Coverage guide · auto

Auto cover, from the statutory floor upward

The California Department of Insurance sets an auto policy out in two halves: the liability coverage California law requires you to have, and the other kinds of coverage it describes as commonly available for purchase. The required half is stated as three separate limits rather than as one pot of money.

• $30,000 — for the death or injury of any one person.
• $60,000 — a total, for the death or injury of more than one person in any one accident. Where two or more people are hurt, the Department says the injured people share the money and the coverage will not pay more.
• $15,000 — for damage to the property of other people, which the Department describes as damage you cause to someone else’s car or to objects and structures that your car hits.

Whose losses those three figures actually pay

All three are liability limits and all three are spent on other people. The Department states the point twice over: liability coverage helps pay for injuries or damage that you cause to others, and it does not pay for injuries to you or the people in your household. For that side of the accident it points to medical payments coverage, which covers the cost of medical expenses if you or your passengers are injured, and which it says can pay for immediate medical care, no matter who is at fault. The minimum limit you can buy is $1,000 for each person injured, and the Department adds that you can ask for higher limits of coverage.

Above the floor, the Department states the consequence and then sends the decision on. Cause an accident that costs more than your limit and you will be responsible for any damage you cause beyond the limits purchased. Asked whether to buy higher limits than the law requires, it says you may want to, because in general the more assets you have, the more you could lose in a lawsuit, and that you should discuss your situation with your agent, broker, insurance company or financial advisor.

The driver with nothing, and the driver with not enough

Uninsured and underinsured motorist coverage answers the other half of that problem, and the Department requires that it be offered: decline it and you must sign a waiver saying you were offered the coverage and turned it down. On the injury side, uninsured motorist bodily injury pays for injuries to you and anyone in your car when an uninsured driver is at fault, and its limits are the same as your liability limits. On the property side the picture is narrower — uninsured motorist property damage pays for damage to your car from an accident with an at-fault uninsured driver, its limit is $3,500, and the Department states it only pays if that driver is identified. A related option, the collision deductible waiver, pays your collision deductible when your insured vehicle is damaged in an accident with an at-fault uninsured driver.

Contact, and everything that is not contact

The line between the two physical damage coverages is drawn by the Department in a definition each, and it is worth reading them literally rather than by intuition. Collision covers damage to your car caused by physical contact with another vehicle or an object, and its examples are a tree, a rock, a guardrail or a building. Comprehensive covers damage caused by something other than a collision, and its examples are fire, theft, vandalism, windstorm, flood and falling objects. Comprehensive, the Department adds, does not cover mechanical breakdown, normal wear and tear or maintenance, and both coverages, it says, provide compensation based on the market value of your car.

Deductibles, the Good Driver rule, and the three ways out

A deductible is the share of a loss the insured is responsible to pay, and the Department’s own worked example is a $500 comprehensive deductible against $1,500 of storm damage, leaving $1,000 for the insurer. You usually pay a lower premium if you choose a higher deductible. On rating, California defines a Good Driver as a person licensed for at least three consecutive years with no more than one point on their driving record, and provides that a Good Driver’s rates must be at least 20% lower than a non-Good Driver’s rates would be at the same company. Once issued, a policy can be cancelled or non-renewed for only three reasons: fraud or material misrepresentation, non-payment of premium, or a substantial increase in the hazard insured against.

Buying a policy is only the commonest way to satisfy the law. The Department lists three routes to financial responsibility: liability insurance from an insurer authorised to do business in California, a cash deposit of $35,000 with the Department of Motor Vehicles, or a $35,000 surety bond from a licensed insurer. Whichever route is taken, evidence of financial responsibility must be carried at all times in the vehicle. Where the route is insurance, the Department says your insurance company will provide you with proof of insurance, which lists the insured vehicles and the names of the insureds and shows the policy number and the dates the policy starts and ends, and its instruction is to keep this card in your car.