Don’t Buy Insurance You Don’t Need
With so many car insurance options out there, it can be hard to pick out exactly what kind of car insurance you need and determine what kind of insurance is unnecessary.
If you’re not sure why drivers need different types of car insurance, then you’ve come to the right place! Here, we break down the three main types of car insurance and why people need them (or not).
Liability Insurance
When you’re at fault in a car accident, liability insurance covers the damage to the other car as well as the medical bills of the other people involved in the accident. Liability insurance does not cover your medical bills or repairs to your own car. The other driver’s liability insurance covers these costs, but only if they’re at fault for the accident.
Do You Need Liability Insurance?
Liability insurance is the type of insurance that’s required by law in most states. In California, all drivers must have liability insurance with policy limits of at least 15/30/5. This means that a liability insurance policy in California must cover at least $15,000 per person for bodily injury, $30,000 per accident for bodily injury, and $5,000 for property damage.
In addition, California drivers must carry uninsured motorist insurance with policy limits of at least 15/30/3.5, or at least $15,000 per person for bodily injury, $30,000 per accident for bodily injury, and $3,500 for property damage. Uninsured motorist insurance covers your own medical bills and repair costs if another driver causes a car accident but is uninsured.
What Happens When You Exceed the Limits of Your Liability Insurance Coverage?
If you are at fault for a car accident and the medical and/or car repair costs of the other driver exceed your policy limits, then you may be sued in court to cover the remaining costs personally.
What Happens When You Don’t Have Liability Insurance Coverage?
If you are caught driving in California without proof of minimum liability insurance coverage, you face fines ranging from $100 to well over $500. In addition, your car registration will be suspended, and your car may be impounded until you can provide proof of adequate insurance coverage. If this happens, then you’re also responsible for paying the towing and storage fees before you can get your car back.
Collision Insurance
Collision insurance covers the costs of repairs to your car when it’s involved in a collision with another vehicle or object. Unlike liability insurance coverage, you can make a collision insurance claim regardless of whether you are at fault for the accident. In addition to covering repairs to your vehicle, collision insurance policies may also cover services related to car accidents, such as car towing and rental car reimbursement while your car is being repaired. Expect to pay a higher premium if you choose these additional coverages.
Do You Need Collision Insurance?
Collision insurance is not legally required in California. However, if you are leasing or financing a car, then the leasing or financing company may contractually require you to maintain the minimum collision insurance coverage.
What Happens When You Exceed the Policy Limits of Your Collision Insurance Coverage?
If you exceed the policy limits of your collision insurance policy, then you will be on the hook for the remaining costs to repair your car.
What Happens When You Don’t Have Collision Insurance Coverage?
If you’re leasing or financing a car, then you may likely be violating your contract if you don’t have collision coverage. When this happens, the leasing or financing company usually takes out a collision insurance policy, which you then have to pay. And unlike you, leasing and financing companies aren’t interested in finding the cheapest option!
If you’ve already completely paid off your car, then the risk of not having a collision insurance policy is that you’re responsible for your car repairs if you’re at fault in a car accident.
Another advantage of collision insurance is that claims are usually faster to process. Even if you’re not at fault for a car accident, it may take weeks or even months for a court to determine that the other driver is liable for the damage to your vehicle. In the meantime, you may not be able to drive your car to work or school!
However, if you don’t need your car for essential tasks like getting to work, then it likely makes sense to reduce or drop your collision insurance coverage altogether.
Comprehensive Insurance
Comprehensive car insurance covers repairs to your car when it’s involved in an incident other than a collision with another vehicle. If your car is vandalized, stolen, or damaged in a natural disaster, then a comprehensive car insurance policy would cover the costs to repair or replace it. As with collision insurance coverage, you can make a comprehensive insurance claim whenever a covered event occurs. However, keep in mind that the insurance company may consider factors such as whether your car was parked illegally or in an unauthorized area when processing your claim.
Do You Need Comprehensive Insurance?
California does not legally require drivers to carry comprehensive insurance coverage, but drivers who lease or finance their car may be contractually required to carry minimum comprehensive insurance coverage. It’s always a good idea to double-check your contract to make sure you completely understand your total financial obligations before signing.
What Happens When You Exceed the Policy Limits of Your Comprehensive Insurance Coverage?
If you exceed your comprehensive insurance policy’s policy limits, you will have to pay for the remaining costs to repair or replace your car.
What Happens When You Don’t Have Comprehensive Insurance Coverage?
As with collision insurance coverage, you may be violating your leasing or financing contract if you don’t maintain adequate comprehensive insurance coverage. When this happens, you’ll need to pay for an insurance policy selected by the leasing or financing company, which is typically much more expensive.
If your car is already paid off, then the risk of not having comprehensive car insurance is that you’re responsible for repairing or replacing your vehicle if it’s stolen, vandalized, or damaged in a natural disaster such as a hailstorm or fallen tree.
One of the biggest advantages of comprehensive car insurance is that it covers your car when it would otherwise be impossible to be covered by car insurance. If you need your car for something essential like getting to work, then comprehensive insurance is a great way to ensure it can get repaired quickly when the unexpected happens.
On the other hand, if you don’t require a car for essential tasks or feel you could cover the repair costs to your car if it were suddenly damaged, it would be a good idea to consider reducing or dropping your comprehensive insurance coverage.
Are You Getting the Best Deal on Your Car Insurance?
For whatever types of car insurance you need, make sure you’re getting the best rate possible! Be sure to shop around for several quotes before making a decision, and check us out at Cost-U-Less. It only takes a few minutes to get a quick online quote, but speaking directly to an expert on the phone or in person is always possible too.
