California Property & Casualty Broker-AgentMiscellaneousEasy
An individual with multiple traffic violations and a history of at-fault accidents has been rejected by several auto insurance companies in California. They need to obtain minimum liability insurance coverage to legally drive. Through which of the following mechanisms can this individual most likely secure the required coverage?
- AThe California Earthquake Authority (CEA).
- BThe California FAIR Plan.
- CThe California Automobile Assigned Risk Plan (CAARP).
- DA preferred or standard auto insurance carrier, by paying a higher premium.
Show answer & explanationAnswer & explanation
Correct answer: C. The California Automobile Assigned Risk Plan (CAARP).
The California Automobile Assigned Risk Plan (CAARP) is designed to provide liability insurance to motorists who are unable to obtain coverage in the voluntary market due to their driving record or other high-risk factors.
Why the other options are wrong
- A. The CEA provides earthquake insurance, not auto liability.
- B. The FAIR Plan provides basic property insurance, not auto liability.
- D. Given the 'multiple traffic violations and a history of at-fault accidents,' it is highly unlikely a preferred or standard carrier would accept them, even with a higher premium, making CAARP the most probable solution.
California Automobile Assigned Risk Plan (CAARP)
A program in California that provides automobile liability insurance to individuals who are unable to obtain it through the voluntary market due to their high-risk driving record or other factors.
- Market of last resort for auto liability
- For high-risk drivers
- Ensures minimum legal liability coverage
Memory trick: CAARP is for CARS, high-risk drivers, a LAST RESORT.