Navigating the Road Ahead: Understanding Auto Insurance and Uninsured Driver Accidents

Auto insurance is a critical safeguard for anyone who owns and operates a vehicle. It’s designed to provide financial protection in the event of accidents, covering injuries and property damage. This guide aims to clarify the complexities of auto insurance, helping you make informed decisions about your coverage and understand your policy thoroughly. Your auto insurance policy is a legally binding document, so understanding its details is paramount. Whether you drive a car, truck, van, motorcycle, or any other type of private passenger vehicle, this information is relevant to you.

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Understanding California’s Auto Insurance Laws and Your Responsibilities

California law mandates that every vehicle owner must demonstrate financial responsibility. This is crucial in case your vehicle causes injury to others or damage to their property. For most people, the easiest way to meet this legal requirement is by purchasing auto liability insurance. California Vehicle Code explicitly states that “All drivers and all owners of a motor vehicle shall at all times be able to establish financial responsibility and shall at all times carry in the vehicle evidence of the form of financial responsibility in effect for the vehicle.” Driving without auto liability insurance can lead to significant penalties, including fines, license suspension, and even vehicle impoundment.

Decoding Your Auto Insurance Policy

Your auto insurance policy is essentially a contract between you and your insurance provider. It clearly outlines several key aspects of your coverage:

Costs: This details your premium payments and any potential deductibles.
Coverages: This section specifies what situations and damages your policy will cover.
Exclusions: Crucially, this lists situations and damages that are not covered by your policy.

It’s important to understand that auto insurance policies can differ significantly between providers. To ensure you’re getting the best coverage for your needs, have an open discussion with your insurance agent, broker, or insurance company representative. While they can offer valuable guidance, ultimately, choosing the right insurance is your responsibility. Always compare quotes from multiple insurers before making a decision. A quote provides an estimated premium cost, allowing you to compare pricing and coverage options effectively.

Being an Informed Policyholder

Familiarizing yourself with your auto policy before you need to use it is essential. Read it carefully, paying close attention to the Declarations page, which offers a helpful summary of your policy details.

If any part of your policy is unclear, don’t hesitate to contact your agent, broker, or insurance company for clarification.
Inform your agent, broker, or insurance company immediately if you buy or sell a vehicle, or if new drivers join your household, as these changes can affect your coverage.
Before allowing anyone else to drive your car, review your policy. Some policies may exclude certain drivers, meaning accidents caused by those excluded drivers might not be covered.

Your Rights as a Policyholder: The Good Driver Provision

California law includes a “Good Driver Provision.” This mandates that every auto insurance company must offer coverage to individuals classified as “Good Drivers.” To qualify as a Good Driver, you must have been licensed for at least three consecutive years and have no more than one point on your driving record. Importantly, insurance rates for Good Drivers must be at least 20% lower than the rates offered to non-Good Drivers by the same insurance company.

Policy Cancellation and Nonrenewal Protections

Once your auto insurance policy is in effect, there are limited reasons why it can be canceled or not renewed by the insurance company. These reasons are specifically restricted to:

Fraud or Material Misrepresentation: If you provided false or misleading information when applying for the policy.
Non-Payment of Premium: Failure to pay your insurance premiums as agreed.
Substantial Increase in Hazard: A significant change that increases the risk the insurance company is covering.

Understanding Auto Insurance Costs: Premiums, Deductibles, and Limits

Premiums: Your Insurance Payment

A premium is the price you pay to your insurance company to purchase your auto policy. This payment covers the policy term, which can range from one month to a year. Most insurance companies offer installment payment options for premiums. It’s wise to inquire if there are any additional fees associated with paying in installments.

Deductibles: Your Out-of-Pocket Responsibility

Deductibles apply to certain types of coverage, like collision and comprehensive. A deductible is the amount you are responsible for paying out-of-pocket towards a covered loss.

Choosing a higher deductible typically results in a lower premium.

Example: Suppose your Comprehensive coverage has a $500 deductible. If a hailstorm causes $1,500 in damage to your car, you will pay the first $500, and your Comprehensive coverage will pay the remaining $1,000.

Limits: Maximum Coverage Amounts

Each type of coverage in your policy has its own coverage limit. This limit is the maximum amount your insurance company will pay for a single accident or claim. The insurance company will not cover any costs that exceed these limits.

