BILL ANALYSIS
AB 725
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Date of Hearing: April 1, 2009
ASSEMBLY COMMITTEE ON INSURANCE
Joe Coto, Chair
AB 725 (Jones) - As Introduced: February 26, 2009
SUBJECT : Low-cost automobile insurance
SUMMARY : Extends from January 1, 2011, to January 1, 2016, the
sunset date on the low-cost automobile insurance program.
EXISTING LAW :
1)Requires that all drivers on public roads be insured.
2)Establishes a low-cost automobile insurance program in all
counties of California that is administered by the California
Automobile Assigned Risk Plan (CAARP). All insurers
authorized to transact liability insurance must participate in
CAARP and accept an equitable apportionment of applicants for
automobile insurance who are unable to purchase insurance
through ordinary methods.
3)Specifies that the low-cost automobile insurance program is
available to each individual whose family income does not
exceed 250% of the federal poverty level, is at least 19 years
of age, has been continuously licensed for the previous three
years, meets the good driver standard (no more than one
at-fault property damage only accident or more than point for
a moving violation in the past three years), has a vehicle
valued at $20,000 or less, and is not a college student
claimed as a dependent of another person for income tax
purposes.
4)Sets the sunset date on the low-cost automobile insurance
program on January 1, 2011.
FISCAL EFFECT : Undetermined.
COMMENTS :
1)Goal of program. The primary goal of the California Low Cost
Automobile Insurance Program is to provide an affordable auto
insurance option to low-income good drivers.
AB 725
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2)Rates, coverages, premium cost, and participation. The
program is not subsidized by taxpayers. The rates are set and
adjusted annually in each county so that the premiums are
sufficient to cover losses and expenses in each county. The
program is now available statewide. It provides $10,000
bodily injury coverage for one person, $20,000 bodily injury
coverage for all persons, and $3,000 for damage to property of
others. The coverage costs less than $400 per year. As of
2006, this program had 8,695 low-cost policies in force.
3)Prior Legislation . In 1999, SB 171 (Escutia) established the
low-cost automobile insurance program in Los Angeles County
(Chapter 794, Statutes of 1999), and in that same year SB 527
(Speier) established the program in the City and County of San
Francisco (Chapter 807, Statutes of 1999). In 2005, SB 20
(Escutia) extended the program to six additional counties and
provided authority for the program to be extended statewide,
based upon the Insurance Commissioner's determination of need
for that insurance.
REGISTERED SUPPORT / OPPOSITION :
Support
California Department of Insurance (Sponsor)
Consumer Watchdog
Opposition
None received.
Analysis Prepared by : Manny Hernandez / INS. / (916) 319-2086