In most states, if you are involved in a traffic accident, proof of financial responsibility must be provided. The most common way of meeting this requirement is by purchasing a car insurance policy.

Drivers must show their ability to pay damages of at least 15/30/5, which means:

• $15,000 for each person injured or killed in an accident
• $30,000 for injury or death to two or more persons in one accident
• $5,000 for property damage from an accident

However this may not be enough coverage if you have any assets. A typical homeowner might carry limits of 100/300/100 or 250/500/100.

Common Car Insurance Questions

Do all states require some kind of liability insurance?

No. Some states, while not mandating car insurance, have “financial responsibility laws” that require all drivers to pay for any damages or injuries they may cause. Carrying liability insurance is still the best way to meet your states financial responsibility requirements.

UM and UIM policies are offered by law in all states, including no-fault states. In fact, some states require all motorists to carry this coverage to gain protection from drivers without insurance.

Do I need higher limits?

Considering the amounts of recent jury awards, you should consider purchasing liability insurance with higher limits than the minimum required. The cost for the additional coverage is well worth it. Jury awards can easily be more than $300,000 due to increasing costs in hospital medical care and auto repair.

What is the difference between a split limits and a combined single limit policy?

A split-limits policy with BI of $100,000 / $300,000 and PD of $50,000 will pay out as follows:

• The maximum paid for one person’s injuries, expenses, etc. is $100,000 under the bodily injury portion.
• If two or more people are involved, the maximum paid out for everyone will be $300,000.
• The maximum paid out for damage to other people’s property (auto, fence, etc.) is $50,000.

With a combined single limit (CSL) policy of $300,000, you can use the lump sum ($300,000) for whatever you need. This policy usually comes with a slightly higher premium (typically 5%) but it can be beneficial.

Note: In each case, the limits do not apply to legal defense, which is furnished in addition to your regular limits.

What type of car insurance do I need?

California requires a minimum of liability coverage. Depending on your situation or the age of your vehicle, you may need other types of coverage such as physical damage coverage and uninsured motorist coverage.

A typical policy might include:

• Liability
• Uninsured / Underinsured Motorist
• Physical Damage (Comp & Collision)
• UMPD or CDW (Uninsured Motorist Deductible Waiver)
• Towing
• Rental Reimbursement

Additional coverage options:

• Medical Payments
• GAP or Loan/Lease Coverage
• New Car Replacement
• OEM Parts
• Extended Warranties for New & Used Cars