Auto insurance premiums reduction sought by Consumer Watchdog

California Low Income Auto Insurance Program

California Low Income Auto Insurance ProgramThe group claims the agency running the car policy program is seeking to charge $40 more than necessary.

According to a Consumer Watchdog actuarial analysis, California drivers who are in the low income bracket and who maintain a good driving record should be paying 3.9 percent less on their car coverage premiums through the Low Cost Auto Insurance Program.

The analysis was just submitted to the California Department of Insurance.

The auto Insurance Commissioner in the state is now performing an annual review in order to decide whether or not the rate structure for the program should stay the same or be increased or decreased. The non-profit organization that submitted the analysis has filed data that illustrates the necessity to decrease the premiums following proposal by the California Automobile Assigned Risk Plan (CAARP), which is the program’s overseer.

CAARP is seeking a 6.7 percent increase in the program’s auto insurance premiums.

For drivers in Los Angeles – where most of these policies have been sold – this will mean an increase of nearly $25. However, according to the analysis that was performed by Consumer Watchdog, they feel that the rates in L.A. should decrease by $14.

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According to Pamela Pressley, the litigation director at Consumer Watchdog, “This program is built to provide very inexpensive insurance to low-income drivers who can’t otherwise afford coverage, so price is of the utmost concern.” She added that “For families struggling financially, a $40 swing in expenses makes a real difference.”

The actuarial analysis was performed by AIS Risk Consultants Inc’s Allan Schwartz. The filing containing the auto insurance premiums claims states that CAARP has not used the data from the program to accurately forecast future losses, as is required by California law. The rate hike that CAARP has proposed is, instead, based on generic data from across the state. What Consumer Watchdog has found was that when the data was specific to the program, then there is evidence that a decrease is necessary.

The Low Cost Auto Insurance Program is a basic skeleton coverage that is available to good drivers with a low income, with annual premiums ranging from $231 to $347.

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