Full Coverage: Understanding Your Auto Insurance

By Aline Miranda on September 23, 2016

Auto insurance is mandated by California, but it provides only basic financial protection if you (or another driver using your car) causes an accident that hurts someone or damages someone else’s property. Clients often are told by insurance agents or brokers that they have purchased “full coverage,” only to find out after an accident that it is not what they expected. Minimum coverage is all that is required by California, but that it is not what I would call “full coverage.” Why? Because the state-required minimum may not cover the cost of a serious accident.

In California the state-required minimum for auto liability insurance is $15,000 per person for injuries, up to $30,000 per accident, and $5,000 for property damage. These amounts may not be sufficient in the event of a serious accident. In the event these amounts are not enough to fix the damage caused by a serious accident, you will be personally responsible for the rest. For that reason, consider purchasing higher levels of coverage, if you can afford to do so.

California also mandates that auto insurance companies offer you uninsured/underinsured motorist (UM/UIM) coverage with your policy. However, but the law allows consumers to waive UM/UIM coverage and many people do so to bring down the cost of insurance. I explain to my clients that liability insurance protects everyone else on the road but you, but UM/UIM protects you from others on the road who either are driving with no insurance or without enough insurance to cover your injuries and damages in the event of a serious accident. If a client is seriously hurt by a driver who either has no auto insurance or has a minimum policy, the client’s own UM/UIM coverage often makes the difference between getting my client fair compensation for her injury and not. For that reason, I tell my clients do not waive UM/UIM coverage.

There are other optional coverages that the law does not require, but that might be helpful in the event of a serious car accident including:

• Medical Payments coverage provides reimbursement for medical expenses for accident related injuries to you or your passengers. This will allow you to cover medical expenses health insurance does not cover (co-pays and deductibles) or allow you to get medical treatment without health insurance.
• Collision coverage will pay for accident related damage to your car regardless of who is at fault. This will allow you to get your car repaired even if the other driver’s insurance company is disputing how the accident happened. Other related coverages include Roadside Assistance/Towing and Rental.
• Collision only covers the market value of your car, not what you paid for it or what you may owe the finance company. If your car is totaled in a serious accident, there may be a “gap” between what you owe on the vehicle and your (or the other driver’s) insurance coverage. To cover this, you may want to look into purchasing Gap Insurance to pay the difference.