California looks for ways to minimize amount of uninsured drivers on the road

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In the midst of an economic crisis and a destructive fire season, the state of California is also facing a number of decisions in regard to preventing drivers in the state from breaking the law by not taking out auto insurance policies.

In the midst of an economic crisis and a destructive fire season, the state of California is also facing a number of decisions in regard to preventing drivers in the state from breaking the law by not taking out auto insurance policies.

According to the Santa Ana Press Democrat, the window for state residents to qualify for the California Low Cost Automobile Insurance Program CLCA) is closing, as the program is set to expire at the end of 2010 unless action is taken to extend the program by Governor Arnold Schwarzenegger.

Launched in 2007, the program currently includes 45,000 residents who hold policies. Depending on the varied premiums attached to the plans, the average cost for one to be insured in the CLCA varies from $161 to $368, according to the Santa Rosa Press Democrat.

However, some questions remain as to how popular the program is throughout the state and if it is worth renewing. Since introducing the program to Sonoma County, which had an estimated 28,000 without auto insurance in 2007, only 142 policies had been taken out by residents in the county, the Democrat reported.

In order to qualify for coverage for the CLCA, residents must be at least 19-years-old, be continuously licensed for the last three years, and have no more than one accident and moving violation in the previous three years. The motorist must also meet various income eligibility requirements - one person must make less while $27,075 while a household of four people must net an income of less than $55,125 - and their vehicle must be currently valued at $20,000 or less.

Despite the low amounts of enrollment, experts are still calling for the program to be renewed, arguing that the program has been effective in minimizing the amount of uninsured drivers throughout the state.

Department of Insurance spokeswoman Molly DeFrank told the Democrat that low enrollment in the program could have likely been caused by uninsured motorists who first looked at the CLCA program but ended up signing up with a better insurance plan after learning they could afford better coverage.

"It's very important that this program be extended," added Doug Heller, the executive director of a Los Angeles-based organization that monitors insurance issues in the state. "The last thing we want is for people to be uninsured."

Uninsured drivers continue to be a problem throughout the country. Even though not having auto insurance is illegal, estimates from leading auto insurance providers range from 12 percent to 23 percent when asked how many uninsured drivers were on the road.

In addition to providing coverage through the state's CLCA program, state insurance commissioner Steve Poizner announced new regulations that would allow insurers in the state to offer pay-as-you-drive insurance plans that make use of odometer readings, auto mechanic reports, smog check stations, and an extra device installed on vehicles to monitor how often a car is utilized before offering coverage with pro-rated payment plans based on the mileage.

"Pay as you drive is an innovative way to create financial incentives for California motorists to drive less, leading to lower-cost auto insurance, less air pollution and a reduced dependence on foreign oil," said Poizner. "I am pleased with the final regulations I have submitted today, after months of working with consumer groups and other valuable parties. I look forward to approving the first pay-as-you-drive program for California drivers."

Poizner had originally proposed pay-as-you-drive regulations in 2008 before the most recent ones were finalized in August. If approved by the Office of Administrative Law by October 3, the final regulations could go into effect as soon as October 2009.

In addition to helping to alleviate the state's auto insurance problems, the Environmental Defense Fund estimate last August that a pay-as-you-drive plan could reduce the state's CO2 emissions by 55 million tons by 2020 if 30 percent of Californians participated in the coverage. 5.5 billion gallons of gasoline would also be saved, reducing drivers' costs by $40 billion dollars in car-related expenses.

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Posted: September 9, 2009

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