Yes, this permissive use buyback program is something California allows some auto insurance companies to have in place if they so chose to. Not all California car insurance providers will make you buy back your higher Liability limits, some will extend those limits to others that you allow to drive your car, permissive users, without an additional fee charged.

We contacted the California Department of Insurance (DOI) to help explain how this works in CA. They stated that the California Insurance Code, under section 11580.1 (D) Statutory Exceptions to Coverage of Permissive Users, allows the insurance company to include a limitation on permissive user coverage to the state's minimum Liability limits (i.e. $15,000 for Bodily Injury Liability coverages) even though the named insured’s coverage is greater.

The CA insurance code does not require the insurer to limit the coverage; therefore companies may vary on whether they limit the Liability coverages to state minimum. There is policy wording and location of disclosure in the policy requirements for the limitation to be enforceable.

Here is standard verbirage for restricted coverage for Permissive Users. Most CarInsurance.com carriers offer the coverage without this restriction. If you want to add the limited or "restricted coverage" you can request it after you buy your policy:

• Restricted coverage for permissive users is an optional reduction in coverage in return for a premium credit. The restricted coverage option reduces the Bodily Injury/Property Damage limits in the policy declarations to Financial Responsibility limits when the insured vehicle is operated by someone other than the named insured, a relative, an agent, or an employee of the named insured in the cope of his employment. Coverage for the named insured, a relative, an agent, or an employee of the named insured in the scope of employment remains at policy limits.
• The named insured must request restricted coverage for permissive users in writing or by contacting the service center.

As the one insurance company told you, auto insurance companies may offer a “Buy Back” type of coverage for an additional charge. For companies that do not enforce this limitation, the same limits chosen by the insured would extend to a loss in which a permissive user operated the vehicle, as we explained above. 

The CA DOI does not have a list of companies that do or do not enforce the limitation on a private passenger automobile insurance policy so when obtaining insurance it is a good question to ask about if a buy back is required if you allow others to use your vehicle and you want them to also have your limits that are higher than the state Liability amount of $15,000 / $30,000 for Bodily Injury Liability and $5000 for Property Damage Liability.

The CA DOI noted that if you wanted more information on this buy back of Liability limits you can contact their representatives through their consumer hotline at 1-800-927-4357. To get free auto insurance quotes for California get a quote. You will be notified if you have this restriction. If you want to lower your premiums with CarInsurance.com and add this restriction you will need to contact your carrier after you purchase your policy. Carriers quote without the restriction. As always this is for informational purposes only, Please refer to your insurance policy for specific coverage and exclusion information with any policy you purchase through CarInsurance.com!