Understanding California Auto Insurance

Automobile coverage in CA can become complex depending on a person’s specific needs and is often misunderstood by consumers which may leave them with the wrong type of policy and/or underinsured. The Golden State requires that motorists follow the Financial Responsibility law in order to register and operate a vehicle; what this means is that motorists must have compensation in place in the event that they cause injury or property damage to a third party while operating their automobile.

Complying with the state’s Financial Responsibility law can be done in a few different ways; a vehicle owner can make a cash deposit of $35,000 with the Department of Motor Vehicles (DMV), obtain a surety bond in the same amount from an insurer licensed to do business in the state or use the most common method of obtaining a California auto insurance policy from a licensed carrier. Californians who choose to purchase policies must obtain minimum limits of liability in the amount of $15,000 for bodily injury to one person, $30,000 for bodily injury to two or more people and $5,000 for property damage; motorists should be aware that this coverage does not cover any property damage or injuries that are sustained by the insured.
Additional Info About CA Car Insurance

A large number of individuals who choose to purchase an auto insurance policy often buy policies with the lowest limits that the state allows; this is usually because it is most likely the most affordable coverage since it offers the least protection. Unfortunately what many do not realize is that California has some of the lowest requirements in the nation and purchasing these low limits can leave motorists liable for the cost of injuries or damages that exceed what is covered by the policy. For example, if a motorist strikes a high end vehicle and causes damages in the amount of $12,500; if the minimum is carried for property damage then the insurer will only pay $5,000 toward the damage and the policyholder could be held responsible for the remaining $7,500.

Many industry professionals and consumer guides suggest that motorists purchase policies with limits of $100,000/$300,000/$50,000 to help avoid facing financial hardships in the event that a third party is seriously injured or substantial property damage is caused by the policyholder. Although these limits may be much higher than what is required and can become expensive for some individuals, it may be wise to buy limits as high as can be afforded. In addition, motorists should be aware that the state requirements will not pay for injuries or damages sustained by the insured and additional coverage must be purchased to cover expenses if this were to occur. The California Department of Insurance Information Guide explains the optional types of coverage such comprehensive and collision which will help pay to repair or replace an insured’s vehicle.

source from http://car-insurance.onlineautoinsurance.com/articles