As with most states, California auto insurance law requires all drivers to carry 3 fundamental liability components.

Bodily Injury Liability (BIL) of $ 15,000 per person injured

Total Bodily Injury Liability of $ 30,000 / accident

Property Damage Liability or PDL of $ 15,000 per accident

In insurance industry jargon, this is known as 15/30/15.

But please understand that to rely on this coverage alone, would be asking for trouble. Multiple car accidents and ambulance chasers (i.e. lawyers) can drive the cost of a car accident to six figures and well beyond. If you’re at fault and you’ve gone with the minimums, you personally, are now on the hook for the shortfall. So, you’ll have to sell your property, deplete your bank balance and maybe even more…how do you feel about that?

From experience, I recommend no less than 100k/300k/100k and more, if you are on the road frequently…particularly in the abundant elite communities of Californ-i-a. Spending a few extra dollars here is money well spent.

Thus far, we have discussed only liability insurance which doesn’t cover your injuries and damages to your car. What we will discuss from here on is not mandated by law in California.

First, let’s take care of you. Personal Injury Protection (PIP) pays for injury to you and your passengers no matter who was at fault. I recommend PIP coverage of no less than $ 100,000.

Next, your vehicle. To most people, having both collision and comprehensive insurance is known as full coverage.

There are two purposes of collision insurance; to cover the cost of damages to your vehicle or, if your car is a total write-off, to provide a cash settlement. You are liable for a predetermined “deductible” amount and the insurer pays the balance.

Comprehensive covers your ride for vandalism, theft and damages due to fire, animals and acts of God.

Another valuable coverage — protection from uninsured drivers. It’s not your fault, but he can’t pay…your uninsured driver coverage kicks in.

Southern California auto insurance introduces “pay-by-mile” program.

CA’s Insurance Commissioners have tabled a plan allowing insurance companies to charge based on actual miles driven. Similar to purchasing prepaid minutes for a mobile phone…the consumer would pay up-front for a fixed number of miles to be driven in a limited period of time. A device installed in the automobile will allow the insurance company to monitor a car’s mileage and charge appropriately.

Consumer advocate groups are backing the plan because paying for miles traveled, instead of an insurer’s estimate, will provide savings for low mileage drivers.

And maybe more importantly, the plan will act as an incentive for drivers to stay off the pavement. Environmentalists say this type of auto insurance La Mesa will encourage consumers to drive less…leading to lower fuel usage, reduced pollution & less road congestion.

The plan looks like an all-out winner to me.

Technorati Tags: , , , , ,