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Jun 21, 2022
California can be a dangerous place for drivers of all ages and abilities. In fact, a recent Policygenius.com report confirmed that in 2019, California had the highest number of fatal car crashes, with 3,316. Those car accidents led to a tragic 3,606 deaths on California’s roads and highways.
Types of Car/Auto Insurance Available in California
As a driver in California, the law mandates that you carry a minimum amount of auto insurance coverage. But while it’s widely known that car insurance is mandatory for all drivers in California, the different types of coverage available to residents are not always well understood.
Let’s take a look some of the most important types of car insurance coverage options to consider when insuring your vehicle.
What Types of Car/Auto Insurance Coverage Policies are Available in California?
1. Personal Liability Coverage:
Personal liability coverage is typically thought of as the minimum requirement for drivers to obtain without having to worry about incurring fines and/or a driver’s license suspension (sometimes up to four years for an infraction).
Under California law, the minimum car insurance policy requirements are as follows (i.e. you, as a driver, must have at least this amount of coverage):
Minimum Bodily Injury Liability Limits:
- $15,000 for the death or injury of any one person. If one person is injured in the accident, your coverage pays up to $15,000.
- A total of $30,000 for the death or injury of more than one person in any one accident. If two or more people are injured, the coverage pays up to $30,000. The coverage will not pay more. The injured people share the money.
- This coverage applies to injuries that you cause to someone else.
Minimum Property Damage Liability Limits:
- $5,000 for damage to the property of other people.
- This pays for any damage that you may cause to someone else’s car, or to objects and structures that your car hits.
However, in addition to the minimum requirements outlined above, auto insurance companies are required to offer you what’s known as uninsured motorist bodily injury (UMBI) coverage and uninsured motorist property damage (UMPD) coverage. While both of those types of coverage are optional, there are a number of reasons why you might want to consider including them on your auto insurance policy.
For example, while your minimum personal liability auto insurance coverage will pay for losses incurred by other people in a car or motor vehicle accident that is your fault, that minimum coverage will not pay for any damages that you incur as a result of the collision. In other words, if you’re injured in an accident that you cause (are liable for), that minimum policy will more than likely not cover any ensuing medical bills, pain and suffering, rehabilitation, vehicle repairs, or lost wages/earning capacity – all of which can accumulate to hundreds of thousands and sometimes millions of dollars.
Although it’s widely accepted that purchasing the minimum required auto insurance coverage can be incredibly risky, many California drivers choose to do so in an effort to save money (particularly today, given the economic uncertainty with inflation and rising gas prices).
However, it’s important to note that extended coverage may be much more affordable than you realize. And if you happen to cause an accident that seriously injures another driver or pedestrian, a minimum coverage policy will more than likely not pay for 100% of that individual’s resulting damages. Accordingly, you would be liable out-of-pocket for any excess damages. Sadly, as we’ve seen on many occasions here at Dordulian Law Group, having minimum auto insurance coverage and causing a serious accident can lead to substantial financial hardship and even bankruptcy.
Wondering how much it would cost to increase your minimum liability coverage? Take a look at our recent blog on the varying factors that can affect your auto insurance rates.
2. Collision Coverage:
Collision auto insurance coverage helps pay for damage to your personal vehicle that may have been caused by another car, a pedestrian, a scooter, a bicyclist, or another physical piece of property, such as a road defect, tree, fence/gate, etc.
There are two types of collision coverage:
- Basic collision coverage
- Comprehensive collision coverage
Both types of collision coverage will pay the lesser of:
- The expense to repair your damaged vehicle
- The expense to replace the damaged vehicle if it is deemed by an adjuster to be a “total loss”
However, it’s important to note that the insurance company will not cover anything in excess of your maximum policy limits. That’s why it’s commonly recommended that California drivers purchase collision and comprehensive coverage with high enough limits so that, in the event that your vehicle needs to be replaced or is a total loss, said limits would be sufficient.
3. Comprehensive Coverage:
What is comprehensive auto insurance coverage? It offers a number of benefits depending on specific circumstances, such as:
Payment for vehicles damaged by causes including:
- Natural disasters/inclement weather
- Theft
- Riots
- Fires
- Vandalism
- Falling objects
- Other miscellaneous incidents that were not directly caused by the policyholder/driver/vehicle owner (e.g. a child home from college, a relative or friend borrowing your car, etc.)
Comprehensive coverage is often required for individuals who choose to lease or finance their vehicles.
4. Uninsured/Underinsured Motorist Coverage:
Uninsured or underinsured motorist coverage is available to pay out benefits if you happen to be injured in a car accident that is the fault of an uninsured or underinsured driver. In California, the Insurance Information Institute (III) estimates that 16.6% of drivers are uninsured. This is one of many reasons why obtaining uninsured/underinsured motorist coverage is so essential in the event of a car accident.
Moreover, while it’s often believed that one’s health insurance will serve as a substitute for UM/UIM coverage, that’s not always the case (and it your health insurance does not extend to cover major injuries, you could experience substantial financial hardship as a result).
