BILL ANALYSIS
AB 725
Page 1
GOVERNOR'S VETO
AB 725 (Jones and Torres)
As Amended June 22, 2009
2/3 vote
INSURANCE 10-0 APPROPRIATIONS 13-1
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|Ayes:|Coto, Garrick, Blakeslee, |Ayes:|De Leon, Ammiano, Charles |
| | | |Calderon, Davis, Fuentes, |
| |Charles Calderon, Carter, | |Hall, Harkey, |
| |Feuer, Hayashi, Nava, | |John A. Perez, Price, |
| |Niello, Torres | |Skinner, Solorio, Audra |
| | | |Strickland, Torlakson |
| | | | |
|-----+--------------------------+-----+---------------------------|
| | |Nays:|Nielsen |
| | | | |
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|ASSEMBLY: |78-1 |(May 11, 2009) |SENATE: |24-12|(August 31, |
| | | | | |2009) |
| | | | | | |
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|ASSEMBLY: |75-0 |(September 2, | | | |
| | |2009) | | | |
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SUMMARY : Extends from January 1, 2011, to January 1, 2016, the
sunset date of the Low-Cost Automobile Insurance Program
(Program), and renames the program.
The Senate amendments rename the Program the Martha Escutia and
Jackie Speier Low-Cost Automobile Insurance Program.
AB 725
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EXISTING LAW :
1)Requires that all drivers on public roads be insured.
2)Establishes the Program to make available low-cost automobile
insurance throughout California. This Program is administered
by the California Automobile Assigned Risk Plan (CAARP), an
entity that is subject to the authority of the California
Department of Insurance (CDI). 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 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 a 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 of the Program on January 1, 2011.
AS PASSED BY THE ASSEMBLY , this bill extended from January 1,
2011, until January 1, 2016, the sunset date on the Program.
FISCAL EFFECT : Minor absorbable workload to the CDI to continue
the implementation of the Program.
COMMENTS :
1)The primary goal of the Program is to provide an affordable
auto insurance option to low-income good drivers.
2)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
AB 725
Page 3
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. In 2007,
this program had 11,519 low-cost policies in force.
3)In 1999, SB 171 (Escutia), Chapter 794, Statutes of 1999,
established the Program in Los Angeles County; and, in that
same year SB 527 (Speier), Chapter 807, Statutes of 1999,
established the Program in the City and County of San
Francisco. In 2005, SB 20 (Escutia) extended the Low-Cost
Automobile Insurance 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.
GOVERNOR'S VETO MESSAGE :
"While I recognize the need to provide low cost automobile
insurance to low income drivers, the effectiveness of this
program is questionable given the number of policies in effect
and low participation rate amongst the uninsured. Since the law
this bill is looking to extend does not expire until January 1,
2011, I encourage the author and sponsor to take the next year
to examine the results of the program and determine if any
changes are needed to the program to ensure its success."
Analysis Prepared by : Tracy Elwell / INS. / (916) 319-2086
FN: 0003448