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Understanding The Different Types of Auto Insurance Coverage in California

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When it comes to car accidents, California is one of 38 at-fault states, meaning the driver who is responsible for the accident will be liable to pay for the damages. This is why California law requires all vehicle owners in the state to have and maintain auto insurance. In this article, our team of experienced lawyers at Forward Law Group covers an essential topic—the different types of auto insurance coverage in California. Choosing the right auto insurance coverage can be confusing and complicated. However, spending a few minutes by reading this article below, you will familiarize yourself with the different types of policies. In turn, this will give you more peace of mind when it comes to understanding what your policy encompasses and what you are covered against.

In addition to describing the different types of auto insurance coverage, we also discuss the minimum required car insurance coverage in California, penalties for driving without auto insurance, and much more. 

Types of Insurance Coverage Available in California

Ask any car accident lawyer in Los Angeles or any other city across California who deals with insurance companies on a daily basis—there are many different types of insurance coverage that are available in the state. Most people are familiar with common coverages such as personal liability, but have less knowledge about coverages like medical payment coverage and gap coverage. Prior to providing a description about each type of insurance coverage available in California, here are the coverages in list form: 

  • Personal Liability Coverage
  • Comprehensive Coverage
  • Collision Coverage
  • Uninsured/Underinsured Motorist Coverage
  • Medical Payments Coverage
  • Personal Injury Protection Coverage
  • Gap Coverage
  • Personal Umbrella Policies
  • Rental Car Reimbursement

One important thing to note with regard to auto insurance policies is that various types of coverage can be combined to cater to your specific needs. By understanding the different coverages, you are better suited to make sure you are covered against what is important to you, as well as make sure that you are not spending extra money on coverages that you do not need and/or want. 

Auto Liability Coverage

Auto liability coverage is the most fundamental form of coverage that everyone is required to have (more on this later). If you get into a car accident and it is ultimately decided that the accident was your fault, the auto liability coverage will pay the medical bills, property (i.e. vehicle) damages, and other losses suffered by the other driver. In situations where you are at fault for an accident, the auto liability coverage will not pay for your damages—it only covers the innocent party. 

Comprehensive Coverage

Comprehensive coverage means that the insurance pays when your vehicle is damaged due to something other than a crash or collision that is outside the vehicle owner’s control, such as:

  • Vandalism
  • Theft
  • Hail
  • Flooding
  • Falling objects (e.g. rocks, trees)
  • Fire and ash 

In some cases, this type of coverage is required when leasing or financing a vehicle. Additionally, comprehensive coverage is more popular among people with newer vehicles that are of higher value. 

Collision Coverage

Many people will find that comprehensive coverage is typically bundled with collision coverage. In simple words, collision coverage pays to repair or replace a policyholder’s vehicle if it gets damaged in a collision with another vehicle, a pedestrian, or property such as a fence or gate. Collision coverage is crucial because it ensures you are covered even if you end up being at-fault for the accident. 

Uninsured/Underinsured Motorist Coverage

Uninsured motorist coverage applies when the at-fault driver has no liability insurance to pay all the bills of the injured victim(s). Similarly, underinsured motorist coverage applies when the at-fault driver has coverage with limits too low to pay all bills. For example, if you get into an accident with another driver who is at-fault but has coverage limits too low to pay for all the bills for you and your passengers, this coverage would kick in. It is important to note that this coverage does not apply to property—only medical bills, costs related to injuries, and funeral expenses. 

Medical Payments Coverage

Also sometimes referred to simply as Med Pay, medical payments coverage covers medical bills and funeral costs for the policyholder (and their passengers, if any), regardless of who was at fault. This type of coverage is particularly important in situations where a person sustains injuries in a car crash that require medical treatment, but they are deemed at-fault. With medical payments coverage, their injury treatment bills are paid for by the insurance. 

Personal Injury Protection Coverage

Although personal injury protection (PIP) is quite similar to medical payments coverage, there are significant differences. Simply stated, personal injury protection covers more expenses. In addition to covering medical costs, PIP also covers other losses—most notably lost wages that result from a car accident. While all people are generally always offered medical payments coverage, most people in California will find that their insurance company does not offer personal injury protection. In California, most insurance companies unfortunately do not offer this type of coverage. 

Gap Coverage

Gap coverage pays for the difference between the value of a policyholder’s car at the time of an accident and what the policyholder owes on the car. While this may seem a bit confusing, consider the following example. A policyholder gets into a car crash while driving a vehicle that they leased or financed, and the vehicle is totaled (damaged beyond repair). The insurance company pays the actual cash value of the vehicle, which is a few thousand dollars less than what you owe to the financing company. In this situation, the gap coverage would pay for that difference so it does not come out of your pocket. 

Personal Umbrella Policies

While personal umbrella policies are not necessarily a type of insurance coverage, they are slightly related and should be considered in this article. For people who want more car coverage than the maximum limit that their insurer offers, they can purchase a personal umbrella policy. If you are at-fault in an accident and the claim against you goes over your maximum coverage amount, the personal umbrella policy will pay the remaining amount, up to the umbrella policy’s limits. 

What are California's Minimum Insurance Requirements?

As with many other states, California has minimum insurance requirements for all vehicles parked or operating on California roads. In the state, the minimum liability insurance requirements for private passenger vehicles, as pursuant to California Insurance Code §11580.1b, are: 

  • $15,000 for injury/death to one person
  • $30,000 for injury/death to more than one person
  • $5,000 for damage to property

Evidence of insurance must be carried inside your vehicle at all times. In California, if you do not meet the minimum auto liability insurance requirements, you can be fined, your license may be suspended, and your vehicle could be impounded. Driving without insurance in the state is considered illegal. If you get pulled over by law enforcement and do not provide proof of insurance, you will likely be ticketed and can potentially face more severe consequences. 

Involved In a Car Accident in California? Call Forward Law Group

Most people do not look at the details of their auto insurance policy until they have been involved in an accident and want to know what their coverage includes. It is always better to be over-prepared than under-prepared — and by reading this article you will better understand the different types of auto insurance coverages and will be in a much better position to make sure you have the coverage you want and/or need. 

At Forward Law Group, our goal is to be a resource for people all across California, particularly when they are in need of legal assistance. If you are involved in a car accident in Los Angeles or any other city in California, our team of experienced lawyers will make sure you get the justice you deserve. From opening the claim, to taking care of all required paperwork, to negotiating the best settlement with insurance companies, and to making sure you get the medical treatments you need, our lawyers will go above and beyond to make sure you get the outcome you desire. Call us today at (818) 471-8389 to get a free, no-strings-attached consultation.