Understanding all your options for car insurance

Auto insurance is a critical element of responsible vehicle ownership, providing financial protection in the event of an accident, theft, or other vehicle-related incidents. California's auto insurance requirements and coverage options can be complex, so it's important to understand the various elements of coverage available.

​This guide outlines the different types of auto insurance coverage in California, including the levels of coverage, their purposes, and considerations for choosing the best coverage for your needs. We'll also discuss Proposition 213 and the financial responsibility of drivers in California.

Types of Auto Insurance Coverage

1. Liability InsuranceWhat It Covers: Liability insurance covers damages and injuries that you cause to other people in an accident. It is divided into two main components:

• Bodily Injury Liability (BIL): Covers medical expenses, lost wages, and pain and suffering for other parties injured in an accident you caused.
• Property Damage Liability (PDL): Covers repairs or replacement of property damaged in an accident you caused, such as other vehicles, fences, or buildings.

California requires a minimum of $15,000 per person and $30,000 per accident for bodily injury liability, and $5,000 for property damage liability. However, higher coverage limits are recommended to ensure adequate protection. For example, a common recommendation might be $100,000 per person, $300,000 per accident for bodily injury, and $100,000 for property damage. Liability insurance is mandatory in California, and you should always carry at least the minimum required coverage. However, higher limits are advisable to protect your financial assets in the event of a serious accident.

2. Collision Coverage: Collision coverage pays for repairs to your vehicle or its replacement if it’s damaged or totaled in a collision, regardless of who is at fault. Coverage levels typically depend on the value of your car and the deductible you choose. The deductible is the amount you pay out of pocket before your insurance covers the rest. Common deductibles range from $250 to $1,000. If your vehicle is relatively new or has a high value, collision coverage is recommended. If your car is older and worth less, you might consider whether the cost of this coverage outweighs the potential benefit, especially if the repair costs are lower than the deductible.

3. Comprehensive Coverage: Comprehensive coverage protects your vehicle from damage not caused by a collision. This includes theft, vandalism, natural disasters, falling objects, and animal strikes. Similar to collision coverage, comprehensive coverage includes a deductible that you must choose. The coverage amount typically matches the vehicle’s value. If you want protection against a broad range of potential damages beyond just collisions, comprehensive coverage is advisable. It is particularly useful if you live in an area prone to natural disasters or high crime rates.

4. Uninsured/Underinsured Motorist Coverage: This coverage protects you if you're in an accident with a driver who has no insurance (uninsured) or not enough insurance (underinsured) to cover the damages.  Coverage levels usually mirror those of your bodily injury liability limits. For instance, you might choose $30,000 per person and $60,000 per accident. Given that not all drivers carry sufficient insurance, uninsured/underinsured motorist coverage is a good safeguard to have. It helps ensure that you’re not left with significant out-of-pocket expenses if you’re involved in an accident with an inadequately insured driver.

5. Medical Payments Coverage: Medical payments coverage, or "MedPay," covers medical expenses for you and your passengers after an accident, regardless of who was at fault. Coverage amounts vary, but common limits are between $1,000 and $10,000. MedPay is particularly useful if you have high medical expenses or if your health insurance has high deductibles. It ensures that medical costs are covered immediately after an accident.

6. Rental Reimbursement Coverage: Rental reimbursement coverage pays for the cost of renting a car while your vehicle is being repaired due to a covered claim. Coverage limits vary, but typically cover up to $30 to $50 per day for a certain number of days. If you rely on your vehicle daily, rental reimbursement can be a valuable addition to your policy, ensuring you have transportation while your car is out of commission.

7. Roadside Assistance Coverage: Roadside assistance provides services like towing, battery jumps, lockout assistance, and fuel delivery. Coverage often includes a limited number of service calls per year, with specific limits for each type of service. If you frequently drive long distances or in remote areas, roadside assistance can be a lifesaver. It provides peace of mind knowing that help is available if you encounter a breakdown.

Proposition 213, passed in 1996, is a California law that limits the ability of drivers who are uninsured or underinsured to recover damages for non-economic losses (such as pain and suffering) in personal injury lawsuits arising from car accidents.  If you're found to be uninsured or underinsured at the time of an accident, Proposition 213 restricts your ability to claim compensation for non-economic damages, although you can still recover for economic damages like medical expenses and lost wages. Proposition 213 highlights the importance of maintaining adequate insurance coverage. To protect yourself fully and avoid potential limitations on your ability to recover damages, ensure you have sufficient insurance coverage that meets or exceeds the state's minimum requirements.

In California, drivers must demonstrate financial responsibility, meaning they must be able to cover the costs of damages or injuries resulting from a car accident. This is primarily achieved through auto insurance.

You can show proof of financial responsibility through:

• Insurance: A valid insurance policy meeting California's minimum requirements.
• Cash or Bonds: A cash deposit or a surety bond with the California Department of Motor Vehicles (DMV) for a minimum amount ($35,000).
• Self-Insurance: For those with a fleet of 25 or more vehicles, a self-insurance certificate from the DMV.

Penalties for Non-Compliance: If you're caught driving without insurance, you may face fines, vehicle impoundment, or suspension of your driver's license and registration. Adhering to California's financial responsibility laws is crucial to avoid legal penalties and ensure that you can cover the costs of any damages you cause. Always carry adequate insurance coverage and keep proof of insurance with you.

Choosing the Best Coverage for You:

1. Vehicle Value: Consider the value of your vehicle when deciding on collision and comprehensive coverage. Higher-value vehicles typically require more extensive coverage.
2. Driving Habits: If you drive frequently or in high-risk areas, additional coverages like uninsured motorist or roadside assistance may be beneficial.
3. Budget: Balance your insurance premiums with your financial ability to cover deductibles and out-of-pocket expenses. Opt for coverage levels that offer adequate protection without overextending your budget.

Evaluate Your Risks:

• Location: If you live in an area prone to natural disasters or high crime rates, comprehensive coverage and theft protection might be more critical.
• Health Insurance: If you have robust health insurance, you might consider a lower MedPay limit, whereas if your health insurance has high deductibles, higher MedPay coverage could be advantageous.

Review and Compare Policies:

• Shop Around: Compare quotes from multiple insurers to find the best rates and coverage options.
• Check Insurer Ratings: Research customer satisfaction and financial stability of insurers to ensure reliable service.

Regularly Update Coverage:

• Life Changes: Reevaluate your coverage if you move, acquire a new vehicle, or experience significant changes in your driving habits.

Understanding auto insurance coverage in California is essential for protecting yourself financially and meeting legal requirements. By assessing your needs, evaluating risks, and comparing policies, you can select the right coverage to ensure you're adequately protected. Remember to stay informed about legal changes, such as Proposition 213, and always maintain proof of financial responsibility to avoid penalties. Taking these steps will help you make informed decisions and secure the best coverage for your circumstances.