Example: If your auto liability coverage has a $50,000/$100,000 bodily injury limit per accident, the insurance company will not pay more than $50,000 for injuries to any single person in an accident, and no more than a total of $100,000 for all injuries in one accident.

Agent vs. Broker Fees

Agents represent specific insurance companies and are compensated by those companies, not directly by you. If you choose to work with an insurance broker, you will usually pay a broker’s fee for their services.

Cost Variations Among Insurance Companies

Auto insurance costs are not uniform and can vary significantly, even within the same geographic area. When shopping for auto insurance, it’s crucial to compare both costs and coverage options from multiple companies to find the best value.

Affordable Insurance Options: California’s Low Cost Program

If you are struggling to afford auto insurance premiums, California offers a Low Cost Automobile Insurance Program for income-eligible drivers. For detailed information about this program and to check your eligibility, visit Home – California’s Low Cost Insurance (mylowcostauto.com) or call 1-866-602-8861.

Liability Coverage: Protecting You and Others Under California Law

Liability coverage is designed to cover injuries or damages you cause to others in an accident where you are at fault. As a vehicle owner and driver, you are legally obligated to comply with California’s financial responsibility laws, primarily through purchasing auto liability coverage.

It’s important to note that liability coverage does not cover injuries to yourself or members of your household. For that protection, you can purchase separate Medical Payments Coverage.

Minimum Liability Coverage ($30K/$60k/$15K):

These limits represent the minimum liability coverage required by law for a standard auto policy in California. You must carry at least this much coverage to legally drive.

Minimum Bodily Injury Liability Limits

$30,000 for injury or death of one person: If one person is injured or dies in an accident you cause, your coverage will pay up to $30,000 for claims related to that person.
$60,000 total for injury or death of multiple people: If two or more people are injured or die in a single accident you cause, the total coverage available for all bodily injury claims is capped at $60,000. This amount is shared among all injured parties.
This coverage applies to injuries you cause to others, not to yourself or your passengers.

Minimum Property Damage Liability Limits

$15,000 for damage to property: This coverage pays for damage you cause to someone else’s property, which typically includes their car, but can also extend to other objects or structures your car hits, such as fences or buildings.

The Legal Requirement to Purchase Liability Coverage

Driving without liability insurance is illegal in California. Furthermore, proof of liability insurance is required to register your vehicle with the Department of Motor Vehicles (DMV). Insurance companies are mandated to notify the California DMV if you purchase a policy or if your coverage lapses due to non-payment.

Consequences of Driving Without Liability Coverage

If you are stopped by law enforcement and cannot provide proof of insurance, you will receive a citation. Driving without any insurance can result in license suspension and vehicle impoundment.

Proving You Have Liability Coverage

Your insurance company will issue you proof of insurance, typically in the form of an insurance card. This card lists the insured vehicles, the name(s) of the policyholder(s), your policy number, and the policy’s effective and expiration dates. You are required to keep this proof of insurance card with you in your vehicle at all times.

What Happens If Accident Damages Exceed Your Liability Limits?

If you cause an accident where the damages exceed your purchased liability limits, you will be personally responsible for paying the remaining costs out of your own pocket.

Should You Opt for Higher Liability Limits?

Consider purchasing liability coverage limits that are higher than the state-mandated minimums. Generally, the more assets you own, the greater your potential financial risk in a lawsuit resulting from an accident. Discussing your individual circumstances with your agent, broker, insurance company, or a financial advisor is recommended to determine appropriate liability coverage limits for your needs.

Alternatives to Insurance for Demonstrating Financial Responsibility

While purchasing auto liability insurance is the most common method, California law allows for two other ways to demonstrate financial responsibility:

Cash Deposit: Making a cash deposit of $35,000 with the Department of Motor Vehicles (DMV).
Surety Bond: Obtaining a surety bond for $35,000 from an insurance company licensed to operate in California.

Regardless of the method chosen, evidence of financial responsibility must be carried in your vehicle at all times. However, most California drivers choose to fulfill this requirement by purchasing auto liability insurance from an authorized insurance company.

