Car Insurance Doesn’t Have to Be Confusing
When it comes to choosing the right car insurance, most people don’t know where to start. Terms such as personal coverage, liability, deductible, property damage, bodily injury, comprehensive, collision, uninsured and underinsured motorist, medical expenses pay, rental coverage, state minimums, gap insurance, and personal injury can be overwhelming. Simply put, understanding auto insurance can be confusing. To decide which types of auto insurance San Diego drivers need, they need to understand the basics of each type of policy — what it covers, what it doesn’t cover, and what options are available. Below is a summary of the types of auto coverage that are available. Some types are required, while other types are optional. You can choose the coverage amounts that fit your budget and meet your precise needs.
Who Your Policy Covers and When
Your car insurance policy will cover you and any family members listed on your policy, both while driving your insured car and while operating another person’s vehicle with his or her consent. Your policy also provides coverage for a person who drives your vehicle with your permission.
Personal auto policies typically cover only personal driving, such as driving to and from work, on a road trip, and other similar kinds of activities that are strictly for personal purposes. Personal car insurance policies don’t include coverage for when you’re using your vehicle for a commercial purpose (for example, if you’re using your car to deliver cupcakes for a local bakery). Commercial purposes include using your vehicle to provide ride-sharing services such as those offered by Lyft and Uber—you won’t be covered by personal auto insurance in this instance, either. Additional supplemental coverage for car owners who provide ride-sharing services is becoming increasingly available, and it does involve extra cost.
Auto Insurance San Diego Drivers Must Carry
The basic type of auto insurance required by most U.S. states provides some degree of financial protection if you or someone driving your car causes an accident that results in damage to another person’s car or other property, injures another person, or both.
Most states have compulsory financial responsibility laws to ensure drivers operating motor vehicles will have at least a minimum required level of financial responsibility to cover any damage or injury caused by an accident.
California is a “fault” state, which means people involved in accidents must file their insurance claims with the insurance company of the person who is at fault instead of filing with their own insurance companies. The driver who is at fault for the collision will be responsible for damages. It’s crucial for every driver in fault states to carry adequate insurance. If they don’t, the drivers who are not at fault may have to pay for their damages themselves.
The most common method of financial responsibility is to maintain liability insurance through an auto insurance policy. Liability insurance protects you against claims if you’re at fault in a collision.
Liability auto insurance coverage has two primary components: bodily injury and property damage. Bodily injury liability refers to coverage for medical expenses another person incurs as a result of injuries from a collision when you’re at fault. Property damage liability insurance covers the cost of repairing any property you damage.
Almost every U.S. state mandates that car owners have the following types of auto liability coverage:
- Bodily injury — This coverage pertains to costs related to injuries or death that are caused by you or another driver while driving your vehicle.
- Property damage — This coverage compensates others for property damage caused by you or another driver while driving your vehicle. This includes damage to other vehicles as well as other types of property, such as fences, buildings, and utility poles.
Each state has its own minimum liability requirements. For example, in California, the minimum liability insurance requirements are:
- Bodily injury – $15,000 per person/$30,000 per accident minimum
- Property damage – $5,000 minimum
Keep in mind the coverage amounts you purchase represent the limits of your car insurance. For example, if you have $5,000 in liability coverage and you cause $50,000 in damage, you’ll have to pay the remaining $45,000 out of your own pocket. You’ll find your coverage limits listed on your policy’s policy declarations sheet.
Uninsured Motorist Coverage
California drivers are also required to carry uninsured motorist coverage. This type of coverage applies when an uninsured driver causes an accident or in the event of a hit-and-run accident. The requirements in California are:
- Uninsured motorist bodily injury – $15,000 per person/$30,000 per accident minimum
- Uninsured motorist property damage – $3,500 minimum
Another available option is underinsured motorist coverage, which is car insurance San Diego drivers can purchase to cover costs incurred when another driver doesn’t have enough coverage to pay for costs resulting from a serious accident.
Car Insurance San Diego Drivers Should Consider
Keep in mind that the state-required minimum auto liability coverage may not cover all the costs involved in the event of a serious accident, so it’s often a good idea to purchase higher levels of coverage. While liability insurance fulfills the state minimum requirement, due to its limited coverage, it doesn’t necessarily cover catastrophic accidents that could result in huge financial damages. Most importantly, liability insurance only covers the medical and property damages of the other party involved. You should purchase as much car insurance as you need to make up for any costs you wouldn’t be able to afford out of pocket.
