California Automobile Assigned Risk Plan (CAARP)

California Automobile Assigned Risk Plan (CAARP)

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The California Automobile Assigned Risk Plan (CAARP) was created in 1947 by the state legislature to make sure that all drivers on the road are protected by auto insurance.

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What is the California Automobile Assigned Risk Plan (CAARP)?

The California Automobile Assigned Risk Plan is California's residual auto insurance market, which is also called the non-standard market. It's where consumers go after they can't find an insurer in the regular market who is willing to quote them, or fall under specific guidelines (and can't access cheaper car insurance that better-rated drivers get) and can't afford the standard market rates.

Through CAARP, these motorists are placed into a residual pool that companies are collectively responsible for underwriting. In other words, participating insurance companies — which are most licensed insurers in California — are obligated to accept a certain number of non-standard motorists who are delegated by the CAARP. The amount of assigned motorists is in proportion to the standard or preferred auto insurance market share that each insurer has in California. For example, State Farm has approximately 15% of the market share in CA, so we would expect that it has a similar share of the non-standard marketplace business too.

There are two types of plans that are issued through the CAARP administration office. One of them is for income-eligible drivers through California's Low Cost Auto Insurance Program (CLCA). The other type is for high-risk drivers with more than a few accidents or traffic tickets who are unable to obtain a policy through the voluntary auto insurance market.

Insurance plans through CAARP

A policy through the CAARP does not mean that it will be more affordable than if you go through the regular voluntary market. It is merely a guarantee that you will get insurance for you and your vehicle when everyone else has rejected you. With that said, note that you may only go through this program when you are unable to find a voluntary standard company to insure you. Unless you are getting a policy through the CLCA program, it can cost more than a policy through the voluntary market, even if it is with a non-standard insurer that normally charges higher than average rates for insuring higher-risk drivers. However, paying for these types of assigned risk plans are better than the potential financial liability from an accident you cause, not to mention the penalties for driving without insurance in CA, and getting your car registration suspended if caught.

High-risk auto insurance policy

When you are a high risk driver, it can be difficult to get affordable car insurance, and sometimes even to get a willing insurer to give you a policy at all. By law, licensed auto insurance providers in California establish an approved Driver Class Plan, by which all drivers are grouped into one of several classes by their profile and driving records.

Each insurer has its own risk assessment method, but the higher risk class they assign you to, the higher your insurance costs will be. When you fall under a class of higher risk that the insurer is unwilling to take, it will likely decline to insure you. There are several factors that may cause insurance companies to consider a driver as "high-risk," such as having less than three years of driving experience, multiple speeding tickets, or being below the age of 25. However, unless it is DUI of drugs or other legally severe offenses — such as a non-adult with a DUI record, chances are there may be non-standard insurance companies that specialize in insuring these high risk drivers.

There are no legal guidelines on the amount of coverage for high-risk drivers' insurance plans obtained through CAARP. It is up to the assigned insurer and the driver to reach an agreement on the coverage limits. Insurers in the residual pool have to offer at least the mandatory minimum limits, but insurance agents we’ve spoken to say that fewer insurance companies are willing to provide limits higher than the state minimums to really high-risk drivers in California.

Each insurer is only obligated to keep the CAARP-assigned high risk drivers for three years. So if you are still a high-risk driver after three years — that is, you were unable to maintain clean driving records in that three years or it wasn't enough to bring your driving record down to lower risk — then the CAARP will assign you to a new insurance company if you don't get renewed. It will be in your best interests to practice safer and more conservative driving habits — you'll establish a record as a more standard motorist, and be able to access more competitive auto quotes in the regular market.

California's Low Cost Auto Insurance Program (CLCA) policy

The Department of Insurance created the CLCA in 1999 as its effort to provide affordable auto insurance for motorists facing specific financial constraints. Drivers who have good driving records and valid California driver's licenses but are unable to obtain auto insurance due to limited resources may still be able to buy a policy. If your household income is below 250% of federal poverty level guidelines, then the CLCA can get you more affordable coverage.

The CLCA will assign eligible drivers to insurers through the CAARP pool. A policy through the CLCA is the only occasion when an insurer may issue and a driver may carry a liability policy below the state-mandated coverage limits. All CLCA liability policies have the coverage limits of 10/20/1.

How to get insurance through CAARP

To enter the CAARP as an income-eligible driver, you must first complete an online eligibility questionnaire through the CLCA's official website:

To enter the CAARP for a high risk policy, you have to call the CAARP service number below. A representative will put you in contact with a local certified producer in your region, who is a CAARP specialist that acts as the two-way mediator between the high-risk driver and the designated insurer. Your certified producer will then connect you with an auto insurance company in California. Afterward, you and your assigned certified producer will work with the insurance company's agent to get you an appropriate policy.

To Find a CAARP Certified Producer, call: 1 (800) 622 – 0954

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