You’ve probably seen ads on television advertising auto insurance policies that have low premiums and small deductibles coupled with promises to insure anyone, no matter how poor their driving record. The reason many of these policies are so inexpensive isn’t because these particular auto insurance companies have figured out how to stay in business while charging customers half of what other companies do, but because these are bare-bones policies that provide the required minimum amount of insurance to legally operate a vehicle.
In California, the mandatory minimum amount of coverage required is $15,000 for the death or injury of one person in the car, $30,000 for the death or injury of more than one person, and $5,000 for property damage. As you can probably see, these amounts are woefully inadequate. For starters, $15,000 worth of medical bills in this day and age can be gone in the blink of an eye, and $5,000 is laughable if you happen to be the at-fault driver in a collision in which the other driver’s Mercedes was totaled.
Whatever the amount, when your auto insurance coverage is used up, the remaining cost doesn’t go away – you’re still responsible for it. So, the simple act of trying to save a little on auto insurance by going with the mandatory minimum can easily cost you far more than you would have paid for a policy with better coverage.
Some drivers have little choice. It could be they’re living on a very tight budget, or perhaps their past driving record has put better policies out-of-reach for a little while. However, for people who can afford a better policy, it’s probably a good idea to look into it. The Insurance Information Institute recommends auto insurance coverage amounts of at least $100,000 of bodily injury coverage per person in an accident, and $300,000 per accident.
Nobody expects to be in an accident, but everyone makes mistakes. Just be sure that one of them isn’t being under-insured.