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Consumer advocate blocks auto insurance rate hike

Consumer Watchdog has managed to block a plan to hike the rates of drivers under California’s low-income auto insurance program.

The California Automobile Assigned Risk Plan (CAARP) had proposed increases averaging 3.8% statewide for California’s Low Cost Auto Insurance Program – which allows low income motorists to purchase a lower cost liability auto insurance policy with more limited coverage. The rate increases would have been larger in certain parts of the state, such as an average increase of 4.3% for drivers in Los Angeles and Orange counties, and 7.3% in Ventura, San Bernardino, Riverside, and San Diego.

To counter this rate increase, Consumer Watchdog said that submitted comments to the state’s insurance commissioner on June 10, requesting a block to the proposed changes. The consumer advocate group stated that the data used by CAARP to calculate the proposed rate increases dated back before the COVID-19 pandemic, and thus did not reflect reduced driving as a result of California’s stay-at-home order.

Consumer Watchdog noted that the blocked rate hikes resulted in total savings of $259,000 in annual premiums for about 11,470 Low Cost Auto insured vehicles.

“We are pleased with CAARP’s decision to drop its rate hike proposal at a time when low income Californians are bearing the brunt of the economic impacts of the pandemic,” said Consumer Watchdog senior staff attorney Pamela Pressley. “Californians with limited incomes must not be forced to choose between family necessities and auto insurance that they are required to purchase under California law.”

Pressley added that most other standard auto insurers have similarly stopped hikes based on outdated loss proposals that were filed earlier this year.

On top of halting the rate increases, CAARP has committed to offering 30% premium refunds to Low Cost Auto Insurance Program policyholders for March through May of 2020, as well as 15% premium refunds for June and July 2020. The decision was made in response to bulletins issued by the state insurance commissioner directing all auto insurance companies to offer refunds to reflect reduced driving behavior.

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