Navigating California Auto Insurance Laws and Requirements

California auto insurance

Is the minimum amount of required car insurance enough, or do you need additional coverage?

California requires certain minimum insurance coverage amounts for drivers. But is that really enough? The minimums likely won’t protect your finances if you’re in a serious accident, and your personal assets could be on the hook. Here’s a list of the minimum coverage requirements, other options, and what you should know to protect yourself.

The time to understand car insurance is before you get into an accident. But if you’ve been in a recent collision, don’t despair. Car insurance laws can be complicated, but we’ll break down the important parts so you can be informed and ready if you need to file a claim.

If you own or drive a car, you probably already know that you’re required to have car insurance coverage. You need certain minimum amounts in order to drive legally, but are those minimums enough? Would they really cover you in an accident, or do you need supplemental coverage, too?

Below is everything you need to know about California car insurance minimums and whether you might want to consider additional coverage.

California car insurance requirements

Every California driver is required to maintain at least these car insurance coverage amounts:

Minimum Car Insurance Coverage Requirements in California
Bodily injury liability $15,000 per person, $30,000 per accident
Property damage liability $5,000
Uninsured motorist bodily injury $15,000 per person, $30,000 per accident
Uninsured motorist property damage $3,500

There are just a few exceptions to these coverage requirements. A California driver could opt to:

  • Pay $35,000 cash to the California Department of Motor Vehicles (DMV)
  • Obtain a self-insurance certificate from the California DMV
  • Obtain a $35,000 surety bond from a California licensed issuer

The vast majority of California drivers purchase an auto insurance policy.

California collision and comprehensive insurance

California collision and comprehensive insurance are optional, or add-ons.

Collision insurance covers damages caused in an accident with another vehicle, person, or other property. Comprehensive insurance covers other damages caused by an event that’s not a collision. Most insurance companies sell these 2 types of policies together as a bundle.

Collision insurance can pay for repair or replacement of your vehicle if it’s been damaged by another car, pedestrian or bicyclist, or has sustained any other kind of damage from colliding with an object like a mailbox, garbage can, fence, or sidewalk.

Comprehensive insurance covers your vehicle if it’s damaged by something that’s not a collision, such as:

  • Hail
  • Fire
  • Falling trees, branches, or power lines
  • Theft
  • Vandalism
  • Earthquake
Enjuris tip: Collision and comprehensive insurance aren’t required by California law, but some lenders require this additional coverage in order to finance a vehicle purchase or lease.

The main difference between the required and optional coverage is who and what is covered.

The required $5,000 in property damage liability covers the other person’s property in an accident. Collision and comprehensive insurance can cover any amount above that $5,000 and it can cover your own damage.

Generally, your collision and comprehensive insurance coverage pays for the cost to repair or replace the vehicle if the damages are what an insurance adjuster considers a “total loss.” The insurance company will pay up to the policy limit, which is usually the current market value of the vehicle.

Remember this:

An insurance policy is never intended to enrich you so that you’re better off after an insurance payout than you were before. The purpose of insurance is to restore you to the financial condition you were in before the damaging event happened.

If your car is damaged, your insurance adjuster will consider its current market value from Kelley Blue Book or other sources for estimates based on its make, model, and year. If the car that was damaged was a 15-year-old mid-range sedan, the insurance company will offer you the amount that you’d be likely to receive if you were to sell or trade that car. A collision likely won’t result in an opportunity to upgrade from a 15-year-old sedan to a brand-new luxury SUV based on your insurance payout.

What’s the benefit to collision and comprehensive coverage?

Collision and comprehensive coverage are different from liability insurance because your liability will cover the other person’s property if you’re at fault in an accident. It doesn’t pay for your vehicle damages if you were at fault. It also doesn’t cover non-collision damage to your vehicle caused by hail, falling tree limbs, other acts of nature, or vandalism.

If you were at fault, you must have collision insurance in order to have your own car damages covered.

If the other driver was at fault, their liability insurance will cover your repairs and your collision insurance will cover any amount above their policy limits.

How much does collision and comprehensive insurance cost?

As with anything, the cost of collision and comprehensive insurance depends on what your needs are. Generally, it’s based on:

  1. Policy limits (the current market value of your vehicle), and
  2. The amount of your deductible (if you have a high deductible, your premium could be lower).

You can’t predict an accident. Even if you’re a careful, conscientious driver, serious accidents happen. If the amount of damages is more than your policy limits, you’re responsible for the remaining costs. A collision and comprehensive coverage policy could protect your personal assets.

California PIP and MedPay insurance

Personal Injury Protection (PIP) and Medical Pay Benefits (MedPay) are additional optional insurance policies that cover medical services following a car accident. California doesn’t require this insurance coverage.

MedPay can cover any injuries sustained by you or your passengers in a California car accident, whether or not you were at fault.

Enjuris tip: If you weren’t at fault, your insurance company isn’t allowed to raise your insurance rates for using your insurance coverage, including MedPay.

