California Governor Vetoes Auto Insurance Program

A state-backed low-cost automobile insurance for Californians is threatened following Governor Arnold Schwarzenegger’s veto of a bill that would have extended the program until 2016.

The veto has consumer groups calling foul. They say the bill had bipartisan support and is sorely needed in a bad economy with a 12% unemployment rate.

The program is scheduled to expire in January 2011
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“This veto is out of touch with the real economy that many Californians are facing,” said Doug Heller, Executive Director of the Consumer Watchdog, in a prepared statement. “Why would a program that has allowed nearly 50,000 Californians to buy auto insurance instead of driving uninsured and doesn’t cost the taxpayers a dime be on the Governor’s chopping block? It’s not just low-income families who benefit from this program but all the people who have had their claims paid because another driver was carrying this policy.”

According to the Los Angeles Times, the governor vetoed the bill, which was written by Assemblyman Dave Jones (D-Sacramento) because, he said, “The effectiveness of the program is questionable given the number of policies in effect and low participation rate amongst the insured.”

He did suggest, however, that Jones and the sponsor of the bill, state Insurance Commissioner Steve Poizner, send him a refined proposal in next year’s legislative session.

The low-income program provides affordable coverage to any driver over the age of 19 years with a good driving record who has an income 250 percent of the federal poverty level, or less. It costs about $350 a year and requires no state financial support.

According to Consumer Watchdog, more than 80% of those who have bought a policy were uninsured prior to their purchase.. .