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California car insurance: What you need to know

Knowing state laws and regulations on automobile insurance is an important factor in maintaining your driving privilege. State laws vary and this article covers the sunny state of California.

Whether you are a current resident of California or planning to become one, if you intend to drive, you must prove you are financially able to take responsibility for any accidents you may cause or be involved in. There are a four ways to do this.

1. The most common is to purchase a typical auto insurance policy. The amount of coverage you choose for things such as collision or comprehensive can vary, however, California does have minimums set for their limits of liability. They are:

   • Bodily Injury- $15,000 for the death or injury of any person in any one accident
   • $30,000 for every person in any one accident.
   • Property Damage- $5,000 for one accident.

2. Provide the Department of Motor Vehicles with a $35,000 cash deposit. This deposit is held and used in the event of an accident. If exhausted through an accident, this deposit must be paid again.

3. For people with fleets of more than twenty-five vehicles, the Department of Motor Vehicles can issue a certificate of self-insurance.

4. Obtain a security bond for $35,000. This can be purchased from any insurance company licensed to do business in the state of California.

It is illegal to operate a vehicle without a minimum of one of the above methods of showing financial responsibility. One offense can lead to a suspension of your driver’s licence. However, since most people don’t have $35,000 sitting idle (or can think of better ways to invest their money), most people go with the first option - purchasing a car insurance policy from an insurer. With this in mind, when choosing to purchase a traditional auto insurance policy, it is important to understand the terms.

• Bodily Injury: This term refers to the amount of coverage available if you are liable for an accident and another person is injured.

• Property Damage: This term refers to the amount of coverage available if you are liable for an accident and another person’s property is damaged. This can include their vehicle or other property.

• Uninsured/Underinsured: This term refers to coverage for you if you are involved in an accident that is not your fault, and the other driver either does not have enough or doesn’t have any coverage.

• Medical Payments: This term refers to coverage intended to cover medical expenses, regardless of fault in the accident.

• Collision: This term refers to the amount of coverage that is available for your personal vehicle, regardless of fault. This is only for your vehicle. This coverage will not cover another vehicle or bodily harm. Usually, insurance companies will offer deductibles for this coverage to lower your cost. These generally, are in the range of $500 to $2000. In this case the insurance company would pay the cost of your damage less the amount of the deductible.

• Comprehensive: This term refers to the amount of coverage available for your personal vehicle for any other reason. Examples of this would be hail, fire, theft, and flood. Many insurance companies will offer deductibles for Comprehensive coverage as well.

When speaking with your insurance representative, ask a lot of questions if you are unclear on any of the coverages or liabilities available through your car insurance policy. That’s what they’re there for!

Finally, make sure you shop around and compare auto insurance quotes. You’d be surprised at the different insurance rates quoted from one insurance company to another. Getting the right insurance means you get the right amount of coverage for a price you can afford. That’s where kanetix.com can help. Compare car insurance quotes online now.

Disclaimer - The above description/explanation is intended as a guideline only, and is not to be interpreted as a recommendation to buy or sell any insurance products, or to provide legal or financial advice of any kind. Also, Kanetix Ltd. does not warrant or assume any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed.

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