It is not uncommon for an individual to choose the least expensive auto insurance policy available. This may not be an area where cutting cost is in your best interest. It’s important to know exactly what your policy does, and does not, include, as well as, what the different types of coverage actually do and do not protect.
In California, all vehicles in operation must have “financial responsibility” i.e. insurance. Liability insurance is the most basic policy to meet the insurance requirement. Liability only compensates the other people involved in the accident (when the accident is your fault), and not the policy holder. If your policy is only liability coverage, your car and your injuries will not be covered under this policy.
Liability Coverage Minimum Limits
In California, the minimum liability insurance requirements are 15/30 ($15,000 per person, $30,000 per accident) and $5,000 for damage to property. While minimum coverage policies will be cheaper, they still open the driver/owner up to personal liability. If you are at fault in an accident where injuries and damage exceed the limits of your policy, you can be personally sued for the difference.
Collision coverage is recommended because the policy will cover the damage to your vehicle. Even when the vehicle itself is worth very little, the cost to repair or replace the vehicle may be much greater than the additional monthly payment to include this coverage on your policy.
Med Pay coverage covers medical bills for the driver of the vehicle. This includes medical bills when the driver is at fault for the collision. Medical bills can be costly and some services may not be covered under general medical insurance policies and programs, so each individual should plan for how they would pay for treatment after an accident.
Uninsured/Under-insured Motorist Coverage
We highly recommend our clients obtain Uninsured/Under-insured Motorist coverage in their auto insurance policy. This coverage works when you are not the at fault party in the collision but the party at fault either does not have insurance, or has policy limits too low to cover all your injuries and damages.
Be careful not to allow excluded drivers behind the wheel, even in an emergency, as your policy will not cover your liability. If someone lives in your household and will be driving the vehicle, you should include them on your policy.