Understanding your auto insurance policy

California Vehicle Code § 16020 requires that all drivers and all owners of a motor vehicle must carry automobile insurance when operating a motor vehicle. California Vehicle Code § 16056 requires that the minimum coverage carried by an operator or owner of a motor vehicle must be a minimum of $15,000.00/$30,000.00. There are many different insurance policies with different types of coverage. The insurance policies are long and complex, and filled with different conditions and exclusions on when the policy applies. Make sure to review your policy in details before getting behind a vehicle.

Auto Insurance Costs

When purchasing auto insurance coverage, there are certain payments that must be made to maintain the auto insurance coverage without lapsing and additional payments that must be made when making a claim.

1. A “premium” is paid, depending on the policy, every six months, and it is the amount that is paid to the insurance company to purchase the auto policy. The premium payment covers the term or length of the policy, typically six months or one year, depending on the policy.
2. A “deductible” is paid when someone opens up a claim with their insurance company. Typically, deductibles range from $500.00 to $1,000.00. Depending on who the at-fault party is, the deductible could be recovered when making an insurance claim. No fees are paid to an insurance agent because they are paid by the insurance companies. However, if a broker is involved, there may be broker fees.

Auto Insurance Coverage Limits

Limits are typically divided into two parts: the first number covers the injury or death of the first claimant and the second number covers any additional parties by stating the maximum benefits per claim. For example, a $15,000.00/$30,000.00 will pay up to $15,000.00 for the death or injury of the first claimant and if more than one person is injured in the collision, a total of $30,000.00 will be paid out for the death or injury of the other parties, but no more than $15,000.00 per person. Coverage limits also extend to property damage and typically range from $5,000.00 to $100,000.00 per claim.

In California, the driver and owner of a vehicle must carry a minimum of $15,000.00/$30,000.00 coverage for bodily injury claims and $5,000.00 for property damage claims.

Different Types of Insurance Coverage

1. Liability Coverage: Liability coverage applies when someone is involved in a collision and is deemed at-fault for causing the collision. The coverage limits will only apply to the other claimants and not the at-fault party. This includes coverage for the other person’s medical expenses and vehicle damage. California requires a $15,000.00/$30,000.00/$5,000.00 minimum liability insurance coverage to operate a motor vehicle.
2. Collision Coverage: Unlike liability coverage, collision coverage only applies to vehicle damage and covers the repairs of the insured’s vehicle, regardless of who is deemed at-fault for the collision.
3. Comprehensive Coverage: Just like its name, comprehensive coverage will cover everything else – if the car is stolen, broken into, weather damage, hitting a side pole, etc. Regardless of who is at-fault for the collision, comprehensive coverage covers all the other types of property damage claims for the insured’s vehicle.
4. Personal Injury Protection: Often referred to as PIP, this coverage will cover any medical bills up to the limits that are claimed by the insurer. For those who do not have health insurance, the payments will be made directly to the insured for any out of pocket expenses. This coverage typically ranges from $5,000.00 to $50,000.00.
5. Uninsured Motorist Coverage: Not all drivers abide by the laws of the state, and chances are, drivers do not carry any insurance coverage. In those instances, the insured’s insurance coverage will kick in and cover the collision. For example, if the insured has $50,000.00/$100,000.00 uninsured motorist coverage and is involved in a collision with a driver who has no insurance, the insured can make a claim up to $50,000.00 against the insured’s insurance company for damages and up to $100,000.00 for the entire collision.
6. Underinsured Motorist Coverage: Similarly to uninsured motorist coverage, the underinsured motorist coverage will kick in as an excess coverage when the at-fault party’s insurance limits are not enough to cover all the damages. For example, if the at-fault party carries $15,000.00/$30,000.00 and the insured carries $50,000.00/$100,000.00 underinsured motorist coverage, the insured can make a claim up to $35,000.00/$70,000.00 for the collision against their own insurance company.

Personal Exposure After Limits Are Exhausted

In an event of an incident where the auto insurance policy is the only policy that covers the incident and is at fault for the incident, if the injuries claimed by the other parties exceed the coverage that applies, the policy holder’s personal assets will be exposed to a judgment or a verdict. Depending on the usage of the vehicle and employment history, consider obtaining the maximum auto insurance limits or an umbrella policy to avoid exposure.

Know Your Auto Policy

Insurance policies are complex and are filled with exceptions in order to avoid coverage in situations where you need it most. Recovery could be limited based on your coverage.  It is important to understand the extent of your auto insurance policy and what coverage and exceptions could possibly arise in the future. It is just as important to consult an attorney in your state immediately following an incident to better understand and protect your legal rights. Do not wait, never hesitate, and reach out to a professional who is ready to serve your needs.

Driving without auto insurance and a driver’s license

California requires that all drivers and all owners of a motor vehicle must carry automobile insurance when operating a motor vehicle. The laws also require that the driver carry a valid driver’s license. If someone is involved in an auto collision without a valid driver’s license or valid auto insurance, recovery can be limited. There may also be criminal liability for failure to obey the rules of the road.

What happens if someone is involved in an auto collision and does not have auto insurance?

If someone is involved in an auto collision and does not have automobile insurance, recovery may be limited. In 1996, California passed the Limitations on Recovery to Uninsured Motorist Act that limits the recovery of automobile drivers who are involved in motor collisions and do not have auto insurance. Also known as Proposition 213, the act denies recovery for noneconomic damages, such as claims for pain and suffering. However, there are certain exceptions. For example, if the vehicle was operator for the driver’s employer, if the accident occurred on private property, or the owner of the vehicle did have insurance coverage.

Nevertheless, if someone was involved in an auto collision and cannot show proof of financial responsibility by purchasing liability insurance, the person involved in the auto collision can post a bond or deposit cash in the amount of $35,000.00 with the Department of Motor Vehicles. This allows the party to meet the financial responsibility requirement of the California Vehicle Code and allows full recovery. Though, this process is tedious and requires assistance from an attorney.

What happens if you are involved in an auto collision and do not have a driver’s license?

In California, driving without a valid driver’s license is either a misdemeanor or an infraction. This is made clear in California Vehicle Code § 12500. If charged and convicted for a misdemeanor, there can be penalties up to and including six months in jail and up to $1,000.00 in court fines. If the conviction is determined to be an infraction, the maximum penalty is $250.00.

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What happens if you are involved in an auto collision with a suspended driver’s license?