Even in Hard Times, Don’t Cut Corners on Auto Insurance

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California is feeling the severe effects of the current economic downturn. In California, a worrying trend is the increase in people cancelling or reducing their auto coverage to reduce expenses.

It is tempting to reduce motor vehicle insurance. California is a prime example of how this can lead to devastating consequences.

California Insurance Requirements

California law requires that all vehicles carry minimum levels of property injury and bodily injury liability insurance. In the event that an insured driver is responsible for an accident, their liability insurance will pay for the injuries and damages to the vehicle. You could face a citation, fines and impoundment of the vehicle. Your registration may be suspended. Personal liability for any injuries or damages you cause to your car.

Optional, but smart coverage

Two types of optional, relatively affordable insurance coverage that are not required by California are worth your consideration, even if you have tight finances.

Med Pay – Also called personal injury protection (PIP), the med pay benefits will cover your medical expenses, even if you are responsible for the accident. You may be eligible for compensation for medical expenses that are not covered by your insurance. Med Pay is a great protection option that offers so much for such a low price. Med Pay covers you if you’re in an accident. It even includes chiropractic care.

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California’s uninsured and underinsured motorist coverage is 18%. According to the Insurance Research Council (IRC), California ranks seventh in the country in terms of the percentage of uninsured drivers as of 2007. This means that one in five Californian cars is uninsured. Uninsured motorist policies (UIM) will protect you in the event of an accident with another driver. An underinsured motorist policy will protect you if another driver is not insured. This protection is also necessary if you are struck by an uninsured/underinsured motorist while biking or walking, or if the driver is not known. The coverage can cover medical bills, lost wages due to missed work, and other related expenses. If you can’t afford insurance, consider purchasing a higher level of coverage. This will cover medical bills, lost wages from missed work, and other related expenses.

California law requires insurance companies to offer low-rate auto coverage to drivers over 19 years old with good driving records, incomes up to 250 percent below the poverty line, and vehicles worth less than $2,000. Although the minimum coverage is lower, it provides some safety net. You may be eligible for California Low Cost Automobile Insurance Program if you are financially struggling.

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Even if your coverage is not affordable, it is important to make sure you are protected. If you are involved in an accident, cutting your coverage will not make you more money in the future.

What happens if you are involved in an accident and have no insurance?

Even if you are not at fault for the accident, you cannot recover any compensation for your discomfort, pain and inconvenience. This greatly reduces the value of your injury case. Many attorneys won’t help you get the compensation you deserve if you have insurance.