BILL ANALYSIS
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THIRD READING
Bill No: AB 725
Author: Jones (D), et al
Amended: 6/22/09 in Senate
Vote: 21
SENATE BANKING, FINANCE, AND INS. COMMITTEE : 7-2, 7/9/09
AYES: Calderon, Correa, Florez, Kehoe, Liu, Lowenthal,
Padilla
NOES: Cox, Runner
NO VOTE RECORDED: Cogdill, Harman, Price
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 78-1, 5/11/09 - See last page for vote
SUBJECT : Auto insurance: low-cost automobile insurance
SOURCE : Department of Insurance
DIGEST : This bill extends the sunset date for
Californias Low Cost Auto Insurance program from January 1,
2011 to January 1, 2016 and renames this insurance program
the Martha Escutia and Jackie Speier low-cost automobile
insurance program.
ANALYSIS : The California Automobile Assigned Risk Plan
operates the California Low-Cost Automobile Insurance
program. The California Low-cost Automobile Insurance
program provides an affordable auto insurance option for
low-income good drivers in California and since December
CONTINUED
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2007 the program has been available to qualifying motorists
in all 58 counties. The program offers policy limits
prescribed by law of $10,000 for bodily injury or death per
person in an accident, $20,000 for bodily injury or death
per accident, and $3,000 property damage for each accident.
Premiums for the low-cost policy vary by county and
installment options are available. To qualify for a
low-cost policy, household income can't exceed 250 percent
of the federal poverty level, the driver must be a "good
driver" as defined by law, and the applicant must be a
state resident 19 years of age or older meeting other
criteria too. The program is due to sunset on January 1,
2011.
This bill:
1.Extends the sunset from January 1, 2011 to January 1,
2016.
2.Names the California Low-cost Automobile Insurance
program the Martha Escutia and Jackie Speier low-cost
automobile insurance program.
Background
California's Low-Cost Automobile Insurance program has
expanded steadily from its inception in 1999. Starting as
a pilot in Los Angeles and San Francisco counties pursuant
to 1999 legislation by Martha Escutia (AB 171) and Jackie
Speier (Sb 527), in 2005 SB 20 (Escutia) authorized its
eventual expansion to all counties in California at the
discretion of the Commissioner of Insurance. The 2005 bill
mandated that as of April 1, 2006 it should be extended to
Alameda, Fresno, Orange, Riverside, San Bernardino and San
Diego Counties. The program was available in all
California counties by December 2007.
Information provided by the Department of Insurance (DOI)
indicates that in 2008, 77 percent of all policies issued
went to applicants with a yearly household income of at or
below $20,000.
In 2008, 7,892 applications were received of which 6,306
were assigned.
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While the program specifies an applicant's vehicle cannot
exceed $20,000 in value at the time of their application
for insurance, in 2008 most vehicles insured had a value of
less than $5,000 dollars.
Statistics provided by the program administrator, the
California Automobile Assigned Risk Plan, indicate that in
2008, 70 percent of new policies went to applicants who
were uninsured at the time of application.
A recent study of the Insurance Research Council (Uninsured
Motorists, 2008 Edition) finds a strong correlation between
the percent of uninsured motorists and the unemployment
rate. It estimates that a one percentage point increase in
the unemployment rate is associated with a three quarters
of one percent increase in the uninsured motorist rate.
Consequently, based on current unemployment trends, the
percentage of uninsured motorists in California and other
states is expected to rise.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/17/09)
Department of Insurance (source)
Consumer Watchdog
California Communities United Institute
Consumer Attorneys of California
ARGUMENTS IN SUPPORT : This bill is sponsored by DOI to
extend the low cost auto program sunset from 2011 to 2016
and to rename it the Martha Escutia and Jackie Speier
low-cost automobile insurance program. The DOI indicates
the extension of this program will ensure that low-income,
good drivers will continue to have access to affordable
auto in insurance. The DOI indicates the program has
provided over 37,000 policies since its inception, helping
thousands comply with California law.
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Beall, Bill
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Berryhill, Blakeslee, Block, Blumenfield, Brownley,
Buchanan, Caballero, Charles Calderon, Carter, Chesbro,
Conway, Cook, Coto, Davis, De La Torre, De Leon, DeVore,
Duvall, Emmerson, Eng, Evans, Feuer, Fletcher, Fong,
Fuentes, Fuller, Furutani, Gaines, Galgiani, Garrick,
Gilmore, Hagman, Hall, Harkey, Hayashi, Hernandez, Hill,
Huber, Huffman, Jeffries, Jones, Knight, Krekorian, Lieu,
Logue, Bonnie Lowenthal, Ma, Mendoza, Monning, Nava,
Nestande, Niello, Nielsen, John A. Perez, V. Manuel
Perez, Portantino, Price, Ruskin, Salas, Saldana, Silva,
Skinner, Smyth, Solorio, Audra Strickland, Swanson,
Torlakson, Torres, Torrico, Tran, Villines, Yamada, Bass
NOES: Miller
NO VOTE RECORDED: Tom Berryhill
JJA:cm 8/19/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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