California Car Insurance 101 – What You Need to Know About

Car insurance is technically complex because it is legally binding. Every aspect of your policy has been challenged in court. Understanding car insurance terminology and concepts will help you buy California car insurance confidently and save money.

California Car Insurance Policy Terminology 101

  • Liability Limits This section of your policy shows how much coverage you have in case of a property damage or bodily injury accident. California requires that you have at least $15,000 to insure injury or death for one person and $30,000 for injury/death for more than one person. Property damage must be covered by $5,000. You may have 15/30/5 limits on your car insurance policy. If you have higher limits they might read 100/300/100, 250/500/100, or other variations. Your drivers license could be suspended or your vehicle registration may not be renewed. You may also be ticketed and your vehicle impounded. In the event of an accident, you are personally responsible for all damages.
  • Uninsured/Underinsured Motorists Coverage (UM/UIM) – This car insurance coverage is commonly misunderstood by consumers and is an important part of your California car insurance policy. Your UM/UIM coverage will pay your medical bills if another driver causes an accident in which you are hurt. This coverage is for you, and not the other driver.
  • Personal Injury Protection or Medical Payment This coverage is “no fault” and covers medical expenses for you and your passengers. This coverage could apply to pedestrian injuries or when you enter or exit a vehicle.
  • Comprehensive and Other-than-Collision Insurance This coverage covers your vehicle against damage caused by collisions with other vehicles or objects. A collision with an animal or bird is exempted from comprehensive coverage. Flood, hail and fire are examples of covered claims.
  • Collision Insurance This coverage covers damage to your vehicle if it is struck by another vehicle or object. Your collision coverage will cover the cost of repairs to your vehicle if you are in an accident.
  • Towing Coverage Insurance companies may use different names for this coverage. Benefits can differ among carriers. If your vehicle is damaged or needs to be towed, this coverage will reimburse you.
  • Rental Reimbursement This coverage will cover the cost of renting a vehicle to you in the event your vehicle is damaged or is otherwise required to be repaired. The limits are typically stated on a daily basis. A total limit, such 30/600, would provide coverage at $30 per hour up to $600.
  • Deductible This is the amount you pay before your insurance company pays any amount for collision or comprehensive claims. You can lower your California car insurance premiums if you choose a higher deductible.

These are the most commonly used terms on your California Car Insurance Policy. Every car insurance company offers its own benefits and added features. It is important that you read your policy to fully understand the coverages. Understanding the basics of California’s car insurance policy and the coverages available will help you make an informed decision about buying California car insurance.