Auto insurance premiums have risen dramatically across the nation, with some states seeing rate increases approaching 15%. In California, however, the state regulates insurers, and individual insurance companies must apply for approval of premium increases. Many companies have already received permission for rate hikes in California this year or have applied for premium increases. With car insurance costs on the rise, it becomes more important than ever to determine the right amount and type of coverage for your individual circumstances.
Different Types of Car Insurance Protect You and Others on the Road
Before deciding the amount of coverage needed, it helps to review the various types of vehicle policies. Some coverage protects other drivers, passengers, and property owners, while other types of insurance protect you and your vehicle.
If you are involved in an accident, liability insurance pays for bodily injury or property damage to others up to the amount of the policy. A full-coverage policy of 100/300/100 pays up to $100,000 of expenses for a single individual injured, up to $300,000 total expenses if more than one person is injured, and up to $100,000 of property damage sustained in the accident.
Personal Injury Protection
PIP insurance pays for medical costs up to the policy limit regardless of who caused the accident.
Uninsured or Underinsured Motorist Insurance
This coverage protects you if another driver causes injury or damages in an accident but has no insurance or lacks enough insurance to pay the bills.
Collision coverage takes care of the repair costs when your vehicle sustains damage in an accident.
This insurance kicks in if your vehicle suffers damage in incidents not involving collisions. Some examples might include vandalism, theft, or weather events.
An umbrella policy provides additional insurance if expenses exceed the dollar limitations of your policy.
California Mandates Certain Types and Amounts of Car Insurance
If you want to drive your vehicle on California roadways, the state tells you the minimum amount of auto insurance you must carry. It is almost always in your best interest, however, to purchase a policy with higher limits. You must show proof of insurance when renewing your vehicle registration when you are involved in an accident, or at the request of law enforcement. Failure to maintain minimum insurance requirements can result in large fines, loss of driving privileges for as long as four years, or impoundment of your vehicle.
California requires a 15/30/5 liability policy that provides coverage of up to $15,000 for one person’s injuries in an accident, up to $30,000 total for all persons injured in an incident, and up to $5,000 for a vehicle or property damage. If you think this isn’t much coverage, you are correct. Consider hospital costs, physician’s fees, vehicle prices, and repair costs. Bills add up quickly, and larger amounts of insurance are strongly recommended.
Creditors May Require Insurance on Leased or Financed Vehicles
If you lease a vehicle or finance your car or truck with a bank loan or other option, the transaction may include mandatory types and amounts of car insurance. Since lenders and leasing agencies want to protect their investments, insurance requirements make good sense.
Car Insurance Protects Your Present and Future Assets
While the state and creditors such as banks may determine the minimum amounts of car insurance you need, another vital reason to review your car insurance coverage involves the protection of your assets. If you own your vehicle outright, for example, you decide whether to buy collision and comprehensive policies and the amount of the policy limits. If you do not cover your vehicle and it is damaged or stolen, you may suffer a significant financial loss.
Failure to carry adequate amounts of liability insurance may also put your assets at risk in case of an accident. Since California is a pure comparative fault state, you may have to pay for medical expenses exceeding your policy limit if multiple persons are injured in an accident even when the other driver is assessed a greater percentage of fault than you.
Many Factors Affect Your Individual Premium
Some considerations used by insurers to set rates are beyond your control, but you can manage others. Insurance companies usually evaluate these details:
- Driving records
- Location and zip code
- Type of vehicle
- Amount of deductible
- Teen drivers
Note that California does not allow insurance companies to consider credit scores when determining individual insurance premiums.
While you probably wouldn’t move to lower your car insurance costs, you should consider insurance rates when buying a different vehicle. Drivers listed on the policy should also do everything possible to maintain clean driving records and avoid citations.
A Good Attorney Can Sort Through the Car Insurance Maze
Whether you have been involved in a motor vehicle accident and need help with a personal injury claim, or you have questions about car insurance coverage, an experienced personal injury lawyer can provide the advice and assistance you need. Contact us at The Law Offices of Brent D. George today for a free consultation.