Required Coverage:

Liability – Also called Bodily Injury. This coverage pays up to the limit purchased for injuries you or an insured cause while driving a car covered by the policy.

There are two primary kinds of liability policies. The most common is called a split limits policy.

Split Limits Policy– Typically, the minimum California split limit policy is called a 15/30 policy. Those numbers mean the insurance company is only obligated to pay up to 15,000 for injury to any one person and $30,000 for multiple injuries in any one accident, but no more than 15,000 per person. So, if you kill someone, your insurance company is only obligated to pay $15,000.  You are responsible for anything over the limits.

Single Limit Policies– Will pay up to the limit purchased for one accident whether one or multiple people are hurt. A $300,000 single limit policy will pay $300,000 to one person who is hurt or it can be divided between multiple people as long as it does not exceed $300,000.

Property Damage– This is just what it means. It covers damage to property you or an insured might cause through your negligence. The minimum in California is $5,000.  Do you think $5,000 will cover a lot of damage? You are on the hook for anything over $5,000.

Liability and Property damage are all that is required:

Collision Coverage– Pays up to the limits purchased if you damage your own car in an accident and it is your fault.

Comprehensive Coverage- Pays for damage to your car and personal property in the car up to the limit purchased for losses like theft, vandalism, acts of God, etc.  

Full coverage– If you hear the term full coverage most will believe it covers anything that might happen to them right? Not so!  If you are making payments on a car, the dealership will say you need “full coverage.” What they are talking about is collision and comprehensive coverage above.  Both of those are coverage for the car to protect the loan company’s interest and to replace your car if it is damaged and you are at fault. The dealerships couldn’t care less about coverage for you. So, you can have full coverage and still have absolutely no coverage for yourself – – No uninsured motorist coverage, no med-pay and just enough liability coverage to pay for two days in the hospital if you accidently hurt someone else. At this point, your car is MUCH better covered than you are. That is not full coverage.

Uninsured Motorist-This is like liability coverage above but it covers YOU if someone without insurance drives negligently and hurts you. Given the rough shape of our economy and depending on the area you live in, as many as 25% of the drivers on the road are uninsured. Their vehicles are generally poorly maintained and they have a very high incidence of driving under the influence of drugs or alcohol. Unless you buy uninsured motorist coverage, your policy will pay zero if you are injured.

Medical Payments- Pays up to the limits purchased, per person to cover medical expenses and funeral expenses reasonably incurred from an automobile related accident. It covers everyone in your car. Generally, I think Med-Pay is a bargain even if you have health insurance. It might only cost $25 to $35 per YEAR to buy $5,000 in med-pay coverage on a policy.

Deductible – This term usually applies to collision and comprehensive losses above. A $250 deductible means that if there is $1,000 in damage to your car, then you have to pay the first $250 and the insurance company pays the remaining $750.

Uninsured Motorist Property Damage– Covers damage to your car caused by an uninsured motorist.

Premium- This is how much you pay for the policy. You might be shocked at how little additional cost is involved in purchasing a much better policy for your family.