In states where liability auto insurance is required, the law also states a minimum amount of coverage that you must purchase. Your coverage refers to the amount of money your insurance company will pay out if you’re responsible for an accident that causes property damage, injuries, or deaths. In California, the minimum amount of liability auto insurance that you must purchase is $5,000 for property damage, $15,000 for the injury or death of one person, and $30,000 for the injuries or deaths of more than one person.
However, it’s important to remember that the above amounts should be considered minimum coverage amounts … Most auto insurance specialists recommend that you purchase well above those coverage limits, and this is why:
Property damage may run much higher than your coverage limit. Let’s say you have $5,000 in property damage coverage. What if you are responsible for an accident that damages a $30,000-dollar car? The owner of that vehicle can sue you for the remaining $25,000 in replacement costs. If you don’t have that much money lying around, your future wages could be garnished or a lien could be placed on your home.
You could be responsible for medical bills. We’re all aware of the high cost of medical care these days. Even a simple medical problem can cause you to rack up thousandatory in California, you could be responsible for their medical bills.
Comparative liability causes tricky legal situations. California is a comparative liability state, which means that each driver can be found responsible for a percentage of the accident. Even if you aren’t found to be primarily at fault for an accident, you could still be responsible for a portion of the property damages and medical bills. You may feel the likelihood of an accident is low because you’re a great driver, but you can’t count on that in a comparative liability state like ours.
Yes, increasing your coverage limits can translate into a higher premium. But in most cases, it won’t be nearly as high as you think. For just a few dollars more each month, you can buy yourself peace of mind that one error in judgment won’t cause you a lifetime of financial pain.