Low-Cost California Auto Insurance Company Criticized for Raising Rates

cheap auto insuranceA low-cost California auto insurance company is allegedly charging a higher price for its low-income customers than warranted, according to a new analysis from Consumer Watchdog.

The non-profit agency stated in the analysis, which was sent to the California Department of Insurance this week, that the program should continue to offer cheap auto insurance by dropping rates by at least 3.9 percent.

California Auto Insurance Overpriced

The actuarial analysis created by Consumer Watchdog and submitted to the state’s insurance department on Wednesday alleges that the California Low Cost Auto Insurance Program (CLCA) is wrongfully overcharging low-income drivers who have a good driving record.

The program was created in 1999 to provide drivers in the state with a discount car insurance option if they earn a lower income.

Recently, the California Automobile Assigned Risk Plan (CAARP), which oversees the CLCA, proposed to raise premiums for the cheap auto insurance option by 6.7 percent (approximately $25) for drivers in Los Angeles where most of the policies are sold.

Consumer Watchdog, however, believes rates should be reduced by about $14 to continue providing low-income drivers with California auto insurance they can afford.

Securing Cheap Auto Insurance

The California Department of Insurance said this week that it is conducting an annual rate review to determine whether to increase, decrease or maintain the California auto insurance program’s rate structure.

In the meantime, drivers in California and around the country interested in securing cheap auto insurance can consider the following tips:

  • Shop around for quotes: Rather than seek one quote from one company, shop around for multiple quotes. This way, you can compare prices and other features to determine which coverage is best for you.
  • Seek discounts: Never assume the quote you’ve been granted is the company’s final offer. After receiving your quote, contact the company to find out if it offers discounts for everything from purchasing a policy with your partner to bundling with another insurance policy.
  • Pay as you drive: If your drive to and from work is not far, or you work from home and barely drive at all, you could benefit from a Pay-as-You-Drive (PAYD) plan that rewards drivers who spend less time on the roads and have good driving behaviors when behind the wheel.

It’s no secret that auto insurance rates fluctuate, making it tough to always pay the desired price for coverage. But by taking the right steps, it’s possible to always maintain cheap auto insurance, even when a company chooses to raise its customers’ premiums.