California Auto Insurance – What You Now Need and Savings Coming Up

Posted on February 26, 2010
Filed Under Debt | Leave a Comment

As with most states, California state car insurance law requires all drivers to carry three fundamental liability components.

Bodily Injury Liability (BIL) of $ 15,000 / person

Total Bodily Injury Liability (Total BIL) of $ 30,000 for each accident

Property Damage Liability or PDL of $ 15,000 / accident

Your insurance agent calls this 15k/30k/15k.

But please understand that to rely on this coverage alone, would be asking for trouble. Multiple pile-ups and ambitious lawyers often drive the cost of a vehicular accident to well beyond six figures. If you’re at fault & you’ve stuck to the minimums, you and your estate, are now liable for the shortfall. Now you must re-mortgage your house, forfeit your savings & probably even more…sound good?

On the basis of experience, I recommend a minimum of 100k/300k/100k…more if you’re on the road often, particularly in the up-market communities of California. Spending a few more dollars here is value for money.

So far, we’ve discussed only liability coverage and that doesn’t apply to injuries to you and damages or loss of your vehicle. The rest of what we will talk about is not required by California statute.

First, let’s take care of you. Personal Injury Protection (PIP) covers you and your passengers for injury and/or accidental death. I suggest PIP coverage of no less than $ 100,000.

Next, your vehicle. To most people, having both collision and comprehensive insurance is known as full coverage.

The purpose of collision insurance is two-fold; to cover the cost of the repair to your damaged vehicle or if “totaled” to make a cash settlement. You must pay for a predetermined deductible, & the insurer pays for the rest.

Comprehensive protects your auto for theft and vandalism and damages caused by Mother Nature, animal impact and fire.

Another important coverage is protection against uninsured or underinsured drivers. It’s not your fault, but he can’t pay…your uninsured driver coverage kicks in.

Southern California auto insurance may allow “pay by the mile” plan.

California’s Insurance Board has put forth a proposal to allow insurers to charge consumers based on miles traveled. Similar to purchasing prepaid cellular phone minutes…consumers would pay in advance for a number of miles to be driven during a specified time period. A mileage monitor will be installed in the vehicle, and insurance companies will charge on the basis of miles driven.

Consumer advocacy groups are supporting the proposal because paying for miles actually driven (instead of an insurance company’s estimate) should provide savings to low mileage drivers.

And possibly more important, it will serve as an incentive for drivers to stay off the road. Environmentalists say this type of car insurance in La Mesa will encourage consumers to drive less…meaning lower fuel usage, reduced pollution and less road congestion.

The plan looks good to me.

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