Exploring Other Essential Auto Insurance Coverages

Beyond liability coverage, several other valuable coverage options are commonly available for purchase to enhance your protection.

Uninsured Motorist Coverage (UMC) and Underinsured Motorist Coverage (UIM): Protection Against Negligent, Uninsured Drivers

This crucial coverage protects you if you are involved in an accident with a driver who either has no liability insurance at all (uninsured) or has insufficient insurance to cover your damages (underinsured). If you’ve been injured in an accident caused by an uninsured driver, consulting with an Uninsured Driver Lawyer is highly recommended to understand your legal options and pursue compensation.

Insurance companies in California are required to offer you Uninsured Motorist Coverage. If you decline this coverage, you must sign a waiver form acknowledging that you were offered the coverage and chose to reject it.

Uninsured Motorist Bodily Injury (UMBI): This coverage pays for bodily injuries sustained by you and any passengers in your car if you are hit by an uninsured driver who is at fault. The coverage limits are typically the same as your liability coverage limits. An uninsured driver lawyer can help you navigate the claims process under your UMBI coverage and maximize your recovery.
Underinsured Motorist (UIM): This coverage provides limited financial protection for bodily injuries if you are in an accident with an underinsured driver whose insurance is insufficient to cover your damages. In underinsured motorist situations, an uninsured driver lawyer (who often handles both uninsured and underinsured cases) can be invaluable in negotiating with insurance companies and ensuring you receive fair compensation.
Uninsured Motorist Property Damage (UMPD): This coverage pays for damage to your vehicle caused by an uninsured driver who is at fault. The limit is typically $3,500, and it generally only applies if the uninsured driver is identified. If you already have collision coverage, UMPD might be redundant.

Collision Deductible Waiver (CDW)

This coverage specifically pays for your collision deductible if your insured vehicle is damaged in an accident caused by an uninsured driver who is at fault.

Medical Payments Coverage: Immediate Medical Care, Regardless of Fault

Medical Payments Coverage helps cover medical expenses for you and your passengers if you are injured in a car accident, regardless of who was at fault. This coverage can provide prompt payment for immediate medical care needs.

The minimum coverage limit you can purchase is typically $1,000 per injured person, but you can request higher coverage limits for greater protection.

Physical Damage Coverages: Comprehensive and Collision

Collision Coverage: This coverage protects your car from damage caused by physical contact with another vehicle or object, such as another car, a tree, a rock, a guardrail, or a building.
Comprehensive Coverage: Comprehensive coverage protects your car from damages caused by events other than collisions. This includes events like fire, theft, vandalism, windstorms, floods, and falling objects. However, it typically does not cover mechanical breakdowns, normal wear and tear, or routine maintenance.

Both Collision and Comprehensive coverage typically provide compensation based on the actual market value (also known as Actual Cash Value or ACV) of your vehicle at the time of the damage.

Policy Endorsements: Adding Specialized Coverage

You can purchase endorsements to add coverage for aftermarket equipment, such as custom wheels, navigation systems, and permanently installed custom equipment.
Coverage for towing and roadside assistance can be added via endorsement.
Rental reimbursement insurance can be added to cover the cost of renting a car while your vehicle is being repaired after a covered accident.
For those who use their vehicles for business purposes, including driving for Transportation Network Companies (TNCs) like Uber or Lyft, specific endorsements are available to cover business use.

Insurance Requirements for Financed Vehicles

If you have a car loan, your lender will almost certainly require you to maintain auto insurance coverage. If you fail to purchase insurance, the loan company may purchase it on your behalf and charge you for it, often at a higher cost than if you obtained your own Collision and Comprehensive coverage.

It’s important to understand that standard auto insurance typically does not pay off your car loan if your vehicle is totaled in an accident and its market value is less than the outstanding loan balance. To cover this potential “gap,” auto dealers and lenders often offer Guaranteed Auto Protection (GAP) insurance.

Coverage Summary: Key Protections at a Glance

Liability Coverage (Required by California Law): Protects you financially when you are at fault in an accident.

Bodily Injury Liability: Pays for bodily injuries you cause to others.
Property Damage Liability: Pays for property damage you cause to others’ property.
California law mandates you to have this coverage.

