Auto Insurance Coverage Issues in the State of California: An Overview
Although thousands of Californians buy insurance for their vehicles each year, understanding the various forms of auto insurance coverage can be stressful and overwhelming, and once an individual needs to use their insurance, most individuals are unaware of the availability and affordability of some of the insurance protections available to them. Aside from the legal language used to define the coverage options, it’s also challenging to understand the sort of coverage that would best benefit a motorist’s individual situation.
Common Forms of Coverage:
The following lists some of the most common forms of auto insurance coverage options in the State of California.
- Personal Auto Liability Insurance Coverage
This form of insurance coverage will protect a motorist in the event that an auto accident occurs and the insured driver was ultimately found liable for the accident. Auto liability insurance is crucial because it helps protect a liable party’s personal assets. Personal auto liability insurance coverage will cover the damages caused to other vehicles involved in the accident. This coverage will also pay for the expenses of the damages made to other forms of property as well, which may include expensive belongings that were in the vehicle at the time of the incident. Equally important, personal auto liability insurance coverage will also cover medical expenses accrued from the injuries sustained by other involved individuals. The State of California has a minimum requirement of liability coverage.
While there are minimum requirements established, it is recommended that higher insurance coverage options be elected. Opting for this higher coverage will provide the insured motorist an extra protection in the event that he or she is found responsible for an auto accident.
- Auto Collision Coverage Insurance
In the event that there is an auto accident that is already covered, the collision coverage insurance will pay for the repairs of the insured driver’s personal vehicle. This type of insurance is sold with a deductible which is the amount the insured will have to pay before the insurance coverages any damages. If the insured driver’s personal vehicle is totaled and the cost to fix the car surpasses the value of the vehicle, a collision coverage insurance policy will pay the current value of the car.
- Comprehensive Coverage Insurance
There are countless of other damages that can happen to a motorist’s car. Some of these damages can include, but are not limited to the following:
- The impact of hitting an animal while driving,
- A completely or partially stolen vehicle, and
- Other damages such as caused by weather (e.g. flood) or vandalism
This type of insurance coverage will cover the costs for these types of damages. Like collision coverage, comprehensive coverage also is sold with a deductible requiring the insured to pay an amount before the coverage kicks-in. While it is suggested that this supplementary insurance coverage is elected, if the vehicle has a lienholder, this insurance coverage will nonetheless be mandatory.
- Commercial Auto Liability
Commercial auto coverage provides policies with cover losses incurred in the course of conducting a business which can include coverage for when an employee of the business use their own cars for company business. This form of coverage often come with higher liability limits. Whether commercial coverage is needed depends on the size of the business, the type of use of the vehicles, the users of the vehicles and other factors.
- Personal Injury Protection (PIP) and Med-Pay
PIP pays a per-person benefit for the insured’s and the insured’s passenger’s medical bills resulting from an accident and in some cases the lost wages, funeral expenses and other losses. This form of insurance is generally referred to as a “no-fault” insurance because it pays the insured’s claims regardless of who is at fault. Similarly, Med-Pay covers the insured’s and the insured’s passenger’s medical expenses up to a predetermined limit regardless of who is at fault. However, Med-Pay does not cover other losses.
Both comprehensive insurance and collision insurance coverage are supplementary forms of insurance policies that are not always required. This will depend on an insured motorist’s individual case. While this is the same for personal injury protection, it is perhaps one of the most valuable forms of insurance coverage a motorist can obtain. Auto accidents can quickly result in many forms of high costs and to cover these costs, this type of insurance can help lessen the responsibility.
- Uninsured or Underinsured Motorist Insurance Protection (UM/UIM)
While all California drivers are required to be insured, not every driver is covered. Further, while drivers may carry liability insurance, many of them will have low minimum insurance coverage. Unfortunately because of this, many of these policies are not sufficient in covering the high expenses that result in many vehicle accidents. Being injured or having a damaged car can dramatically affect a person’s quality of life. With an uninsured or underinsured protection, motorists can feel the comfort of knowing that they will not have to depend on others in order to get back into their daily routines.
Uninsured Motorist (UM) and Underinsured Motorist (UIM) coverage applies if an uninsured, or underinsured, driver hits your vehicle. UM/UIM also kicks-in in situations where an insured’s vehicle is hit by a hit-and-run driver. Claims for UM/UIM are not “third-party” claims, but rather “first-party” claims, meaning the insured makes the claim directly to the insurer because the insurer has a duty to compensate its own insured for his or her losses, rather than to indemnify against liability claims from others.
Bad Faith in Auto Cases:
The following summarizes some of the most common insurance issues that may arise in an auto-collision case.
“Bad faith” refers to the failure of a party to a contract to act in good faith. California imposes a duty of good faith and fair dealing in contracts which is an implied obligation which exists to ensure that neither party to the contract will do anything which will injure the right of the other to receive the benefits of the agreement. In the auto insurance context, an insurer may be subject to claims of bad faith for any of the following:
- Refusing to tender a defense of an insured;
- Failing to pay medical claims under coverage;
- Failing to pay a reasonable settlement demand by a third-party liability claimant/plaintiff within the policy limits if there is later liability exposure above policy limits;
- Unreasonably delaying or denying the payment of an uninsured or underinsured motorist claim;
- A settlement that fails to provide for a lien release or satisfaction;
- A settlement prejudicial to the insured’s affirmative claims against a third-party claimant;
- A settlement on behalf of one insured but not on behalf of another insured who faces liability;
- Paying uninsured motorist or underinsured motorist claim conditioned on the insured releasing the insurer from any bad faith claims.
The Bottom Line
Auto Insurance is lawfully required for all drivers in the State of California. Understanding the insurance available to compensate an insured or an injured party to an auto accident can be complicated and it is important to have a legal representative that can maximize recovery of claims through the various insurance policies available. Furthermore, it is important to have legal representation experienced with the various coverage issues and how to respond to insurance companies that may be engaging in bad faith practices. Speaking to an experienced legal professional can help to understand what rights and protections insured and injured parties have with auto claims.
The attorneys at the Knez Law Group are experienced in the field of person injury. They are a dedicated team of expert attorneys who will champion for their clients rights in the event of an auto accident.
Andrew J. Knez earned his Bachelor of Arts degrees in Political Science and Criminal Justice from California State University, Fullerton. During his college years, he was a member of the Pi Kappa Phi Fraternity and interned at the College Legal Clinic, where he assisted underprivileged communities in obtaining affordable legal services. Mr. Knez credits this experience with fostering his appreciation for the law and its positive impact on society. Additionally, during college, Mr. Knez worked as a paralegal, gaining hands-on experience in civil litigation. Learn more here.