How Auto Insurance Policy Limits Work in California
If you have invested in auto insurance, you expect your policy to cover your expenses if you are injured or incur property damage in a car accident. Insurance policy limits that cap the amount your insurance will pay after an accident can leave you without adequate compensation.
Learn how auto insurance policy limits work in California and how an experienced personal injury lawyer can help you navigate insurance challenges to receive appropriate compensation after an accident.
What Are Auto Insurance Policy Limits?
If another driver causes you damage or injury, you are entitled to financial compensation from that driver in California. Ideally, the at-fault driver’s insurance company pays you a settlement when you file a claim after an accident.
However, an insurance company is only obligated to pay up to the policy limit that the driver selected when obtaining auto insurance. When the auto insurance policy limit is lower than the cost of your damages, the remaining money must come directly out of the other driver’s pocket.
California drivers are required to have auto insurance. Those who don’t carry any form of liability insurance can receive a fine, have their license suspended, or have their vehicle impounded.
Previous California cases have discussed how policy limits affect compensation for insured drivers in the Golden State. Under Murphy v. Allstate Insurance Company (1976) (17 Cal.3d 937, 941), drivers who refuse fair settlements that are within policy limits may lose out on payment entirely.
However, if a damage amount judgment exceeds the insurance policy limits per Blue Ridge Ins. Co. v. Jacobsen (2001) (25 Cal.4th 489, 502), an insurance company may be liable for the entire amount. This action opens up an insurance policy, and when brought forward by a skilled attorney, it can force an insurer for a negligent third-party to pay a reasonable and fair settlement.
How Much Does Auto Insurance Cost in California?
The price you pay for auto insurance in any state depends on your age, driving history, location, and desired level of coverage.
California’s auto insurance rates are considered moderately priced compared with the rest of the country. In a ranking of full coverage auto insurance annual prices by state, Maine offers the lowest prices at $589 annually, with Michigan offering the most expensive premiums at roughly $4,003 a year. California is currently ranked 38th, with an average car insurance cost of $1,409.
What is the Minimum Car Insurance Coverage in California?
California car insurance laws require all drivers to have minimum liability coverage to help pay for injuries or damages they have caused. Under California Vehicle Code 16056, Californians are required to meet state minimums for both bodily injury and property damage coverage.
Minimum California auto insurance requirements for bodily injury coverage:
- $15,000 for death or injury of single individual. Your policy pays up to $15,000 if one person is injured in your accident.
- $30,000 total for death or injury of multiple individuals. Your policy pays up to $30,000 if two or more people are injured. The injured persons share this money.
Minimum California auto insurance requirements for damage liability coverage:
- $5,000 for damage to property, including someone else’s car and any objects or structures your vehicle hits
Many insurance companies offer the option of (uninsured motorist) UM coverage. Uninsured motorist coverage pays for damages incurred in an accident underinsured motorist or underinsured driver. Californians can purchase uninsured motorist coverage separately from regular liability insurance or as part of a bundled policy.
Uninsured motorist policies cover:
- Uninsured motorist bodily injury (UMBI): contains the same limits as California’s minimum liability coverage
- Uninsured motorist property damage (UMPD): pays for repairs to vehicles damaged by an uninsured motorist at a minimum of $3,500
What is Full Coverage Car Insurance in California?
Full coverage insurance in California, also called standard Coverage, refers to an insurance policy that offers more than minimum coverage.
Full coverage offers increased limits on what your insurance company will cover if you’re injured, or your car is damaged in a car accident. Full coverage limits include:
- $100,000/$300,000 bodily injury
- $50,000 property damage
- $5,000 medical payments
- $30,000/$60,000 uninsured/underinsured motorist (bodily injury)
- $250 comprehensive deductible
- $500 collision deductible
A $100,000/$300,000 limit means your insurance will not pay more than $100,000 to one person and no more than $300,000 for a single accident.
What is the Average Cost of Car Insurance in California?
For a full coverage policy, an adult Californian with a clean record can expect to pay an average annual premium of around $1,429 and an average monthly premium of around $119. If that same driver buys a policy that offers the coverage minimum, their average annual premium would be $665, and the average monthly premium would be $55. Average costs can increase based on age and driving record.
Young people and first-time drivers generally have more expensive policies because insurance carriers consider them a higher risk. A 16-year-old driver in California pays an average of $4,187 per year for car insurance.
Your average annual premium will increase if you have received a traffic ticket, caused an accident, or gotten a DUI. Average full coverage annual rates for Californians with a record include:
- Safe driver: $1,429
- Speeding ticket: $2,057
- At-fault accident: $2,463
- DUI: $4,075
Many families save money on their auto insurance policy by choosing a multi-car insurance policy that allows the family to bundle their vehicles into a single package. Bundling with multi-car insurance can save you between 10% and 25% on your premium, though this percentage varies based on your insurance company. Multi-car insurance policies allow families to insure up to five vehicles under a single address.
Some Californians opt for umbrella policy insurance, which provides extra liability coverage at a low cost. Umbrella insurance can be helpful when you are liable for a claim more extensive than your current auto insurance will cover.
Narbeth Shirvanian of The Shirvanian Law Firm offers advice regarding California car insurance policy limits. Based on his years of dealing with insurance claims through personal injury cases, he suggests always opting for higher than the minimum for California motorists to ensure you are protected.
Without adequate coverage, you may have to pay out-of-pocket for your or another person’s accident-related expenses, so it’s always better to pay a higher premium to ensure you are covered if an accident occurs.
How a Car Accident Lawyer Can Help
Insurance companies always try to pay the very minimum for settlements, which may not adequately cover the injuries and other damage you incur in an auto accident. They may act in bad faith to avoid paying a claim by misrepresenting the insurance contract language.
An experienced personal injury attorney can help you navigate the insurance process to receive appropriate compensation. Shirvanian Law Firm specializes in motor vehicle accident claims. We won’t let insurance companies bully you into settling for a low initial offer that doesn’t cover your injury and property damage expenses.
We can help single or multiple defendants get maximum payouts no matter the scale of your accident. Let us fight for you. Call us today for a free case evaluation.