All About the California Automobile Assigned Risk Plan (CAARP)

CAARP (California Automobile Assigned Risk Plan) can help if your income or risk level prevents you from purchasing car insurance.
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The California Automobile Assigned Risk Plan, or CAARP, helps struggling drivers get the liability coverage they need. Unlike many services that only focus on income, CAARP includes high-risk considerations. The Plan is a unique way to be covered, but it’s important to understand what you’re signing up for before you begin the application process.

What CAARP is all about

CAARP is essentially a safety net for drivers who “in good faith” cannot procure insurance through the usual means. It provides liability insurance for drivers who cannot afford traditional insurance plans as a way to encourage and revitalize drivers so they can eventually use regular insurance again.
California’s state legislature created CAARP in 1947. Since then, the way CAARP operates, associated regulations, and even applicant qualifications have changed to accommodate developing culture shifts and norms.
CAARP operates by delegating work. Drivers who contact CAARP for help with insurance are processed and assigned to an insurance agent. The agent then finds an insurance company that will provide coverage for the driver.
The insurance company communicates with CAARP applicants the same way it communicates with other insured drivers. California law requires insurance companies to participate in the program. They must abide by rates set by CAARP’s advisory committee and the Department of Insurance for all drivers under the Assigned Risk Plan.
Insurance companies are only required to carry a driver with the Assigned Risk Plan for three years. If a driver needs the Assigned Risk Plan for more than three years, the insurance agent they were assigned to must create a new application. A new insurance company is then assigned the responsibility of insuring the driver under the Plan.

What CAARP does not do

Although it’s paid for by the insurance industry, CAARP is not an insurer. It is managed by AIPSO, which is a non-profit organization specifically designed to support and regulate CAARP. You can think of it as a support agency rather than an insurer.
As a government program, CAARP is responsible for maintaining sustainability. The insurance industry pays for government employees working in AIPSO, and the same industry bears the cost of the at risk drivers. The more cars an insurance company insures in the state of California, the more they are expected to contribute to CAARP.
Unlike traditional insurance programs, CAARP only has two plans. One covers private vehicles, and the other covers commercial automobiles. Since these plans have no strict guidelines, they rarely offer the kinds of extra benefits and services regular insurance plans do, and they are almost always strictly limited to liability insurance.

How to tell if you qualify for CAARP

CAARP is for low-income and high-risk drivers. Risks vary in the eyes of different insurance companies, but a few factors make you a greater overall risk. These include but are not limited to the following:
  • A driver with under three years’ driving experience
  • Drivers under the age of 25
  • Multiple speeding tickets on record
If you are seeking CAARP as a low-income driver, you can go straight to the AIPSO website and fill out an application that will determine your eligibility. High-risk drivers will have to call in and speak with a representative directly. In either case, there are several criteria you must meet before qualifying for CAARP:
  • Have a valid California driver’s license
  • Own a vehicle valued at no more than $25,000
  • Be at least 19 years of age
Many drivers meet the three criteria listed above have no need for CAARP. The application process will examine your needs based on either your income or your risk level. The only way to know for sure whether or not you qualify for CAARP is to begin an official application.
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