Uninsured/Underinsured Motorist Coverage (UM/UIM) (Highly Recommended): Protects you when the other driver is at fault and lacks insurance or sufficient insurance. In these situations, an uninsured driver lawyer can be crucial in advocating for your rights.

Bodily Injury Coverage: Pays for medical expenses for you and your passengers when hit by an uninsured or underinsured driver.
Property Damage Coverage: Pays for repairs to your car up to $3,500 when hit by an uninsured driver (may be redundant if you have collision coverage).
Collision Deductible Waiver: Pays your collision deductible if hit by an uninsured driver.
You must be offered UM/UIM coverage, but you can choose to decline it (not recommended).

Medical Payments Coverage (Optional but Beneficial): Pays for limited medical expenses for those injured in your car during an accident, regardless of fault.

You may be offered this coverage, and you can choose whether to purchase it.

Physical Damage Coverage (Often Required by Lenders/Lessors): Pays for repair or replacement of your car, minus your deductible.

Collision: Covers damage to your car from accidents involving other cars or objects.
Comprehensive: Covers damage to your car from non-collision events like theft, fire, or vandalism.
Often required by lenders or leasing companies.

Additional Coverages (Optional Enhancements):

Towing and Road Service.
Rental Reimbursement: Pays for a rental car while your car is being repaired after a covered accident.
These coverages are optional and not legally required.

Smart Shopping for Auto Insurance: Comparing Quotes and Saving Money

Auto insurance costs and coverage can vary significantly between companies. Always obtain multiple quotes to ensure you are getting the best value for your needs. A quote is simply an estimate of your premium amount.

An insurance agent or broker can be a valuable resource in navigating the insurance shopping process. They can help you assess your insurance needs, obtain quotes from different companies, compare policies side-by-side, and identify potential discounts. Keep detailed notes of all conversations you have with agents or brokers. Consider bringing a trusted family member or friend with you for added support and clarity.

Steps to Compare Policies Effectively:

Determine Your Desired Coverages: Decide what types and levels of coverage are important to you (e.g., liability limits, inclusion of UM/UIM, comprehensive and collision).
Request Written Quotes: Ask each insurance company or agent to provide you with a quote in writing. This allows for easier comparison.
Compare Quotes Carefully: Don’t just focus on price. Compare the coverage details, deductibles, and limits offered by each quote.
Identify the Issuing Insurance Company: Ask for the full legal name of the insurance company that will be issuing each policy, as this can be relevant for checking their financial stability and reputation.

Strategies to Save Money on Your Auto Insurance Policy:

Multi-Car Discounts: Inquire about discounts for insuring multiple vehicles on the same policy.
Mature/Good Driver Discounts: Ask about discounts for mature drivers or those with excellent driving records.
Vehicle Feature Discounts: Explore discounts for vehicles equipped with safety features like airbags, anti-theft devices, or advanced driver-assistance systems.
Payment Plan Options and Fees: Understand the available payment installment plans and inquire about any associated service fees.
Higher Deductibles: Consider choosing higher deductibles for comprehensive and collision coverage to lower your premium costs. However, ensure you are comfortable paying the higher deductible amount out-of-pocket if you have a claim.
Re-evaluate Coverage on Older Vehicles: For older cars with lower market values, consider reducing or eliminating comprehensive and/or collision coverage, as the potential payout in case of a total loss might not justify the premium cost.
Uninsured Motorist Property Damage (UMPD) vs. No Collision: If you choose to forgo collision coverage on an older vehicle, consider adding UMPD coverage to protect against damage caused by uninsured drivers.

Completing Your Auto Insurance Application: Information You’ll Need

When you apply for auto insurance, you will need to provide certain information to the insurance company. They use this information to assess your risk profile, determine whether to insure you, and calculate your premium. Typical information required includes:

Vehicle Usage: How you primarily use your car (e.g., business, commuting, personal use, family trips).
Annual Mileage: Estimated number of miles you drive per year.
Vehicle Details: Year, make, model, and Vehicle Identification Number (VIN) for all vehicles in your household.
Vehicle Value: The amount you paid for each vehicle.
Lienholder Information: Insurance requirements if you have a car loan or lease (the lender or lessor will be listed as a lienholder or loss payee on your policy).
Driving History: How long you have been driving.
Household Driver Information: Names, ages, marital status, and driver’s license numbers for all drivers residing in your household, even if they don’t regularly drive your insured vehicles.
Driving Records: Detailed driving history for all household drivers, including past accidents, insurance claims, and tickets for moving violations (parking tickets are typically not relevant).
Motor Vehicle Report (MVR): Most insurance companies will order a Motor Vehicle Report from the DMV to verify your driving record. This is the state’s official record of accidents, traffic violations, and license suspensions.

