To be “fully covered” means you own an insurance policy containing all five types of automobile insurance. (Courtesy photo)

To be “fully covered” means you own an insurance policy containing all five types of automobile insurance. (Courtesy photo)

The importance of full insurance coverage

This week’s question comes from Alex in San Bruno, who asks:

Q: “I want to buy a new car. What does ‘full insurance coverage’ mean?”

A: Alex, thank you for your question. Buying automobile insurance unfortunately can be a time-consuming and confusing process. Minor traffic collisions are a financial drain and hassle. Major auto collisions can be financially and physically devastating.

It’s vital that all drivers be fully insured, and I am glad to help you understand what this means.

We have five major types of auto insurance in California: 1) liability coverage, 2) collision coverage, 3) comprehensive coverage, 4) uninsured/underinsured motorist coverage and 5) medical payments coverage. California law only requires that drivers have liability coverage. To be “fully covered” means you own an insurance policy containing all five types of insurance.

Liability insurance covers a driver who causes an accident and injures someone or damages someone else’s property up to the limits of the coverage purchased. Liability insurance limits are sold in bundles that an insurance company will pay for each injured person, each total accident and for total property damage. To comply with the law, a driver must purchase insurance that provides a minimum of $15,000 of coverage per injured person, with a total minimum of $ 30,000 in coverage for all people injured in an accident, and a total of $5,000 in property damage.

If you can afford it, never purchase a minimum auto liability insurance policy. Instead, compare prices and purchase as much coverage as you can afford. Automobile insurers sell policies with various limits, up to $1,000,000 of protection. That may seem like a lot, but if you have a house, property, financial assets or a good job, you need to be protected. A mistake that caused a crash could result in your financial ruin if you hurt someone badly and lack sufficient coverage to pay for the injured person’s damages. Your wages and income could be garnished, your bank accounts could be cleaned out and your property could be sold.

Collision insurance and comprehensive insurance protect your car. Collision insurance repairs or replaces your car if it is damaged in accident. Comprehensive insurance covers non-accident related damage or loss to your car, including thefts, break-ins, falling trees, hail and cracked windshields.

The costs of these coverages are based upon the value of your car. Your rate can also be affected by your deductible — the amount of money you agree to pay out of pocket for the repairs.

Uninsured/underinsured motorist insurance is one of the most important, least expensive, yet often overlooked forms of auto insurance. It protects you, your family and your passengers from mistakes by other drivers. If you get hit by someone who has no insurance or inadequate insurance, this insurance picks up the difference, to the level of your coverage. You should always buy the highest coverage you can reasonably afford. Many Californians drive without insurance or only own minimum liability insurance policies and have no other assets. Through no fault of your own, you could be financially devastated following a serious car crash.

Uninsured/underinsured coverage will compensate you for past and future medical expenses, lost wages and your physical and emotional pain and suffering. Uninsured/underinsured coverage even provides protection if a careless car driver injured you or a close family member while walking, riding a bicycle or just standing on the sidewalk.

Medical payments insurance covers medical costs if you are injured in an automobile accident, regardless of who was at fault for the accident. Even if you have health insurance, medical payments insurance is worth purchasing as it can cover any health insurance deductibles. Medical payments insurance can also assist any injured passengers, particularly if they do not have health insurance.

Hopefully, Alex, you will never need your auto insurance, but it is too late to think about full coverage after an accident has occurred. Shop around and purchase the most comprehensive insurance policy you can afford.

I personally recommend Linda Williams of State Farm Insurance in San Francisco at (415) 641-1655. Linda has been my broker for 25 years and is very knowledgeable about all things insurance.

Christopher B. Dolan is owner of the Dolan Law Firm. Email questions to
Auto collisioncar insuranceChris DolanlawlegalliabilitySan Francisco

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