CAARP Introduction, Part III: CA Low Cost Auto Ins. Program


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Other Issues regarding the LCA Program

Commission

The assigned company must pay the producer the full commission due within 30 days from the date the company receives the application from CAARP. The LCA commission is 12% of the total policy premium. The producer is guaranteed $35.00 in commission at the inception of the policy, even if it is only in force for just one day.

The producer states on the application that they will repay any unearned commission within 30 days from the company's request.

Renewals

Each year the insured must re-qualify for the LCA Program before a renewal quote can be offered. At least 75 days prior to the expiration date of the current policy, if the insured appears to be eligible, the company may request eligibility information. The insured will be asked to verify their income and residency, plus the insurance company will run a motor vehicle report to verify that the insured is still eligible for the LCA Program.

The insured must provide a response in 30 days to avoid non-renewal of their policy.

At least 55 days prior to the expiration date of the current policy, if the insured has failed to respond to the company's request for information, a second request will be sent. The insured will be given 15 days to respond. If the insured doesn't respond by the 40th day prior to the expiration date of the policy, the insurer will issue a notice of non-renewal in accordance with the Program rules.

If the company receives the information at least 40 days prior to the expiration date, it will review the qualifications of the insured and if the insured is still eligible, a renewal will be offered.

As long as an insured continues to meet all LCA Program eligibility requirements, the company is obligated to renew the policy every year.

Cancellations

If the insured requests a cancellation for any reason, the policy shall be cancelled pro rata. The only way a company can cancel is for non-payment, misrepresentation or if they discover the insured has other auto liability coverage.

Certified Producer Requirements

All certified producers are required by law to offer the California Low Cost Auto Insurance Program (LCA) to all potential eligible consumers. California Insurance Code §11629.745 states that producers who conduct business in a county in which a low-cost automobile insurance policy is available "shall inform every new prospective automobile insurance policyholder who requests a minimum limits or basic limits insurance policy, or coverage to meet California's minimum limits automobile insurance requirements, that the low-cost automobile insurance policy may be available for qualifying motorists."

Certified producers are required to assist these individuals in completing the application for eligible applicants to secure insurance through the LCA Program. If a prospective client wishes to purchase the LCA Program insurance and you as a certified producer have never written a LCA Program application, contact CAARP for assistance.

If a consumer asks for the LCA Program and the producer refuses, the consumer can contact CAARP and issue a complaint. If a complaint is issued against the producer or agency, CAARP's manager will send a letter to the producer requesting their written explanation within 10 working days.

If the producer does not respond to the letter within 10 working days, a 2nd Request letter will be sent to the producer. A producer who fails to respond may be referred to CAARP's Peer Review Subcommittee and the California Department of Insurance for disciplinary action.

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Not only are policy forms, clauses, rules and court decisions constantly changing, but forms vary from company to company and state to state. This material is intended as a general guideline and might not apply to a specific situation.
The authors, LunchTimeCE, Inc. and AIPSO, and any organization for whom this course is administered will have neither liability nor responsibility to any person or entity with respect to any loss or damage alleged to be caused directly or indirectly as a result of information contained in this course.