New California Law Lowers Insurance Premiums For The Poor

In such a bad economy, hard decisions have to be made. One of the first monthly bills to get cut or eliminated can be auto insurance. While driving uninsured is unwise and illegal in many states, it is understandable if your choice is paying it or your mortgage. A new California law acknowledges the situation that poor Californians may be in and is offering lower cost insurance to them.

Gov. Jerry Brown signed AB 1024 into law this past weekend. The new law allows California's Department of Insurance to work with the California Automobile Assigned Risk Plan (CAARP), to offer the low-cost program and to develop rules for selling the special auto insurance policy through the website www.MyLowCostAuto.com. The majority of the people expected to sign up for the program are projected to be previously uninsured motorists.

''At a time when the economy has hit so many Californians so hard, an easily accessible low-cost insurance policy could make the difference for people desperately trying to avoid driving uninsured or having to give up their cars altogether,'' said Doug Heller, Executive Director of the nonprofit, nonpartisan group Consumer Watchdog.

California had previously run the program on a trial basis. More than 60,000 Californians purchased a Low-Cost Auto Insurance Program policy, the vast majority of whom had been uninsured prior to purchasing the policy. The program is not subsidized by government funds nor by other drivers who purchase traditional auto insurance. There have been approximately 3,000 auto accidents involving holders of these policies. That is $8 million in claims that would have been absorbed by other insurance companies if these drivers had remained uninsured. Seems like the program is working, doesn't it?

By: Billy Waugh

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The type of vehicle you own obviously has a dramatic impact on your rates. If you drive a high-performance vehicle, you may want to check out a specialist such as Subaru WRX Insurance or BMW M3 Insurance.