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In addition to the other coverage requirements that vary depending on your driving history, area of residence, and other factors, every driver in California must have car insurance that meets a minimum car insurance standard. This standard is called the minimum car insurance requirement.
Why Is Having Minimum Coverage Important? Even if you meet all the other eligibility requirements for obtaining car insurance in California, you won’t be able to get a license or registration if your state of residence doesn’t require you to have auto insurance.
The minimum coverage requirement is designed to make sure that new drivers don’t get into high-risk situations by requiring them to get enough liability coverage until they accumulate more safe driving experience.
The requirement also helps offset the cost of insuring likely low-risk drivers so that everyone else can access affordable car insurance. Finally, having minimum coverage provides some security for yourself and your family should something unfortunate happen while you are not at home or when another party is operating under an alias.
How Much Is Minimum Coverage?
Unlike other states, California has no minimum amount of liability coverage that every driver must have. Instead, you must show that you have certain minimum bodily injury (BI) and property damage liability coverage.
These amounts depend on the kind of vehicle you drive, where you drive, your driving record, and other factors. For most vehicles, you must have bodily injury liability coverage of at least $30,000 per person and $60,000 per accident.
This amount is $20,000 higher if your vehicle is a commercial auto. Property damage liability coverage must be at least $20,000 per accident. If your vehicle is a commercial auto, the minimum property damage liability coverage is $40,000 per accident.
What Does Minimum Coverage Include?
You will receive liability coverage even if your state of residence doesn’t require it. This coverage will help pay for any damages that another party sustains if you are involved in an accident.
In addition to damages to a third party, this coverage will also help pay for any:
- Medical bills incurred by the injured party
- Cost of repairing your car or other property
- Loss of income incurred by the injured party
- Court and attorney fees
Excess Levels of Coverage
At a minimum, California requires you to have one type of liability coverage. This coverage is called unlimited Personal Injury Protection (PIP) coverage. PIP coverage will help pay for your medical bills and other expenses related to an accident. A $20,000 PIP limit is the minimum coverage requirement for most cars.
If you drive a commercial auto, the minimum PIP coverage is $40,000 per accident. For most drivers, the next highest coverage type you must have is uninsured motorist coverage. This coverage will help pay for damages caused by an accident when another driver was uninsured.
In order to be valid, your car insurance company must also provide you with a certificate at the end of each year that states the amount of coverage you had in force during the preceding 12 months.
If your coverage amounts were different from what this certificate reported, you can report these changes to your insurance company within 30 days of receiving the certificate. Furthermore, you can also report any changes that your insurance company has made to your policy.
Types of Insurance You Should Have
While the minimum coverage requirement requires you to take out auto liability coverage, there are several additional types of car insurance coverage that you should consider having.
First, comprehensive coverage will help pay for damages to your car, regardless of who is at fault. This coverage will also cover some of the repairs that are necessary to make your vehicle operable again.
Like comprehensive coverage, collision coverage will help to cover the cost of repairing your car when someone else is at fault. However, you will have to pay for only the cost of repairing your car, not for any damage to the car of the other party.
Finally, if your car is a new vehicle, you should consider having rental car coverage. This coverage will help to pay for a rental car if your car is damaged in an accident.
How Can You Tell If You Need Additional Coverage?
If you are unsure whether you need additional car insurance coverage, you can use the following guidelines to help you decide.
First, you should check your current policy to see what types of coverage your current carrier is offering. If you don’t currently have any extra liability coverage, you should consider purchasing it.
Next, you should also check your current policy to make sure that you have the right amount of comprehensive and collision coverage. This coverage is necessary to help protect you financially if you are involved in an accident. If you have any of these issues, you should consider increasing your bodily injury or property damage liability coverage.
Who Is Excluded From Having Minimum Coverage?
As with most states, California requires you to have car insurance that meets a minimum standard. However, there are some exceptions to the rule. If none of the following apply to you, you do not need to worry about complying with the minimum coverage requirement.
- You haven’t been licensed to drive at least 36 months
- You haven’t been licensed to drive at least 18 months without an accident
- You haven’t accumulated at least $10,000 in medical bills
- You haven’t been involved in 3 accidents in the previous 12 months
- You haven’t had at least one accident causing at least $1,000 worth of damage
Which Companies Are Licensed to Write Car Insurance in California?
The California Department of Insurance licenses all companies that sell car insurance in the state. Companies that are licensed to write car insurance in California must be:
- Licensed to sell life and health insurance in their state of domicile
- Operated in their state of domicile for at least 1 year
- Issued a license for the sale of insurance in their state of domicile within the past 2 years
- Have at least 1 agent who is licensed to sell insurance in California
- Not been found guilty of an insurance fraud violation in the past 5 years
- Not been found guilty of a financial fraud violation in the past 5 years
Having car insurance is an important part of driving, no matter where you live. The minimum coverage requirement in California is designed to protect you and your family from financial catastrophes should something happen. The minimum requirement is NOT the same as the standard amount of insurance you need to purchase.
Each driver’s situation is unique, and the requirement should be tailored to your individual needs. If you are a new driver, and you don’t have enough liability coverage, it’s important to get it as soon as possible so that you are covered in case of an accident.
Also, once you are licensed and driving, you can add comprehensive and collision coverage to help protect your car from damage.