California uninsured/underinsured motorist (UM/UIM) coverage

Some states require uninsured/underinsured motorist coverage, but California does not. You may opt to buy this insurance, which protects you if an accident happens and the other driver isn’t properly insured.

Facing factsOut of 50 states, California ranks 12th in uninsured drivers, with an estimated 15.2 percent of drivers getting behind the wheel without coverage. (Source)

Your rights under the California Fair Claims Settlement Practices Regulations

California law requires you to purchase certain insurance, but it also requires action on the part of the insurance company. An insurer is required to:

  • Advise you of your benefits, coverage, time limits, and other relevant provisions in your policy.
  • Acknowledge the claim, begin an investigation, and provide forms, instructions, and reasonable assistance within 15 days after receiving notice of a claim.
  • Respond to your inquiries or communications within 15 days.
  • Accept or deny a claim immediately, but no later than 40 days after receiving proof of claim.
  • Pay reasonable towing expenses, unless the insurance company provided you with a specific towing company or facility.
  • Offer a fair settlement that reflects the market value of your vehicle.
  • Pay the claim immediately once the claim is accepted, and no more than 30 days from the date of settlement.
  • Tell you whether they will pursue subrogation, which is when they collect money from the at-fault party (if it’s not you) in order to recover your funds. Those funds must include your deductible unless you’ve already recovered it another way.

Liability and insurance coverage in California

California is an at-fault state for auto insurance. That means the damages from a car accident are paid by the insurance company of the person who’s at fault for the collision.

California is also a pure comparative negligence state. This means if you had any amount of fault or liability in the accident, no matter how small, the amount you can recover in damages is reduced by the percentage of your liability.

Here’s an example of how this plays out in real life:

You’re driving north on Main Street. You’re maintaining the appropriate speed, not distracted, and following all of the traffic rules.

Driver Daniel is approaching from the opposite direction — he’s heading south on Main Street. Daniel makes a left turn in front of you without signaling. You realize it too late. You try to brake, but your car collides with the rear passenger side of his vehicle as he completes the turn.

Although Daniel was clearly at fault, you might bear some liability under California law. The insurance company can determine that the accident could’ve been avoided if you’d braked only a few seconds sooner. Therefore, you’re assigned 10% of the fault for the collision.

Thankfully, you weren’t injured. But there’s significant damage to your car, and the repair costs will be $12,000.

The insurance company reduces that payout amount by 10% to account for your fault percentage, so you receive $10,800 to repair or replace your car.

Fortunately, your required liability policy also insures a family member driving your car, or anyone else to whom you’ve given permission to use it. It should also cover you if you’re driving a rental vehicle, but you should review your policy or contact your insurance company to confirm what is and isn’t covered under your plan.

How to pursue damages after a California car accident

If you’ve been in an accident and the other driver is at fault, there are 3 possible ways to recover damages:

  1. File a claim with your own insurance if you have coverage to cover the damages.
  2. Make a third-party claim against the at-fault driver’s insurance policy.
  3. File a personal injury lawsuit against the at-fault driver if you can’t get satisfaction through the insurance companies.

What if YOU’RE the uninsured motorist?

Bottom line... don’t be.

If you’re driving without the required California auto insurance, you can have your vehicle registration suspended, receive a citation, or your vehicle could be impounded — and that’s without getting into an accident.

Here’s why you need insurance:

  • Insurers have a duty to defend: The insurance company is responsible for hiring a lawyer to defend you against a claim on your policy.
  • Insurers have a duty to indemnify: The insurance company must pay for those losses you’re legally liable for, up to your policy limits.
  • If you don’t have liability insurance coverage, you’re personally liable for any defense and damages. If you were at fault in an accident, the other driver can file a claim on their own policy. If the policy pays it, you’d be lucky. Often, even though the insurance company has paid the driver, it retains a right of subrogation. That means the insurance company can file a lawsuit against YOU for the amount it paid for your negligence.

When to talk to a California personal injury lawyer

Insurance is complicated. Chances are that you haven’t read every word of the fine print in your insurance policies — most people don’t.

But just like you have certain obligations and responsibilities as a driver, California has laws and regulations that insurance companies must follow, too.

The important thing to remember is this:

The insurance company isn’t always on your side, even when you think it should be.

Even though you’re the “client, insurance companies profit by paying out the least possible amount for settlements. The adjuster’s job isn’t to be generous. The adjuster’s job is to satisfy your claim, but still spend as little of the company’s money as they can.

Your personal injury lawyer, on the other hand, usually gets paid when you reach the desired result. Their motivation is to be your advocate. The attorney’s job IS to be on your side, and to get the best possible result for you.

Your lawyer knows the intricacies of insurance law in California, has experience negotiating with insurers, and will minimize your liability in order to maximize your damage award. You can start with the Enjuris Personal Injury Directory to find a California lawyer near you who will protect your rights and interests after a car accident.

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