Affordable Automobile Insurance

A bill proposed by Assemblyman Dave Jones was vetoed by the governor of California, Arnold Schwarzenegger. The bill had proposed extension of government backed automobile insurance coverage for low income citizens. According to the state law, it is compulsory for all drivers to have insurance coverage carrying minimum levels of liability. The low income policies from insurance companies provide affordable insurance cover to drivers with clean driving records (over 19 years of age). The governor said he vetoed the bill since the program’s effectiveness was under question and participation rate of people was low. He has asked Assemblyman Jones and Insurance Commissioner of California to come up with a revised proposal next year.

Many consumer advocates criticized the governor’s veto and said that he was not in touch with reality. They argued the real economic issues faced by Californians have not been properly understood by the governor and that numerous Californians will now be forced to drive without insurance.

On an earlier date, the California Insurance Commissioner had stated that expansion of California Low Cost Automobile Insurance (CLCA) program was among his top most priorities. He believed there were numerous drivers who could not afford paying for insurance coverage, whereas driving without insurance was illegal resulting in increased risks for all motorists. His proposal aimed to expand this program so that all the drivers of California could have an affordable insurance coverage option. The program also intended to help citizens comply with the law and reduced the risks faced by other drivers on the road.

The CLCA program was started in 1999, and it was in 2006 when the department began the process of making it applicable across entire state. To be eligible to get this insurance, the applicant has to be a good driver, and should have only one at fault property damage incident.

Numerous car insurance requirements are being changed by the legislatures across various states and the insurance rates determination with credit history in the background is one of them. The insurance industry people strongly believe that there is a link between financial history of a driver and the possibility that he or she might file a claim. That’s the reason why insurance companies go through your credit information before deciding their insurance rates for you.

To some extent, there is some connection between accident risk and personal credit, the consumer groups still insist credit reports can be unreliable. There is a difference between the times when unemployment rate was 6% and now when it has increased to 15%. A clean credit record can easily be dented by two or three missed car payments. The very idea of establishing a connection between credit score and insurance rates is a complicated one and it has become difficult for the political process to set it right.

The insurance scoring issue continues to be embroiled in court cases, whereas even lawmakers have not been able to resolve the controversy. Many states in US have already stated that gender, income, marital status, absence of credit score and bankruptcy should not be included in insurance scores. Another proposal floating around is whether loss of employment should also be excluded from the list or not. Some legislatures still have to decide the status of working poor under severe financial penalties or driving without insurance even when they can’t afford it. The proposal has not been passed yet because a substantial part of these penalties help balance government budget, but affordable automobile insurance is definitely a hot topic among the lawmakers.

Law makers should also explore the idea of allowing bare bones policies under which drivers coming in low income category would be allowed to not to go for expensive health insurance policies. The situation has already become alarming since numerous drivers are already on the road driving without insurance because they cannot afford it.