Important Steps Before Signing Your Application:

Review Thoroughly: Take your time to carefully review your entire application before you sign it.
Understand Everything: Do not sign any forms or sections of the application that you do not fully understand. Ask for clarification.
Avoid Blank Forms: Never sign blank forms or incomplete applications.
Request Copies: Always request copies of all forms and documents for your records before you leave the agent’s office or finalize the application process.

Review Your New Policy Upon Receipt

Once you receive your new auto insurance policy documents, review them carefully to ensure all information is accurate and the coverage provided matches what you purchased. Contact the insurance company immediately if you find any errors or discrepancies. Send any requested changes to your agent, broker, and/or insurance company in writing, and retain a copy for your records. Don’t hesitate to contact the insurance company directly to confirm that your agent or broker has properly requested the desired coverage. Using “certified mail/return receipt requested” when sending written correspondence ensures proof of delivery and receipt.

Working with Insurance Agents and Brokers: Understanding the Differences

In California, you have several options for purchasing auto insurance: you can work with an insurance agent, an insurance broker, or directly with an insurance company. You can obtain insurance quotes online, over the phone, or through the mail.

Licensing Requirement: All insurance agents and brokers in California must be licensed by the state to legally sell insurance.
Agent Commissions: When an agent sells an insurance policy, they receive a commission payment from the insurance company. Agents represent the insurance company.
Broker Fees: Brokers, unlike agents, represent you, the insurance buyer. Brokers typically charge an additional fee, called a broker’s fee, for their services. Always ask about the broker’s fee amount before you sign any agreements. Broker’s fees are not regulated by law and are negotiable, so you can discuss the fee and request a lower amount.
Payment Receipts: Always keep receipts for your premium payments, especially if you are paying in cash.

Choosing the Right Agent or Broker for Your Needs

Selecting an agent or broker is an important decision. Choose someone you trust and who you believe will prioritize your best interests. Consider these factors when choosing an agent or broker:

Trustworthiness: Do you feel you can trust this person to provide honest and reliable advice?
Client Focus: Do you believe they will put your needs first, rather than simply trying to sell you any policy?

You can find agents or brokers through local directories (like online yellow pages) or online searches. You can also ask for recommendations from family members, friends, neighbors, or coworkers. Ask these contacts about their experiences:

Policy Explanation: Did the agent/broker take the time to thoroughly explain your policy in a way you understood?
Question Answering: Did they answer all of your questions clearly and patiently?
Claim Support: How responsive and helpful were they when you had to file an insurance claim?
Policy Reviews: How often do they contact you to review your policy and suggest updates based on your changing needs?

Verifying Agent or Broker Licenses

Always verify that an agent or broker is properly licensed to sell auto insurance in California. You can check their license status online through the California Department of Insurance (CDI) License Status Inquiry: CDI License Status Inquiry. Alternatively, you can call the California Department of Insurance directly at 1-800-927-4357.

What to Do If You Are Involved in an Accident

In the event of a car accident, it is crucial to report the accident immediately to both law enforcement and your insurance company. The California Department of Insurance (CDI) offers a free brochure titled “So You’ve Had an Accident, What’s Next?” which provides detailed guidance on accident procedures. You can order this brochure for helpful information.

Your insurance company will likely assign an adjuster to your case. An adjuster is a representative who investigates the accident, assesses the damages, and evaluates your losses. If your car has sustained damage, the adjuster may recommend a specific body shop, or you generally have the right to choose your own repair shop.

Determining Fault in Accidents: Comparative Negligence

In many car accidents, fault is shared between drivers. Police, insurance companies, or courts may determine comparative negligence, which assigns a percentage of responsibility to each driver involved.