While the basic types of auto insurance San Diego drivers are required to carry cover the cost of damages you cause to other people and vehicles while you’re behind the wheel, they won’t pay for any damage that happens to your car. Different types of auto insurance that cover damage to your vehicle include:
- Collision — Collision coverage is an optional type of coverage that pays for damage to your car from an accident, no matter who’s at fault. It applies when your vehicle collides with something, whether it’s another vehicle or an unmoving object, and it will cover the cost of repairs up to the current value of your vehicle. If the repair costs are higher than your vehicle’s cash value, your insurance company may “total” your car, meaning it’s considered a total loss, and repairs won’t be covered. Collision coverage won’t pay for your car’s usual wear and tear or for a mechanical failure, but it will cover damage from an event such as hitting a pothole.
- Comprehensive — This optional type of coverage covers theft and damage caused by something besides a vehicle collision. The presence of other drivers isn’t a relevant factor with regard to comprehensive coverage. Comprehensive insurance coverage applies if your vehicle is damaged by an event such as a flood, fire, natural disaster, vandalism, theft, falling trees or rocks, or striking an animal while operating your car. As is the case with collision coverage, comprehensive will only pay as much as your car is worth. If repair costs exceed your car’s value, the insurance company will compensate you for the value of your car minus your deductible.
- Glass — Some auto insurance policies cover damage to glass, which includes the windshield, rear windows, glass sunroofs and moonroofs, and side windows. If a policy doesn’t include glass coverage, it’s usually available as a supplement to the policy for an added fee.
If your vehicle is financed or leased, you’ll probably be required by the financing institution or car dealer to purchase collision and comprehensive insurance. These types of coverage will cover only the market value of the vehicle, not the amount you paid for it or the balance of what you owe. The value of new cars depreciates rapidly, so if your car is stolen or gets totaled, there will probably be a “gap” between your insurance coverage and the amount you still owe on the car. Gap insurance is a type of optional coverage you can buy that will cover this difference. Leased vehicles often include gap coverage as part of the lease payment, so if you lease your car, check your lease agreement or call your auto dealer.
Auto Insurance Premiums
Each car insurance policy comes with a monthly premium. Whether there’s an accident or not, this is the fixed amount paid to the insurance company each month to maintain the policy. Depending on your insurance company and your specific policy, you may have the option of paying premiums monthly, quarterly, every six months, or once a year.
Premiums vary according to several factors. Things that may affect the price of your premium include your age, your driving record, the age of your car, the types of coverage you choose, the coverage limits you select, where you live, how much you drive, and your credit score.
During your policy period, if you file a lot of claims or a lot of claims are filed against you, your premiums are likely to go up. Being liable for even one car accident will increase your rates, especially if you cause serious damage or injuries. Any traffic violations such as speeding will also cause your premiums to rise.
If you have a long history of safe driving, you’ll likely pay lower premiums. But if you’re less experienced or your driving history includes a lot of accidents or moving violations, expect to pay higher premiums.
Because insurance companies see younger people as more likely to take risks while driving, drivers under 25 usually have to pay more for car insurance than older people. Similarly, men are considered higher-risk drivers, so they pay more for their auto insurance.
If you live in a location with a high crime rate, you’ll probably pay higher premiums because of the greater risk of theft or vandalism to your vehicle.
If your car comes installed with any safety features, you’ll probably get a discount on your premium, and you may get a lower premium if you drive less. Other discounts many insurance companies offer include those for being a safe driver, having good grades (if you’re still a student), and for bundling your auto insurance policy with your homeowners or renters insurance policy when you buy from the same company.
Auto Insurance Deductibles
The deductible is the amount of money you must pay when making a claim on your policy before the insurance company pays additional costs. Suppose you have a policy with a $500 deductible and you have an accident that causes $5,000 in damages to your vehicle. You are responsible for $500, while the insurance company will cover the rest of the $4,500. In some cases, your insurance company may set deductibles for particular policies. In other cases you may be able choose your deductible. In general, a higher deductible means a lower premium, and a lower deductible means a higher premium. For example, if you choose a $1,000 deductible on your auto policy, you will likely pay less in premiums than you would for a policy with a $250 deductible.
To choose the best deductible for you, you’ll need to balance your psychological comfort and your budget’s flexibility. If you have a tight budget, you may be better off choosing a lower deductible because paying a slightly higher premium each month premium may be worth it to prevent the possibility of having to cover a large repair bill out of your own pocket. If you have more savings available, lower monthly premiums may be the best choice, since you’ll be able to cover a larger portion of repair costs if you have to file a claim.
We’ll Help You Choose the Right Car Insurance
As your trusted car insurance provider, Altra Insurance Services will help you demystify car insurance and guide you in obtaining auto insurance coverage that fits your budget and provides the right amount of protection. Getting a car insurance quote is just a phone call away. Let us help you get the right insurance coverage so you can enjoy peace of mind knowing you’re covered in the event of any accident. When they need high-quality auto insurance or motorcycle insurance, San Diego drivers can trust us to provide reliable, affordable coverage. Give us a call at 619-474-6666 or request an online quote now.