15,260 |
$38,150 |
Four |
$18,400 |
$46,000 |
Five |
$21,540 |
$53,850 |
Six |
$24,680 |
$61,700 |
Seven |
$27,820 |
$69,550 |
Eight |
$30,960 |
$77,400 |
For households with more than 8 members, add $3,140 for each additional member to the figure shown in the "Poverty Level" column for eight members in a household. Multiply the result by either 2.5 or 250% (or add $7,850 per household member). |
4. How do I prove I qualify financially by being at or under 250% of the federal poverty level?
The law requires California Low-Cost Auto Insurance Program policy applicants to present a copy of their federal or state income tax return for the previous year or other reliable evidence of the applicant's gross annual household income from a governmental agency or governmental means-tested program. The California Automobile Assigned Risk Plan rules and Department of Insurance regulations specify what documents may be used to prove financial eligibility.
- You must be at least 19 years of age and have been continuously licensed to drive for the three years.
- Preceding your date of application:
a) you must have no more than one property-damage- only accident, in which you were principally at fault, or no more than one point for a moving violation on your driving record within three years preceding your date of application;
b) you must not have had an at-fault accident involving bodily injury or death, during the past three years;
c) you must not have a vehicle code felony or misdemeanor conviction on your record; or
d) your automobile must be valued at $12,000 or less at the time of the purchase of the Low-Cost Auto Insurance Program policy. (Department of Motor Vehicles assesses the vehicle value when determining the vehicle license fee.)
SPECIAL NOTE: If you are a college student claimed as a dependent by anyone for federal or state tax purposes, the law specifically excludes you from eligibility for the low-cost policy.
5. What does the California Low-Cost Auto Insurance Program policy cover?
The policy is required to provide the following coverages:
- up to a maximum of $10,000 liability for bodily injury or death per person per accident caused by you;
- up to a maximum of $20,000 total bodily injury or death to all persons in an accident caused by you; or
- up to a maximum of $3,000 for liability for damage to the personal property of others in an accident caused by you.
NOTE: Buying the California Low-Cost Auto Insurance Program policy will satisfy state financial responsibility laws, which require drivers to carry minimum amounts of third-party liability coverage. The Low-Cost Auto Insurance Program policy itself does not provide coverage for injury to yourself or damage to your own car caused by an accident, regardless of who or what is at fault. However, you are allowed to purchase additional types of coverage to provide this protection.
Uninsured Motorist and Medical Payment Coverages are Available.
In addition to your liability coverage, you may also purchase uninsured motorist bodily injury coverage at limits of $10,000 per person and $20,000 total per accident, and $1,000 medical payment coverage for additional premiums.
6. How much will the policy cost?
Los Angeles County Residents:
- the annual base premium for liability coverage is $347 effective March 1, 2003 ;
- the premium for uninsured motorist bodily injury coverage is $64;
- the premium for medical payments coverage is $26.
San Francisco City and County Residents:
- the annual base premium for liability coverage is $314 effective March 1, 2003 ;
- the premium for uninsured motorist bodily injury coverage is $39;
- the premium for medical payments coverage is $24.
There is a 25% surcharge on the annual base premium for unmarried male drivers ages 19 through 24. The California Low-Cost Auto Insurance Program rates are subject to change.
7. How many cars can be covered?
The law allows only two low-cost policies per household, so only two cars can be covered by the program.
8. How do I apply for this policy?
Contact the California Automobile Assigned Risk Plan (CAARP) to find a list of CAARP-certified agents and CAARP-certified brokers who serve your area.
9. May I make payments over time?
You can choose from one of the following payment plans:
- pay in full at time of purchase of policy;
- 25% down payment or $125, whichever is greater, and the balance within 30 days of billing;
- $100 down payment and six bi-monthly (every other month) installment payments;
- 25% down payment or $125, whichever is greater, and five bi-monthly installment payments; or
- 15% down payment and six installment payments.
For installment plans, there is a $2.00 installment charge per payment.
10. How long is the policy period?
Each Low-Cost Auto Insurance Program policy has a term of one year and is renewable annually provided the policyholder meets the eligibility requirements of the program, (unless the law is modified or repealed).
11. Can the insurer to whom my California Low-Cost Auto Insurance Program policy is assigned by the California Automobile Assigned Risk Plan (CAARP) refuse to renew my policy?
Insurers are permitted to non-renew low-cost policies generally only if:
- there is "a substantial increase in the hazard insured against"; or
- you no longer meet the program's eligibility requirements.
Under the law, CAARP will certify your eligibility the first year; your carrier must re-certify you annually after that.
12. Can my California Low-Cost Auto Insurance Program policy be cancelled for any reason?
The policy can be cancelled for the following reasons:
- nonpayment of premiums;
- fraud or material misrepresentation affecting the policy or the insured;
- if you purchase additional automobile liability insurance coverage (buying other types of coverage such as collision or uninsured motorists is allowed); or
- if you purchase liability insurance outside the program to cover any additional vehicles in the same household.
California Automobile Assigned Risk Plan (CAARP)
The California Automobile Assigned Risk Plan (CAARP) administers the state's assigned risk insurance plan for drivers otherwise unable to obtain insurance and is designated by state law as the administrator of the California Low-Cost Auto Insurance Program. The Department of Insurance has regulatory oversight over the program.
Only CAARP-certified agents or CAARP-certified brokers are authorized to accept applications for the Low-Cost Auto Insurance Program policy. There are approximately 7,500 agents and brokers that are CAARP-certified in the two pilot counties of Los Angeles and San Francisco.
CAARP was created to provide auto insurance for motorists who are unable to obtain coverage in the conventional market due to their driving records or other extraordinary circumstances. The Plan assigns drivers to private insurers based upon each company's share of the auto insurance market in the state.
CAARP's staff can answer your questions or provide you with a list of names, addresses, and telephone numbers of CAARP-certified agents and CAARP-certified brokers from whom you can obtain an application for a California Low-Cost Auto Insurance Program policy
Contact CAARP if you have questions or would like information about applying for a policy.
CALIFORNIA AUTOMOBILE ASSIGNED RISK PLAN
595 Market St., #1250
San Francisco, CA 94105
Mailing address:
CAARP
P.O. Box 7917
San Francisco, CA 94120
Phone number:
(800) 622-0954 Toll-free within California only
(800) 227-4659 Toll-free for out-of-state callers
Monday - Thursday 8:30 am - 4:30 pm
Friday 8:30 am - 4:00 pm PST
Email address:
CAARP@aipso.com
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