In 1984 California placed a law mandating all drivers to purchase car insurance to drive a vehicle. In 1987 the California Supreme Court made a unanimous voted to require a motorist to show proof of insurance when being stopped for a traffic violation. California ranks 13 in the list of states with uninsured drivers with a whopping 14.7 uninsured drivers. Why are the numbers high if it is illegal for a driver to drive without insurance? The simple answer, insurance can be expensive. Nevertheless, the law is the law and breaking it would cause more significant (and more costly) issues. Bottom line, every driver needs car insurance. So when you purchase your Nissan Altima, make sure you get the correct kind of auto insurance.
What Happens if You Drive Without Insurance?
With the advancement of technology, different government entities are syncing up their system to ensure that drivers are abiding by the law. Insurance companies are now required to report each policy purchased and report each termed policy. This way the state of California will know who has car insurance and who doesn't. If you cancel your car insurance and an insurance company does not report a replacement policy within 45 days, the DMV will issue a letter of intent to suspend your car registration. You will be required to purchase an insurance policy and pay a fee to reinstate your car registration.
If you get caught driving without insurance, you can get your car towed at your expense (of course), your license might get suspended, and have to pay a considerable fine. Each police or highway patrol car has a computer system that can look up your registration information, so lying about having insurance will get you further into trouble.
What Are the Components of a Car Insurance Policy?
The car insurance industry is a very saturated and lucrative business, so the competition is steep. There are many different companies and policies. Different policies that will only suffice to allow you to drive legally, to ones that include all the bells and whistles. Let’s start from the bottom because there is a terrible misconception about insurance. Be aware that just because you have insurance doesn't mean it covers everything.
What Do I Need to Satisfy the Law?
Liability Insurance is what the law requires. Liability insurance will only cover the damages of the other vehicle should you get into a car accident, and they rule you to be at fault. The primary intention of insurance is to pay for damages, caused by you, in which you probably could not pay for out of pocket, at any given time. Liability insurance does just that. We all want to think we are safe drivers but the truth of the matter is, we cannot control every moment, and in quick split-second decision moment, you can make a human error and cause an accident.
What most people do not understand is that liability only covers the other driver. It does not include the damages to you or your car. That is a different coverage called “full coverage” or comprehensive coverage, and we will get to that later on this article. Because liability covers the bare minimum, it is the cheapest insurance policy. Depending on your vehicle make and model, your driving record, and your zip code, you can get a relatively low monthly premium. All plans have different variations in coverage. You can purchase a small liability policy that covers only $5000 of property damages to the other driver or buy that one that covers a higher amount. I encourage getting a higher amount since most newer cars cost more than $5000.
Bodily Injury Liability
Bodily injury liability is also a part of the bare minimum insurance coverage mandated by the law. If you are lucky a car accident will only inflict damages to the vehicle, but, in some cases, the damages extend to the person driving the other car and to passengers. Bodily injury liability pays the injuries of the person and people in the other vehicle. The lowest policy covered is what they call a 15/30. This means the insurance company will pay up to $15,000 of damage to each person and up to $30,000 for the entire accident.
Full Coverage and Beyond
Now that you understand what is required by the law, there are a few extras you can add on for more coverage. Most of the time these are a la carte options you can pick and choose.
Uninsured Motorist Bodily Injury & Property Coverage
Just as the name suggests, this is coverage for you should you be involved in a hit or run, or the other driver does not have car insurance. Seeing as 14.7 percent of drivers drive without insurance, it might not be such a bad idea to select this package. The uninsured bodily package also starts with the 15/30 minimum with options to increase the amount. The uninsured property damage minimum, however, is $3,500. So, again, if your car cost more than $3,500, then you want to make sure to increase the amount. Think about how much is owed on the car loan, if you are still making payments.
Car accidents are not the only way a car can endure damage. A car can catch on fire, someone can break into your vehicle, or someone can steal your car. Comprehensive coverage covers these incidents as well as accidents ruling to place you at fault. This coverage starts with the same bare minimum as the liability insurance and also have the option to expand in coverage. Comprehensive coverage almost doubles the price of liability insurance because essential, it covers double more than a liability.
Furthermore, comprehensive coverage entails a deductible. A deductible is a set amount of money you have to pay out of pocket before the insurance company pays their share. The good news is the deductible has different options. Generally, the higher the deductible, the lower the rates are, the lower the deductible, the higher the prices. If you opt to have the higher deductible, it will be cheaper to pay each month, but you will pay more out of pocket when you file a claim.
Don’t Take the Risk of Driving Without Insurance
It is not worth taking the risk of driving without insurance. Do your research and find an insurance company within your means. Fortunately, there are plenty of discounts. Good drivers, insuring multiple cars, and combining home insurance with car insurance - are just a few ways you can qualify for a discount. The state of California also offers insurance policies for low-income families too. The consequences of driving without insurance can be very costly. It is not worth taking the risk.