The Golden state follows the Financial Responsibility Law. This means that motorists must carry the minimum liability limits of car insurance set by the state’s laws in order to ensure that a third party will receive compensation after sustaining injuries or damage to property as a result of a traffic accident. The mandatory limit is set at 15/30/5 which breaks down into the following:
As of 2006 the law made it mandatory for California auto insurance providers to electronically report private-use vehicle policy information to the Department of Motor Vehicles (DMV). If an insurer notifies the DMV that coverage has been cancelled the motorist must obtain a new policy within 45 days and proof would need to be submitted; failure to do so can result in the suspension of a vehicle’s registration. This rule was put into place to protect the residents who occupy the roadways from being involved with a driver who lacks coverage and keep uninsured motorists off of the streets.
One should keep in mind that the minimum required liability limits are relatively low compare to other states as well as compared to the cost for medical care and the repair or replacement of vehicles. If found at fault and the collision results in a serious injury to a third party, $15,000 would probably not cover the expenses needed for medical bills. Moreover, if damage is caused to a luxury automobile then $5,000 would probably not cover the amount that it would cost to repair the vehicle and it would certainly not be enough to replace it.
If one finds themselves in either of these situations they would be held liable for the remaining amount due to the victim after the limits stated on the auto insurance policy have been exhausted. This can end up with the policyholder being subject to a lawsuit and incurring a serious financial hardship which may be avoided by purchasing more extensive policies. Most consumer guides that pertain to automobile coverage suggest that individuals obtain policies with limits of at least 100/300/50 to help protect them from being caught in one of these particular situations.
The state’s requirements also do not cover any injuries that the policyholder may sustain or damage to their property (vehicle); providers do offer protection for these particular instances. Medical Payments is an option that can be added which will pay for the insured’s injuries up to the limit chosen. Comprehensive and Collision will pay for damages to the insured’s vehicle minus the deductible that was chosen at the time coverage was purchased (this excludes mechanical breakdown or wear and tear). For more information on additional options for more extensive protection one can refer to the California’s Department of Insurance information guide for tips from a trusted government website.
Source: http://www.onlineautoinsurance.com/california/
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