It may be mandatory for all California drivers to carry insurance, but that doesn’t guarantee everyone follows the law or understands everything about their coverage. Insurance policies are complicated and can be hard to interpret, making it difficult to know exactly what protection you have if you get hurt in an auto accident.
At Demas Law Group, we’ve seen firsthand how the right insurance coverage can make all the difference after a serious accident. We’re here to help you understand California auto insurance laws and how they might impact a car accident claim. If you’ve been hurt, contact us today for a free consultation.
California Auto Insurance Requirements
California law requires drivers to meet the state’s minimum auto insurance requirements. Liability insurance helps pay for injuries or property damage you cause to others in a car accident.
As of January 1, 2025, new California auto insurance laws mandate the following minimum liability limits:
- $30,000 for bodily injury or death to one person
- $60,000 for injury or death per accident
- $15,000 for property damage
While these amounts satisfy the legal requirements, minimum liability coverage may not be enough to fully protect drivers in the event of a catastrophic crash. If a driver causes an accident that exceeds their auto insurance policy limits, they may be personally liable for paying the difference to accident victim(s).
There are some alternatives to carrying a minimum policy. Drivers can either make a cash deposit of $75,000 with the California Department of Motor Vehicles (DMV) as proof of financial responsibility, obtain a $75,000 surety bond, or have a DMV-issued self-insured certificate. However, most drivers opt for standard auto insurance policies.
Low-income drivers with a good driving record and who meet certain eligibility requirements may qualify for car insurance at reduced rates through the California Low Cost Auto Insurance Program (CLCA).
Understanding Your Policy: Required vs. Recommended Coverage
It’s important to remember that liability insurance only protects other people and their property, not you or your vehicle. At Demas Law Group, we always recommend adding more coverage beyond the minimum legal requirements.
What is Required Coverage?
Required coverage refers to the minimum liability insurance mandated by the State of California auto insurance laws. Meeting the minimum requirements is vital, but drivers should remember that it fails to protect them or their property if they cause a crash. It also could result in legal problems if their liability policy fails to cover the full extent of the damage and injuries they cause to others. This is especially true if an accident victim sustains severe injuries.
What is Recommended Coverage?
Recommended coverage is auto insurance that offers more wide-ranging coverage and peace of mind. It can include uninsured/underinsured motorist coverage (UM/UIM), comprehensive and collision coverage, as well as higher liability limits.
Protecting Yourself and Your Family: MedPay and UM/UIM
Our Sacramento car accident lawyers often find that drivers frequently overlook two of the most essential forms of coverage: Medical Payments (MedPay) and Uninsured/Underinsured Motorist Coverage (UI/UIM).
Medical Payments Coverage (MedPay)
MedPay in California is an optional form of auto insurance that can protect you and your passengers in the event of a crash, regardless of who is at fault. It can help cover medical expenses such as ambulance services, ER visits, rehabilitation costs, and medical equipment, even if you have health insurance. MedPay does not cover property damage or any expenses that exceed the policy limits.
Uninsured/Underinsured Motorist (UM/UIM) Coverage
California ranks eighth in the Insurance Information Institute’s Top 10 list of states with uninsured drivers. Data indicates that around 20 percent of drivers in the state do not carry insurance.
If you suffer injuries in an accident caused by an uninsured driver, you can file a claim to seek compensation through your own insurer if you purchased uninsured motorist coverage. In California, UM coverage can also apply in hit-and-run accidents.
By contrast, underinsured motorist coverage (UIM) protects you if you are hit by a driver who carries insurance, but not enough to cover the full extent of your damages. If you purchase UIM insurance, you may be able to file a claim with your insurance company requesting reimbursement for what the at-fault driver’s policy does not cover.
Though carrying UM/UIM insurance is not mandatory under California law, insurance companies must offer it to you, and you must opt out in writing.
Protecting Your Assets: Liability and Umbrella Insurance
Minimum liability coverage can help you preserve your finances if you cause an accident, but it only offers limited protection. The consequences of a car accident can easily exceed California’s minimum limits. You can increase financial protection for yourself in several ways, including:
- Increasing liability limits – Expanding your liability coverage to provide significantly higher limits can be well worth it. Contact your insurance agent to learn about the cost to increase your limits and how it will affect your insurance premiums.
- Umbrella insurance – This extra liability insurance kicks in after your auto insurance limits are reached. Umbrella policies often provide an additional $1 million or more in liability protection and may be an affordable investment considering the level of coverage they offer.
Optional Coverage for Added Security
Insurance companies offer several optional add-ons to their coverage that can provide further convenience and protection:
- Rental reimbursement – If your car is being repaired after an accident and you need a rental vehicle, rental reimbursement can cover the associated costs. The at-fault driver’s insurance company may also pay for a rental if it accepts your claim.
- Gap insurance – If your car is totaled and you still owe money on it, gap insurance can pay the difference between what you owe and the car’s actual cash value.
- Roadside assistance – If you have a flat tire, your car breaks down, your battery dies, or you lock your keys in the vehicle, roadside assistance coverage provides the help you need to get your car home safely.
Importance of Auto Insurance in Legal Claims
When an accident happens, your auto insurance can play a crucial role in any personal injury claims that may follow. For instance, if you’re injured by another driver who doesn’t have the insurance coverage to compensate you, your UI/UIM or MedPay can offer protection for your medical care, lost wages, and other accident-related expenses.
However, recovering compensation requires communicating and negotiating with insurance company(s). Insurers work hard to pay claimants as little as possible in car accident cases. That’s why it’s crucial to not only carry a strong insurance policy, but to understand what coverage can help if the other driver’s coverage is insufficient or their insurer refuses to cooperate.
Contact a California Car Accident Attorney Today
Dealing with insurance claims after a car accident can be overwhelming, but the experienced personal injury attorneys at Demas Law Group can help. Our Sacramento law firm is led by a team of skilled car accident attorneys and trial lawyers who are ready to stand up for you if the insurance company gives you the runaround. Contact us today to learn more in a free case evaluation.
