California Property & Casualty Broker-AgentMiscellaneousEasy
A California resident has been unable to obtain automobile liability insurance from the standard market due to a poor driving record. Which state-mandated program is designed to ensure that such drivers can still obtain the legally required minimum liability coverage?
- ACalifornia Earthquake Authority (CEA)
- BCalifornia Automobile Assigned Risk Plan (CAARP)
- CNational Flood Insurance Program (NFIP)
- DFair Access to Insurance Requirements (FAIR) Plan
Show answer & explanationAnswer & explanation
Correct answer: B. California Automobile Assigned Risk Plan (CAARP)
The California Automobile Assigned Risk Plan (CAARP) is a state program that makes automobile liability insurance available to drivers who are unable to obtain coverage in the voluntary market due to their driving record or other factors.
Why the other options are wrong
- A. CEA provides earthquake insurance.
- C. NFIP provides flood insurance.
- D. FAIR Plan provides property insurance for high-risk properties.
California Automobile Assigned Risk Plan (CAARP)
A state-mandated program that serves as a residual market for automobile liability insurance, ensuring that high-risk drivers can obtain the legally required minimum coverage.
- Administered by a governing committee.
- Insurers licensed in California must participate.
- Provides basic liability limits, not comprehensive or collision.
Memory trick: CAARP for cars, FAIR for homes, CEA for quakes.