How Health Insurance Interacts with Auto Insurance After an Accident

Typically, your health insurance will initially cover your immediate medical care expenses after a car accident. However, your health insurance company will often then attempt to recover those payments from your auto insurance or the at-fault driver’s auto insurance through a process called subrogation. Subrogation is when one insurance company seeks reimbursement from another insurance company for payments they have made.

Accidents and Your Auto Insurance Premiums: Surcharges

If you are involved in a car accident that is not your fault, your insurance company should not increase your premiums upon policy renewal. However, if you are determined to be at least 51% at fault for an accident, your insurance premium may increase when you renew your policy. This premium increase is known as a surcharge.

California’s Low Cost Automobile Insurance Program (CLCA) for Income-Eligible Drivers

California law mandates auto liability insurance, but for individuals with low incomes, affording premiums can be a significant challenge. The California Low Cost Automobile Insurance Program (CLCA) is designed to help income-eligible “good drivers” obtain affordable insurance coverage.

This program offers liability coverage at premiums that vary based on the county where you reside. Please consult the CLCA website for the most current premium rates.

Lower Liability Limits: The liability coverage limits offered through CLCA are lower than the standard minimum limits typically required in California. However, these CLCA limits do satisfy the state’s financial responsibility laws. The CLCA liability limits are:
- $10,000 bodily injury or death per person.
- $20,000 bodily injury or death per accident.
- $3,000 property damage per accident.
Income Eligibility: Your annual income must be 250% or less of the federal poverty level to qualify for CLCA.
Vehicle Value Limit: Your car must be worth $25,000 or less to be eligible for CLCA.
Valid California Driver’s License: You must possess a valid California driver’s license. AB 60 licenses are accepted.
Age Requirement: You must be at least 16 years old to apply. Applicants under 18 must be legally emancipated.
Premium Surcharge for Young Drivers: The premium is higher if there is a driver in the household who is between 19 and 24 years old.
Payment Plans: CLCA offers 7 different payment plan options. There are no broker’s fees associated with CLCA policies.

For more comprehensive information about the California Low Cost Automobile Insurance Program, visit Home – California’s Low Cost Insurance (mylowcostauto.com) or call 1-866-602-8861.

California Automobile Assigned Risk Plan (CAARP) for High-Risk Drivers

If you have a high-risk driving record, perhaps due to multiple accidents or speeding tickets, you may find it challenging to obtain insurance from standard insurance companies in the voluntary market.

If you are in this situation, it’s still advisable to shop around and compare costs and coverage carefully from any companies that will offer you a policy.

Another option for high-risk drivers to obtain liability insurance is through the California Automobile Assigned Risk Plan (CAARP).

Assigned Insurer: CAARP operates by assigning you to an insurance company. All insurance companies licensed to sell auto insurance in California are required to participate in CAARP and accept assigned policyholders.
Uniform Premiums: All insurance companies participating in the CAARP program are required to charge the same premiums for CAARP policies. Payment installment plans are available.
Improving Your Record: After a certain period, traffic violations or accidents may be removed from your driving record, depending on California law. Once your record improves, you may become eligible to purchase a standard auto insurance policy in the voluntary market at potentially lower rates.
No Broker’s Fees: There are no broker’s fees associated with purchasing a CAARP policy. For further information about the California Automobile Assigned Risk Plan, call CAARP directly at 1-800-622-0954.

Glossary of Auto Insurance Terms

Adjuster

The insurance company representative who investigates and evaluates your damage and losses after an accident.

Agent

A licensed individual or organization authorized to sell and service insurance policies on behalf of an insurance company.

Binder

A temporary, short-term insurance agreement that provides immediate auto coverage until your full auto insurance policy officially starts.

Broker

A licensed individual or organization that sells and services insurance policies on your behalf, representing you to find the best coverage options.

Broker Fee Agreement

The formal contract between you and your insurance broker, outlining the fees for the broker’s services.

Cancellation

The termination of your insurance policy, either by you or the insurance company, before the end of its term. Cancellation by the insurer may occur due to non-payment of premium, while you might cancel if you sell your car.

Claim

Your formal request to your insurance company for coverage and payment for losses resulting from an accident or other covered event.

Collision Coverage

Insurance that pays for damage to your car caused by a collision with another vehicle or object (e.g., tree, guardrail).

