Paying for auto insurance is the law, but do most people know what they are getting in exchange for their premiums?
In California, insureds are required to carry minimum limits of liability which include $15,000 indemnification per person in each accident, and $30,000 total per each accident. Although those limits are the required minimum by law they may not cover the brunt of a full accident for most insureds. With the rise in medical cost, not to mention potential attorney’s fees, an accident that causes bodily injury to another party could far exceed those limits. For this reason, many insureds elect to carry higher limits of coverage which can extend all the way up to $250,000 per person in each accident, and $500,000 total per each accident. The difference in premium between those two sets of limits could surprise you, as many times increasing to the next set of higher limits can be a small difference in cost. A personal umbrella can also be stacked on top of the auto insurance policy to extend the limits even higher.
Another important fact to know about your auto insurance is related to replacement parts. If an insured is involved in an accident the insurance carrier may elect to replace the damaged vehicle parts with parts that are not manufactured by the original manufacturer. Their goal is to indemnify the insured, but do so at a reasonable cost and sometimes using aftermarket parts is the solution. However, there is an endorsement that can be added to the policy to ensure that original manufactured parts are used in any repair. If this is of concern, please ensure you have this endorsement (OEM) added to your policy.
Lastly, and most importantly to many insureds is the part that discusses rates. We have all seen the rates steadily creep up in the past few years. The main reasons for these rate increases have been due to several factors. We have seen more people on the roadways in the past few years. Pair that with people staring at their phones instead of the road while driving, and distracted driver related accidents is at an all-time high. Compound that with higher costs of repairs and new parts (almost every vehicle now has a backup camera in the rear bumper), and the cost of claims being paid out is higher for carriers than it’s ever been. Unfortunately for consumers, we are seeing some of that cost passed along.
In order to properly understand everything about your auto insurance, please make sure to read your policy and verify it for accuracy. You can also review with your insurance agent to discover additional ways to ensure you are properly covered.