Why Car Insurance is Important in California

uninsured-motorist

Up to 4.1 million drivers in the State of California are uninsured, according to the Insurance Research Council.

If you’re one of these drivers, read this article to understand why car insurance is important to have and what can happen if you don’t.

Is car insurance legally required in California?

Yes, car insurance is absolutely required in California. When you drive a vehicle (even a motorcycle), you need to have financial coverage to protect your passengers and your vehicle in case of an auto accident. Auto insurance provides this coverage and protects you financially from unpredictable events like accidents.

What are the minimum insurance requirements?

It is mandatory to have the following minimum auto insurance coverage (which is also needed to register your vehicle with the California DMV):

  • Bodily Injury/Death Liability of one person: $15,000
  • Bodily Injury/Death Liability of more than one person: $30,000
  • Property Damage: $5,000

What happens if I’m caught driving without insurance in California?

  • The first offense can cost you between $100 and $450.
  • For the second offense within three years, you could be fined between $200 and $2,500.
  • Police can have your car impounded.
  • The DMV can suspend your driver’s license for up to 4 years.
  • If you cause an accident while driving without insurance, you can be personally sued for damages.

What if I have adequate insurance, but am hit by an uninsured motorist?

There are various types of coverage you can buy that will help to protect you in the event of an accident. Uninsured and underinsured motorist coverage (UM/UIM) is found within your own insurance policy and is designed to help you pay for bills associated with a crash that was caused by another person who isn’t insured, or is underinsured.

All insurance companies in California must offer you UM/UIM coverage unless you opt out in writing. You also have the option of suing the driver directly for reimbursement of your medical expenses and other costs.

What is the impact on my insurance policy?

If you have to file a claim and collect under your UM/UIM policy, it will not raise your rates. If the accident is not your fault, your insurance company cannot raise your premiums for using this coverage.

Who is covered under my UM/UIM policy and how do I use it?

Anyone who is driving your vehicle with your permission, as well as any passengers in the vehicle, is covered if they are hit by an under- or uninsured person. The vehicle does not even have to be moving in order to qualify.

In order to assert a UM/UIM claim, you must establish that the other party was at-fault and was actually uninsured. You must file a form SR-1, Report of Traffic Accident Occurring in California, within 10 days. Also obtain an SR-19 from the DMV.

From there, you must submit a demand letter to your own insurance company to receive compensation for your expenses. Be sure to settle your UM/UIM claim within the 2 year statute of limitations in the state of California.

What is covered under my policy?

As is the case for any insurance claim where the other party is at fault, the following items are covered:

  • Medical bills
  • Loss of earnings
  • Loss of earning capacity
  • Physical pain
  • Daily Suffering
  • Emotional distress
  • Loss of enjoyment of life
  • Various out-of-pocket expenses such as household help
  • Any other harm caused

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