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How much insurance to buy in California

Penny Gusner

By

CarInsurance.com

Los Angeles trafficCalifornia’s minimum liability car insurance requirements are quite low in comparison with most states’.

You’re responsible for damages that exceed your policy limits. If you buy the bare minimum coverage and have an expensive accident, you could lose your savings or house if someone sues you and wins. If you have no home or savings to lose, you may be able to get by with less insurance coverage.

Most people need more than the bare minimums. Here are my recommendations for California car insurance depending upon your situation. You can use these suggestions as you compare car insurance quotes from multiple insurers; start by typing your ZIP code in the box on the right.

I can afford only the cheapest insurance possible.

If you’re just barely getting by, then it’s better to buy a bare-bones policy than nothing at all.  This is the only time I recommend buying minimum state coverage.

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Recommendations:

  • Bodily injury liability - $15,000 per person / $30,000 per accident
  • Property damage liability - $5,000 per accident
  • Comprehensive coverage - $500 deductible (if you have a newer or financed vehicle)
  • Collision coverage - $500 deductible (if you have a newer or financed vehicle)

By law, California insurers must offer uninsured motorist coverage, but you can reject it. If you turn down uninsured motorist bodily injury (UMBI) coverage and you don’t have health insurance, your injuries would not be covered if you were struck by an uninsured motorist.   And, without uninsured motorist property damage (UMPD) you’re not covered if your vehicle is damaged by an uninsured driver.

A newer vehicle or one that’s financed will require collision and comprehensive coverage. Do not choose an unrealistic deductible; you could find yourself insured but still without a car because you can’t scrape up $1,000.

Some low-income drivers may be eligible for California’s Low Cost Auto Insurance (CLCA) program, where members are permitted to carry lower liability limits of:

  • Bodily injury liability - $10,000 person / $20,000 per accident
  • Property damage liability - $3,000 per accident

The CLCA program is only available to individuals living in eligible counties and meeting specific qualifications on household income, the value of your vehicle and your driving record.

I have some assets to protect, but need to save.

If you can afford more than a basic minimum policy but don’t yet have a lot assets to protect, it’s time to raise your limits but keep your rates low.

Recommendations:

  • Bodily injury liability - $25,000 per person / $50,000 per accident
  • Property damage liability - $25,000 per accident
  • Uninsured motorist bodily injury - $25,000 per person / $50,000 per accident
  • Comprehensive coverage - $500 deductible (if you have a newer or financed vehicle)
  • Collision coverage - $500 deductible (if you have a newer or financed vehicle)

A small amount of additional liability coverage could ensure that you don’t have to drop out of school or take on a second job to pay bills after an accident. 

If you’re paying on a vehicle, you’ll need collision and comprehensive to comply with the requirements of your lienholder.

If you want to save more money, you can choose a higher deductible of $1,000 for collision and comprehensive.  Just make sure you don’t bump the deductible amount up too high and won’t be able to pony up the money if you need to make a claim.

If you did not put a substantial down payment on your newer, financed car, consider gap insurance to pay off the loan if you total the car. It’s usually cheaper from an insurance company than it is from the dealership.

If you own your car outright and it’s older, so that the cost of your collision and comprehensive coverages equal to the car’s value, then skip this coverage. 

If you don’t have health insurance, it’s better to pay a small premium for uninsured motorist bodily injury coverage than face piles of medical bills if you’re hit by an uninsured motorist.

Uninsured motorist property damage (UMPD) isn’t necessary if you have collision coverage.  If you don’t have collision and want coverage if you’re hit by an uninsured motorist, you may want to add UMPD.  Just keep in mind that it only pays up to $3,500.

I have a house, savings and a family to safeguard.

Once you have assets to protect you’ll want to raise your limits and reassess your policy needs.

Recommendations:

  • Bodily injury liability - $100,000 per person / $300,000 per accident
  • Property damage liability - $50,000 per accident
  • Uninsured/underinsured motorist bodily injury - $100,000 per person / $300,000 per accident
  • Comprehensive coverage - $500 deductible (for any newer or financed vehicle)
  • Collision coverage - $500 deductible (for any newer or financed vehicle)
  • Rental reimbursement
  • Umbrella liability policy

Higher liability limits mean that it is less likely for accident costs to exceed your coverage limits and put your own money at risk. 

To better safeguard your assets, you may want to consider an umbrella policy to help cover assets beyond the $300,000 per accident limit. You can buy $1 million in extra protection for a reasonable rate.

Even if you have health care coverage, it usually comes with deductible or co-payments.  With uninsured motorist bodily injury (UMBI) in California, there is none of that, so if you’re hit by an uninsured motorist you can directly use the coverage for your medical expenses, up to your limits.

You don’t automatically get a rental car when using your comprehensive or collision coverage.  If you want this as a benefit of your insurance, you need to add rental reimbursement coverage.  However, if you have an extra car in the household, skip the coverage.

I need the most coverage possible.

The old adage is you should buy as much auto insurance as you can afford, so if you have expendable income, get “the works.”  Purchase the most coverage you can at the highest limits possible to keep your personal assets very well protected. 

Recommendations:

  • Bodily injury liability - $250,000 per person / $500,000 per accident
  • Property damage liability - $100,000 per accident
  • Uninsured / underinsured motorist bodily injury - $250,000 per person / $500,000 per accident
  • Medical payments - $5,000
  • Comprehensive coverage - $1,000 deductible
  • Collision coverage - $1,000 deductible
  • Rental reimbursement
  • Towing and labor
  • Custom parts and equipment
  • Umbrella policy

These high limits are much harder to exceed in an accident, thus safeguarding your personal assets.  I’d also advise an umbrella policy for $2 million to add an extra layer of protection for your assets if your auto or homeowner’s policy limits are exceeded.

Medical payments will pay out regardless of fault in an accident.  If you have health insurance that requires a deductible, medical payments may be able to help in that regard.  It may also pay for other items your health insurance does not cover, such as dental expenses, nursing services and funeral expenses.

Because you have ample savings, we recommend $1,000 deductibles (or higher) on your comprehensive and collision coverages.  You have enough money in the bank to take care of minor damages on your own and thus can save a little money by choosing these higher limits.

If your vehicle is customized, make certain to add custom parts and equipment coverage, or else your extras won’t be covered.

More articles from Penny Gusner


Categories:
  • liability insurance
  • CA
  • Comprehensive
  • Collision

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