Commission

The payment an insurance company makes to an agent or broker for selling an insurance policy.

Comparative Negligence

In accidents where both drivers are partially at fault, comparative negligence is the determination of the percentage of responsibility assigned to each driver.

Comprehensive Coverage

Insurance that pays for damage to your car caused by events other than collisions, such as fire, theft, vandalism, or natural disasters.

Declarations Page

Typically the first page of your insurance policy, summarizing key information like your insurance company’s name, coverage types and amounts, deductibles, and insured vehicles.

Deductible

The portion of a covered loss that you are responsible for paying out-of-pocket before your insurance coverage begins to pay. Deductibles typically apply to comprehensive and collision coverage.

Endorsement/Rider

A written amendment to your insurance policy that changes the coverage terms or details.

Exclusion

Specific situations, perils, people, property, or locations that are explicitly not covered or have limited coverage under your insurance policy.

Gap Coverage

Insurance that pays the “gap” or difference between the fair market value of a newly purchased car and the outstanding balance on your car loan or lease if the car is totaled.

Insured

The person or entity who is eligible to receive insurance benefits under the policy in case of an accident or covered loss. Also referred to as the policyholder.

Insurer

The insurance company that issues your insurance policy and provides coverage.

Liability Coverage

Insurance that helps pay for injuries and property damage you cause to others in accidents where you are at fault.

Limit

The maximum amount of money your insurance company will pay for a covered loss under a specific coverage type.

Medical Payments Coverage

Insurance that covers limited medical expenses for you and occupants of your car if injured in an accident, regardless of fault.

Non-Renewal

The decision by either you or your insurance company not to renew the insurance policy when the current policy term expires.

Policy

Your legally binding contract with the insurance company that details your coverage, rights, and responsibilities, as well as the insurance company’s obligations.

Premium

The payment you make to purchase an insurance policy.

Private Passenger Automobile

A four-wheeled motor vehicle designed for use on public roads, such as cars, SUVs, station wagons, and vans, and registered with the state DMV.

Quotation (Quote)

An estimated premium cost for insurance coverage, based on the information you provide to the agent, broker, or insurance company.

Rescission

The retroactive cancellation of an insurance policy back to its original start date. If a policy is rescinded, the insurance company will not pay any claims, and your premiums are typically refunded. Rescission often occurs if you intentionally provided false information on your insurance application.

Subrogation

The legal process where one insurance company, after paying a claim, attempts to recover those claim payments from another insurance company that may also be responsible for the loss.

Surcharge

An additional charge added to your insurance premium, typically due to factors like at-fault accidents or moving violations on your driving record.

Uninsured/Underinsured Motorist Coverage (UMC/UIM)

Coverage that protects you if you are involved in an accident with a driver who either has no liability insurance (uninsured) or has liability limits too low to cover your total damages (underinsured). An uninsured driver lawyer can assist you in these situations to pursue your claim.

Resources for Auto Insurance Information and Assistance

California Automobile Assigned Risk Plan (CAARP)

Information about the state-sponsored insurance plan for high-risk drivers who may have difficulty obtaining insurance in the standard market.

1-800-622-0954

CAARP Website

California Low Cost Automobile Insurance Program

Information about the state-sponsored program providing more affordable auto insurance options for income-eligible “good drivers.”

1-866-602-8861

CLCA Website

Filing a Complaint or Request for Assistance with the California Department of Insurance

The California Department of Insurance (CDI) is dedicated to protecting consumer rights in insurance matters. Many insurance-related questions can be resolved by phone. If phone assistance is insufficient, you can file a formal Request for Assistance form with the CDI, either by mail or online through their website. The online system allows you to securely attach copies of relevant documents, such as insurance policies, canceled checks, and correspondence.

Examples of issues the CDI may be able to assist you with include:

Improper Denial of an Insurance Claim
Unjustified Cancellation or Non-renewal of a Policy
Unreasonable Delays in Claim Settlement
Allegations of Misappropriation of Paid Premiums
Alleged Misrepresentation or Deceptive Practices by an Insurance Agent, Broker, or Solicitor
Unfair Underwriting Practices
Dishonest or Deceptive Insurance Sales Tactics