Auto Insurance Policy Limits: Understanding California's Rules

California requires all drivers to have auto insurance or some form of financial responsibility before driving. The state's minimum car insurance requirements include $15,000 in liability coverage for a single other driver's injury, $30,000 in coverage per accident and $5,000 in coverage for property damage. These minimum requirements have remained unchanged for over 50 years, despite the rising costs of medical treatment and car repairs following motor vehicle accidents. However, recently, the California legislature passed a bill to increase the minimum liability insurance requirements, which will take effect from Jan 1, 2025.

Bodily injury liability insurance

In California, bodily injury liability insurance is a legal requirement for all drivers. It is a form of third-party insurance that covers the cost of injuries sustained by people in other vehicles in an accident where you are at fault. It also covers wrongful death.

The minimum bodily injury liability insurance in California is 15/30, meaning that for any single accident, your auto insurance will cover up to $15,000 for the injury or death of one person, and $30,000 total for all injuries or deaths. These minimum requirements have been in place since 1967, and are currently being reviewed by the California legislature, which is considering raising the minimum limits.

• Emergency room charges
• Doctor's bills and other medical expenses
• Hospital bills and other medical payments
• Physical or occupational therapy
• Short- or long-term care (e.g. home health aides)
• Dental expenses resulting from broken teeth
• Past and future lost wages if your injuries prevent you from working

If you are injured in an accident, the at-fault driver's bodily injury liability insurance will pay your medical bills. If you are the at-fault driver, your insurance will cover the other party's medical costs and lost wages.

Property damage liability insurance

California requires drivers to carry a minimum of $5,000 in property damage liability coverage. However, this limit may not be enough to cover all potential damages. Many experts recommend higher limits, such as 100/300/100 or higher.

It is important to note that property damage liability insurance does not cover injuries you cause in a crash or damage to your own car. Separate coverage, such as comprehensive and collision insurance, is needed for those situations.

By understanding the specifics of property damage liability insurance, California drivers can ensure they have adequate protection in the event of an accident.

Uninsured/underinsured motorist coverage

UMC/UIM coverage comes in two main types: uninsured/underinsured bodily injury and uninsured/underinsured property damage. Bodily injury coverage typically covers medical bills for you and your passengers, as well as lost wages and pain and suffering damages. Property damage coverage, on the other hand, covers damage to your vehicle.

In California, the default UMC/UIM coverage offered by insurers is $30,000 for bodily injury per person and $60,000 per accident, with $3,500 for property damage. However, you have the option to purchase higher coverage limits, with some recommending a policy of $300,000 to $500,000. It is worth noting that UMC/UIM coverage is relatively affordable and can provide crucial financial protection in the event of an accident with an uninsured or underinsured driver.

It's important to understand the requirements for making a claim under your UMC/UIM coverage. In California, this coverage only applies if the other driver's insurance coverage is lower than your own UMC/UIM policy limit. Additionally, you must first exhaust the policy limits of the at-fault driver's insurance before making a claim under your UMC/UIM coverage.

UMC/UIM coverage can provide peace of mind and financial protection in the event of an accident with an uninsured or underinsured driver. It is a valuable addition to your auto insurance policy, ensuring that you and your passengers are covered for medical expenses, lost wages, and other damages that may arise from such incidents.

Medical payments coverage

Med Pay is particularly useful if you have no health insurance or if your health insurance has high deductibles or co-pays. It also covers passengers in your vehicle, regardless of their health insurance status. Unlike many health plans, Med Pay has no limit on the types of services or providers you can use. Additionally, Med Pay coverage is "per incident" rather than per year, so there are no yearly caps as found in many health insurance policies.

By law, all companies selling motor vehicle insurance in California must offer optional Med Pay coverage with a minimum limit of $1,000 per person injured. However, most insurers offer higher limits, typically $2,000, $5,000, $10,000, and $25,000. Some large insurers, such as State Farm, offer Med Pay coverage of up to $100,000. It is important to consider your budget and other types of insurance you have when deciding on the amount of Med Pay coverage to purchase. Keep in mind that medical bills from an accident can easily run into the tens or even hundreds of thousands of dollars.

Collision and comprehensive coverage

In California, collision and comprehensive coverage provide compensation based on the market value of your car. The coverage limits for both are determined by the value of your vehicle and the deductible amounts you select. While neither collision nor comprehensive coverage is required by state law, they are typically required for a car loan or lease. You can choose different deductibles and coverage limits for each, but selecting the same deductible amount for both can make it easier to predict your out-of-pocket costs in the event of damage to your vehicle.

It is worth noting that California recently passed a bill to increase its minimum mandatory liability insurance requirements, which will go into effect on January 1, 2025. The new law will increase the minimum required liability coverages for bodily injury, death, and property damage. As a result, collision and comprehensive coverage limits may also be affected.

Frequently asked questions