Auto Insurance

Auto insurance is purchased by vehicle owners in order to transfer the risk of potential damages and losses to an insurance company. In order for this to be done, vehicle owners are required to pay a monthly premium as well as a deductible when an accident occurs.

With each person and situation being unique, it’s difficult to have a general cost for auto insurance. Some factors that influence a policy cost are:

• The age and gender of those being covered
• Years of driving experience
• Accident and moving violation history
• The amount of coverage desired

Bodily Injury Liability – This covers injury or death of others during a car accident when the policyholder is found legally responsible. This coverage can also provide legal defense if the policyholder is sued for damages.

Minimum coverage required in California for bodily injury liability is $15,000 per person and $30,000 total for any one accident. For example, if only one person is injured, the coverage will pay up to $15,000. If three people are injured, the coverage will pay only up to $30,000 for the total occurrence. This means that the three people would have to split that money accordingly. These coverages can be increased if needed.

Property Damage Liability – This covers damage to someone else’s vehicle or to any other objects or structures in which the policyholder is found legally responsible.

Minimum coverage required for property damage liability is $5,000 and can be increased if needed.

Medical Payments Coverage – This coverage is similar to bodily injury liability, but instead of covering others, it covers the injuries sustained by the policyholder and any other passengers at the time of the accident. With this coverage, it doesn’t matter who is at fault. The policyholder is covered either way.

This type of coverage is not required in California. However, if the coverage is desired, the minimum limit someone can buy is $1,000 for each person injured. Coverage can be increased if needed.

Uninsured Motorist Coverage – This covers the policyholder in the event there is an accident and the other driver does not have liability insurance. This coverage will apply when there are injuries sustained by the policyholder and anyone else with the policyholder when the uninsured driver is at fault.

Limits for this type of coverage are the same as the liability coverage on the policy. For example, if a policyholder has the California minimum, coverage would be $15,000 per person and $30,000 total per accident.

Collision Coverage – This coverage will apply when a policyholder’s vehicle is damaged due to an accident with another vehicle or another physical object such as a deer or building.

Comprehensive Coverage – This will cover a policyholder’s vehicle when there is damage due to something other than a collision such as fire, theft, or vandalism. Comprehensive coverage does not cover mechanical breakdown or normal wear and tear on the vehicle.

Collision and comprehensive coverage are required by lenders or leasing companies when purchasing a vehicle. While it may not be required by the state of California, it may still be necessary.