California Car Insurance 101 – What you need to know about your car insurance policy

Auto insurance is technical due to the fact that it is a legally binding document and every aspect of your auto insurance policy has been thoroughly challenged in court. By understanding car insurance terminology and concepts, you can buy car insurance in California with confidence and even save money along the way.

California Auto Insurance Policy Terminology 101

  • Limits of liability – This is the part of the policy that indicates the degree of protection you have in the event of an injury or property accident. In California, the state requires a minimum of $15,000 for one person injury or death, $30,000 for multiple person injury or death, and $5,000 for property damage. Your car insurance policy may state limits of 15/30/5 or if you have higher limits they may state 100/300/100 or 250/500/100 or many other variations. If you do not have liability insurance, your driver’s license may be suspended, your vehicle registration may be suspended, you may receive a ticket, your vehicle may be impounded and in the event of an accident, you will be personally responsible for compensating any damages. you caused.
  • Uninsured/Underinsured Motorist Coverage (UM/UIM) – This auto insurance coverage is generally misunderstood by consumers and is an important part of your auto insurance policy in California. If another driver causes an accident in which you are injured and they have low liability limits or worse, no insurance, your UM/UIM coverage will kick in to pay your medical bills. This coverage is for YOU, not the other driver.
  • Medical payment or bodily injury protection coverage – This coverage is considered “no-fault” coverage and pays for the medical expenses of you or your passengers in your car. What most consumers don’t know is that this coverage may apply if you are injured as a pedestrian or while getting in or out of a vehicle.
  • Comprehensive or non-collision coverage – This coverage protects your vehicle against any damage other than a collision with another vehicle or object. The exception is a collision with a bird or animal, which falls under full coverage. Examples of covered claims: hail, fire or flood.
  • Collision coverage – This coverage covers damage to your vehicle when it strikes or is struck by another vehicle or object. If you are involved in a car accident, your collision coverage is the protection that will pay to repair your vehicle.
  • Roadside assistance or towing coverage – Insurance companies use different descriptions for this coverage, and benefits may differ from insurer to insurer. This coverage will provide reimbursement if your vehicle needs towing or other roadside assistance, such as a flat tire.
  • Rental refund – In the event your vehicle is damaged and needs to be in the repair shop, this coverage will pay for a rental vehicle that you will be driving. Limits are usually listed on a daily basis and a total limit, such as 30/600, which would provide coverage at $30 per day up to a limit of $600.
  • Deductible – This is the amount you choose to pay before the insurance company pays any amount for comprehensive or collision claims. Deductibles allow you to lower your auto insurance premiums in California by choosing a higher deductible.

These are the most common terms listed on your California auto insurance policy. Each auto insurance company has their own additional features and benefits that are unique to their policy, so it’s important to read your policy and understand what coverages you actually have. By understanding the basics of how your California auto insurance policy works and the coverages provided, you can purchase California auto insurance with confidence and ensure you get the coverage you need at the price you can afford.

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