What is Automobile Insurance?
Automobile insurance in Calfiornia is simply a contract that helps pay for certain types of financial losses or obligations resulting from car accidents or other automobile related losses. To obtain an automobilie insurance policy in california, you pay a specified amount of money called a premium. In return for the premium paid, the automobile insurance company agrees to pay certain expenses and legal liabilities depending on the terms of the auto-insurance policy. Having the right car insurance coverage may prevent you from suffering a large financial loss in the event of an automobile accident.
The responsibilities of owning and driving a car include following the financial responsibility laws under the Vehicle Code. The most common way to satisfy the financial responsibility for operating an automobile in California is by purchasing automobile liability insurance.
If you choose to meet your financial responsibility by purchasing liability insurance, the DMV outlines minimum limits that you must purchase under Section 16451 of the Vehicle Code.
Financial Responsibility Laws
The statutory minimum limits of liability insurance in California* are as follows:
For Bodily Injury Liability $15,000 for death or injury of any one person, any one accident. $30,000 for all persons in any one accident. For Property Damage Liability $5,000 for any one accident.
There are four ways to accomplish financial responsibility:
1. Coverage by a motor vehicle or automobile liability insurance policy;
2. A cash deposit of $35,000 with the DMV;
3. A certificate of self-insurance issued by DMV to owners of fleets of more than 25 vehicles; or
4. A surety bond for $35,000 obtained from an insurance company licensed to do business in California.
All California drivers and owners must have at least the statutory limits of minimum liability insurance. Penalties are very severe for non-compliance with this section of the vehicle code.
When your car is in an accident for which you are found legally liable, bodily injury (BI) liability covers your liability to others for injuries to them. Property damage (PD) liability covers your liability for damage to someone else's property.
A policy with BI of $15,000/$30,000 and PD of $5,000 will pay out as follows:
The maximum limit for one person's injuries, medical expenses, etc. is $15,000 under the bodily injury portion. If two or more people are injured, the maximum limit for the accident will be $30,000. The maximum limit for damage to other people's property (their car, their fence, etc.) is $5,000.
Comprehensive coverage (other than collision), uninsured motorist, medical payments and collision insurance are not required by law.
You must show proof of auto insurance:
In California the Legislature passed a law requiring drivers to show proof of insurance before the DMV renews the vehicle registration. The new legislation also requires motorists to display proof of insurance when they are stopped by a police officer for traffic violations. Drivers who can't do so may be subject to fines and other penalties.
Proof of financial responsibility must be shown when you:
* Are asked for it by a law enforcement officer
* Have an accident
* Register your car or renew its registration
* Get your car inspected
Remember to ask your California auto insurance company to send you a proof of auto insurance card listing the covered automobiles and drivers and showing the policy number and expiration date. Your auto insurance policy or a temporary binder also is acceptable evidence of insurance.
In California, driving without car insurance is a serious offense. Failure to show proof of auto insurance when requested may result in fines or a suspended license. Remember, driving is a privilege … not a right. If you are stopped by a police officer and asked for proof of auto insurance and you can't produce it, you may receive a citation. You can have the ticket nullified by showing proof of car insurance in court.
Why Should I Shop Around for Automobile Insurance?
Under California's premium rating law, each auto insurance company is allowed to calculate its own rates based on its past loss experience and expenses. Since each auto insurance company's experience will differ, even within the same geographic area, the auto insurance rates will therefore differ. By calling several companies, or brokers/agents for a rate comparison, you can potentially save money. You will then be able to choose the company with the best available price and coverage to suit your individual needs.
It is important to get car isnurance quotes from different car insurance companies. You may not realize it, but the auto insurance rates you pay for your car can vary dramatically depending on the auto insurance company you choose. You should always compare before deciding on a car insurance policy.
Be Prepared Before You Get an Auto Insurance Quote
You need to know what auto insurance coverages you want, what limits of liability you require, and what deductibles you desire. Also, you need to have the following basic information available on all drivers in your household:
1. All drivers' names, ages, sex, and marital status;
2. Driving record (accidents and moving violations);
3. Annual mileage; and
4. The following information on all cars:
* Full vehicle identification number
* Year of vehicle
* Cost of vehicle
* Special equipment
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