Auto insurance is mendatory in state of California. If you are involved in an accident and you are at fault, you are responsible to their vehicle damages and any bodily injuries and this is why you need insurance.
Liability insurance covers you in the event you are in a covered car accident and it is determined the accident is a result of your actions. Liability insurance will cover the cost of repairing any property damaged by an accident as well as the medical bills from resulting injuries. Most states have a minimum requirement for the amount of liability insurance coverage that drivers must have. If you can afford it, however, it is usually a good idea to have liability insurance that is above your state's minimum liability coverage requirement, as it will provide extra protection in the event you are found at fault for an accident, as you are responsible for any claims that exceed your coverage's upper limit. You wouldn't want to run the risk of having to pay a large amount of money because your policy limit has been exceeded.
If there is a covered accident, collision coverage will pay for the repairs to your car. If your car is totaled (where the cost to repair it exceeds the value of the vehicle) in an accident, collision coverage will pay the value of your car. .
If your car is older, it may not be worth carrying collision coverage on it, depending on the value. On the other hand, if you have a more expensive car or one that is relatively new, collision insurance can help get you back to where you were before any damage to your car. Note: If you have a lienholder, this coverage is required.
What if something happens to your car that is unrelated to a covered accident - weather damage, you hit a deer, your car is stolen - will your insurance company cover the loss? Liability insurance and collision coverage cover accidents, but not these situations. These situations are covered by Comprehensive (other than Collision) coverage.
Comprehensive coverage is one of those things that is great to have if it fits in your budget. Anti-theft and tracking devices on cars can make this coverage slightly more affordable, but carrying this type of insurance can be costly, and may not be necessary, especially if your car is easily replaceable. Note: If you have a lienholder, this coverage is required.
While Comprehensive coverage may be something you don't need to purchase, Personal Injury Protection (PIP) is something you should. The costs associated from an accident can quickly add up, and in order to cover those costs Personal Injury Protection is available. With this coverage, your medical bills along with those of your passengers will be paid, no matter who is at fault for an accident. Note: This coverage is not available in all states.
While state laws mandate that all drivers should be insured, this is unfortunately not always the case. Another issue that can arise is that while a driver may have liability insurance, many states have relatively low minimum coverage requirements that may not be enough to cover all of the expenses of an accident. So, if someone is legally responsible for damages related to an accident, you won't receive any payment if they do not have coverage or you will receive less than you need to cover the cost of damages if your damages exceed their coverage amount. This is the type of situation where Uninsured and Underinsured Motorist Protection would help with expenses.
Saving tip: Its usually relatively inexpensive to add uninsured/underinsured motorist protection to your car insurance policy, especially considering the amount of protection it offers.
This information in this newsletter is a summary only. It does not include all terms and conditions and exclusions of the services described. Please refer to the actual policy for complete details of coverage and exclusions. Coverage may not be available in all jurisdictions and is subject to underwriting review and approval.
A typical full coverage policy (liability, comprehensive and collision, uninsured motorist and medical coverage) should cover:
The damage you do to others, up to your liability limits.
Your car, up to its fair market value, minus your deductible, if you are at fault or the other driver does not have insurance or if it is destroyed by a natural disaster or stolen.
Your injuries and those of your passengers, if you are at fault, up to the amount of your medical coverage.
Your injuries and yours of your passengers, if you are hit by an uninsured motorist, up to the limits of your uninsured motorist policy.
Racing or other speed contests
Off-road use
Use in a car-sharing program
Catastrophes such as war or nuclear contamination
Destruction or confiscation by government or civil authorities
Using your vehicle for livery or delivery purposes; business use
Intentional damage
Freezing
Wear and tear
Mechanical breakdown (often an optional coverage)
Tire damage
Items stolen from the car (those may be covered by your homeowners or renters policy, if you have one)
A rental car while your own is being repaired (an optional coverage)
Electronics that aren't permanently attached
Custom parts and equipment (some small amount may be specified in the policy, but you can usually add a rider for higher amounts)
You are required to have liability insurance or some other proof of financial responsibility in every state. Coverage comes in varying levels, from the mandatory minimum to as much as $500,000. You as a car owner are on the hook personally for any injury or property damage beyond the limits you selected. Your insurance company won't pay more than your limit. But liability coverage won't pay to repair or replace your car. If you owe money on your vehicle, your lender will require that you buy collision and comprehensive coverage to protect its investment. After you pay off the loan, the choice to buy comp and collision is yours alone.
We have our own rules of thumb on insuring any car:
When the car is new and financed, you have to have full coverage. Keep your deductible manageable.
When the car is paid off, raise your deductible to match your available savings.
When you reach a point financially where you can replace your car without the assistance of insurance, seriously consider dropping comprehensive and collision. Use Insurance.com's online car insurance calculator to get our recommendation of what car insurance coverage you should buy. It'll also recommend deductible limits or if you need coverage for uninsured motorist coverage, medpay/PIP, and umbrella insurance.
Car insurance rates are very specific to the person who owns the car: Your age, driving record, credit history and location count as much as the kind of car you are driving. Rates also vary by hundreds of dollars from company to company. That's why we always suggest, as your first step to saving money, that you compare quotes.
You also want to have enough coverage to pay for the other parts damages and your own. Many times you find yourself in an unpredicted situation and having insurance and the right coverage will help you get the situation with the least cost to you.
We can help you find the right insurance coverage for all your vehicles at a very competitive price from a top rated company.