Regardless, you will more than likely incur fees for things like copays and deductibles out-of-pocket after a car accident with an uninsured/underinsured motorist. Moreover, health insurance absolutely will not cover the costs of any physical damage to your vehicle.
Here are some additional important facts on UM/UIM coverage:
- Auto insurance carriers are required to offer uninsured motorist bodily injury and uninsured motorist physical damage coverage to customers when they purchase a liability insurance policy (although you do have the option to waive that UM/UIM coverage).
- Drivers are strongly encouraged to purchase UM/UIM coverage with the same limits as their liability insurance policy.
- Drivers are strongly encouraged to always purchase as much uninsured/underinsured motorist coverage as they can reasonably afford (keeping in mind that the cost of increasing such coverage is often very minimal).
Med Pay falls under the category of what’s known as “no-fault insurance” in California. In other words, if you have “no-fault insurance,” your Med Pay claim will not be denied simply because you were liable for a car accident.
What does Med Pay cover?
- Healthcare costs (including hospital stays)
- Funeral expenses (if applicable)
Furthermore, as a no-fault insurance policyholder, you and eligible family members may be able to bring a Med Pay claim under certain circumstances, such as:
- If you were hit by a vehicle as a pedestrian
- If you were injured while riding in another person’s car
- If you were injured while using public transportation
6. Gap Coverage:
Perhaps the most misunderstood type of auto insurance coverage available, gap coverage can be essential if you’re leasing or financing your vehicle. For example, if you’re driving a new leased or financed vehicle and get into a serious accident that renders the car a “total loss,” gap coverage can help you avoid financial hardship.
Let’s take a look at gap coverage using an everyday example:
If you purchase a new Tesla Model X for around $110,000 and, after putting down a $10,000 deposit, you total that vehicle in a crash a few months later, who is going to cover the remaining $100,000 you owe? If you have a $2,000 deductible, that’s a start, but it’s hardly enough to cover the staggering bill you’re still facing.
This is where gap insurance can help.
With standard policies, the insurance company typically agrees to pay the “actual cash value” of a vehicle, but that doesn’t necessarily equal the remaining amount on your loan statement for the recent Tesla you purchased.
Thankfully, gap insurance will cover the remaining amount you owe in such a scenario. With gap insurance, your policy will pay the difference between the value of your car at the time of the accident and what you still owe via your loan on the vehicle (or through your lease).
Tips on Shopping for Affordable Auto Insurance Policies in California
The California Department of Insurance offers the following tips for savvy consumers looking to save on car insurance:
- Remember that auto insurance costs and coverage vary.
- Always shop around and get several quotes from different companies.
- Remember that a quote is merely an estimate of your premium amount.
- An agent or broker can help you figure out your insurance needs, get quotes, compare policies, and get the best discounts.
- Keep notes of your conversations with insurance agents, and consider having a trusted family member or friend with you.
When comparing auto insurance policies, remember to:
- Use the above information in the Dordulian Law Group blog to determine what types of coverage are best for you.
- Ask for each insurance company’s quote in writing.
- Compare quotes thoroughly.
- Ask for the complete name of the insurance company that will issue each policy.
- Make sure the company is licensed to do business in California by visiting www.insurance.ca.gov.
- Check the insurance company’s history of paying claims and look at their customer service reviews to gauge client satisfaction.
If you believe you’ve been treated unfairly by an insurance company or representative, go to www.insurance.ca.gov and search for “consumer complaint study.”
You may also call the California Department of Insurance at 1-800-927-4357 to file an official complaint.
How to Save Money on Your California Car Insurance Policy
The California Department of Insurance also offers the following tips for saving money on your auto insurance policy:
- Ask about multi-car discounts for insuring several cars.
- Ask about mature driver and good driver discounts.
- Ask about discounts for airbags, anti-theft devices, or other safety features.
- Ask about payment installment plans and if there are service fees.
- Ask about higher deductibles for comprehensive and collision coverage (this will often lower your monthly premium).
- Think about dropping comprehensive and/or collision coverage on an older car.
- If you do not have collision coverage, ask about uninsured motorist property damage coverage.
Injured in a Car Accident? Contact a Los Angeles, California, Personal Injury Lawyer
Contact us today at 818-322-4056 for a free consultation. You have nothing to lose and everything to gain by ensuring that the insurance company or at-fault party does not take advantage of your rights after a car, truck, or motorcycle accident injury due to another driver’s negligence.
Ready to file a claim and pursue justice through a financial damages award? Our expert attorneys are available online or by phone now.
You owe it to yourself to take every step towards avoiding financial loss after an unfortunate car accident that occurred through no fault of your own. With Dordulian Law Group’s (DLG) experienced Los Angeles car accident lawyers, there is never any obligation or upfront fee, and we are here to answer any questions you have 24/7.
We’ve helped injured victims like you recover more than $100,000,000 in settlements and verdicts while maintaining a near-perfect 98% success record. We’re here to fight for your right to maximum financial compensation after a car accident injury.
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