If you have not recently checked your automobile insurance policy and coverage page, this is a good time of the year to review your benefits (and the limitations or exclusions). Notably, automobile insurance rates are set primarily by a driver’s safety record and their annual miles driven. The following is for INFORMATIONAL PURPOSES ONLY, and not intended as legal advice.
1. B.I. this is Bodily Injury. In other words, your LIABILITY COVERAGE that pays a THIRD PARTY for his/her personal injuries caused by you. In discussing your policy with your insurer, you want to decide whether the BI limits are “enough” to cover the possible value of any claims that might be made against YOU, now as well as later, to protect your assets now and in the future, including but not limited to all the money you have, real estate, stock, valuables, retirement funds, etc. Err on the side of caution because after a lawsuit is filed and a judgment is ordered against you, it is good ten (10) years, and can be renewed every ten years thereafter or it will expire. CA Civil Procedure Code § 683.110 (2018).
2. P.D. this pays a third party for property damage, including the lower of the cost of repairs to or replacement of their car, caused by you; remember, you need enough to cover the possible value of cars today [and the reasonable future during the period of coverage you are purchasing] that may be damaged as a result of an accident.
3 & 4. BOTH COMPREHENSION and COLLISION WITH LOW DEDUCTIBLE. it is important to choose a practical dollar amount, and not just because it is more affordable. Each of these are often an optional coverage, but are recommended !!
“Collision” coverage pays YOU for your own car’s damage if caused by you; the third party has no insurance OR their insurer claims you are at fault (in full or part) and you want you car repaired or to collect damages to any part of your car at the outset.
“Comprehensive” covers theft, vandalism, glass and windshield damage, fire, accidents with animals, weather/acts of nature, etc. to YOUR vehicle.
5. UNINSURED MOTORIST (UM) AND UNDER-INSURED MOTORIST (UDM). these pay YOU for your injuries if the at-fault third person has no insurance. In some states, these may be optional coverage, but they are highly recommended because there are far too many individuals who do not have insurance, yet cause harm and damages to others who are, and you who may not be, “not” at-fault.
6. UNINSURED P.D (UMPD). this pays for YOUR car damaged if the at-fault third party has no insurance. In some states, this may be an optional coverage; however, it may not be necessary if you have collision insurance, which also pays for damage caused by another driver without coverage or insufficient coverage.
7. RENTAL. consider the daily amount YOU would need to pay to get a rental car if the at-fault third party has no insurance, or a rental vehicle is needed when an accident was a result of your mistake or negligence. This is often optional coverage but many individuals consider it worthwhile.
8. MEDICAL PAYMENTS. commonly referred to as “MedPay,” this is optional coverage; however, it has the benefit of paying for the care and treatment of passengers, and you, in your vehicle who are injured as a result of a vehicular accident, regardless of who is deemed at fault. In addition, it will pay for your family and your medical bills if struck by a vehicle, even if on foot or in another individual’s vehicle.
9. UMBRELLA POLICY. these policies cover all losses whether from your car, boat, motorcycle, in your home, etc. YOU should read your coverage and determine whether you have this because it is beneficial and some even have special additional coverage. These policies are issued in amounts starting with $1 million; $2 million; $5 million, and more. They are actually inexpensive when considering the amount of coverage one is purchasing. However, these policies require a minimum dollar amount of LIABILITY coverage in the underlying auto, home, and other policies, such as $500,000. This too is optional coverage, but highly recommended !!
Minimum CALIFORNIA COVERAGE, but for most individuals it is considered to be “totally” INADEQUATE [see information set forth above]:
- $15,000 for injury/death to one person.
- $30,000 for injury/death to more than one person.
- $5,000 for damage to property
Price is not the only criterion when choosing (auto) insurance. You want the insurer to be a really good company with a reliable track record of settlements when claims are made so that payments are processed without excess delays.