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How much insurance coverage do I need?

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Here's the Scoop
  • Most states require drivers to have at least liability insurance to drive
  • Liability coverage covers injury or death and property damage
  • In California, drivers must have at least $15,000 for liability car insurance
How much insurance coverage you need to have will vary based on where you live and the requirements in your state. In California, drivers must have liability insurance in order to be considered legal drivers. But, how much insurance you need is a different story. In this guide, learn about how much insurance coverage rates are and where to find car insurance quotes. Car insurance is a security policy that prevents you from paying large amounts of money out of pocket in the case of an accident. car insurance companies offer standard policies — such as collision and comprehensive coverage — but you may be allowed to use alternatives if the DMV approves it. Learn more about California car insurance rates and the different types of insurance coverage types. If you think you’re ready to start shopping for insurance now, use our free tool. Enter your ZIP code now to compare car insurance quotes in your area.

How much insurance coverage do I need?

Insurance, referred to as financial responsibility, is required on all vehicles in California. You must be ready to show your proof of insurance whenever an officer of the law requests it, when you’re renewing your vehicle registration, and when you’ve been in an accident. Drivers have four options of acceptable insurance in California:
  • Vehicle liability insurance policy
  • A cash deposit of $35,000 with the DMV
  • A self-insurance certificate issued by the DMV
  • A surety bond for at least $35,000 from a company licensed in California
California car insurance laws require at least liability coverage. According to the California car insurance laws, the minimum liability insurance requirements 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
If you’re thinking, “But, I don’t live in California, how much insurance do I need?”, then keep reading.

Is car insurance required?

In California, yes. It is one of the 48 states in which you are required show proof of car insurance in order to drive legally on the road. The only exceptions are New Hampshire and Virginia.

What is the average insurance cost in California?

Depending on where you live within the state, your insurance will vary based on risk. Your car insurance rates will be higher if you live in a city where car theft or other car-related crimes are more likely. For example, drivers in Los Angeles pay more than any driver in the state — about 37 percent more than the state average. [State charts – compare or other wise] On average, full coverage costs $172 per month and minimum car insurance costs around $49 per month. Those numbers total to around  $733 per year on average for full, comprehensive coverage in California. However, costs will vary depending on what you drive and where you live. If you cannot afford car insurance, you may qualify for the California Low Cost Auto Insurance Program. If you need additional information on this program, visit mylowcostcar.com. Now that we know how much car insurance coverage you need in California, let’s take a look at the different types of auto insurance available.

Types of Car Insurance

When you’re shopping around for car insurance quotes, first make sure you know what you’re looking for. If you’re a particularly nervous driver, you may want to consider a higher coverage. Bodily Injury Liability: The first type of liability insurance is bodily injury. This coverage protects you from paying out of pocket for another driver’s medical bills in an accident that you caused. Every state has its own minimum liability requirements, and it’s usually the minimum car insurance required. In California, that is the case, as we have learned. Property Damage Liability: Another type of liability insurance that also pays for damage to another person’s property if you are at fault in an accident. Collision: Collision insurance pays for any damages to your vehicle that are caused by another driver or if you are found to be at fault. Comprehensive: Comprehensive insurance covers damage to your car that isn’t a result of a car accident. This could include damage from weather, theft, and fire damage.

What is 100/300/100?

This configuration translates to $100,000 in coverage per person for bodily injury that you cause; $300,000 in bodily injury per accident in general; and property damage up to $100,000. It’s the liability standard liability policy. Drivers may not be required to purchase this level in their state. Another common coverage amount is 100/300/50. Let’s break it down. 100: The 100 represents the maximum amount your car insurance company will pay for bodily injury claims per person under your liability coverage. In this case, the 100 represents $100,000. 300: The second number in your liability coverage is the maximum amount your insurance company will pay for bodily injury claims for a total accident. 100: The third number in your liability coverage is the maximum amount your insurance company will pay for property damage claims in an at-fault accident. In this instance, the 100 represents $100,000 in coverage. The maximum number of injury claims per accident is not a substitute for the per-person maximum. For example, if you hit someone and they need medical care, you are responsible for any costs above your $100,000 per person limit. The per accident limit applies when more than one person is hurt. There are other policy amounts available at both higher and lower coverage limits. Keep reading to learn more.

How much car insurance coverage do I need?

When considering liability insurance, it’s often recommended to purchase more than your state minimum requirements. For example, even if it’s a 50/100/50 plan, you may have saved yourself money in the long run. If 50/100/50 is the highest you can go, choose that instead of defaulting to the state minimums. Experts at the Insurance Information Institute suggest at least 100/300/100 in liability coverage. However, depending on where you live and your driving habits, you might want to choose the highest amount of coverage you can afford. As far as comprehensive and collision car insurance, experts suggest that ten percent of the vehicle’s value minus the deductible is a good way to calculate car insurance rates.

How much insurance coverage do I need?: The Bottom Line

How much insurance coverage you need to have will vary based on where you live, the requirements in your state, what you drive, and how safe you are. For example, if you’re driving a 2022 Ford Bronco off the lot in L.A., you will be paying substantially more than the person driving the Prius in Julian. However, you should also keep in mind how many accidents you’ve been in and whether your vehicle is likely to sustain damage in the future. In California, drivers must have liability insurance in order to be considered legal drivers. Beyond the state minimum, drivers do not need any more car insurance. If you’re ready to find your next car insurance company, use our free tool today. Enter your ZIP code to buy car insurance from a dealer in your area.

References

1. http://dmv.ca.gov/portal/vehicle-registration/insurance-requirements/ 2. https://www.iii.org/article/how-much-auto-coverage-do-i-need

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