The Benefits of a Large Auto Insurance Policy
by Jean-Simon Serrano
If you own and drive a car in California, not only does the law require that you have auto insurance, it is also a good idea.
Technically, the law doesn’t require you to have an auto insurance policy. In fact, as an alternative to insurance, one can post with the DMV a thirty-five thousand dollar ($35,000) bond or a thirty-five thousand dollar ($35,000) cash deposit. Or, if you qualify, you may be issued a certificate of self-insurance from the DMV. Realistically, an insurance policy is the only option for many.
It is good to have an insurance policy and there are myriad reasons for this.
Protection from Personal Liability
The first reason is probably the most obvious: protection from personal liability should you cause an accident. If you are deemed to be at fault for an accident, you want an insurance policy to protect you and your assets for the damage caused. This means picking a policy with appropriate limits. How much is appropriate will depend partly on the assets you wish to protect. For example, if you have multiple vehicles, a house, and/or other real property, a minimum policy of $15,000.00 per person/$30,0000.00 per incident will not adequately protect your assets if the accident you have caused does damages in excess of these minimal limits. I have heard insurance defense attorneys joke that carrying a minimal policy is wise as it can lead to faster settlement in some cases and that attachment of assets is rarely sought. This is not good advice. Not only do many plaintiffs’ firms, such as the one where I work, regularly seek attachment of assets where necessary, carrying a minimal policy will limit the amount of underinsured motorist coverage you can carry, the benefits of which will be discussed later in this article.
You should carry as large a policy as you can afford – the benefits of a large insurance policy go beyond mere asset protection.
Civil Code § 3333.4 “Prop 213” Considerations
There is another very important reason to carry automobile insurance that is not well known to those outside the legal and insurance industries: Civil Code § 3333.4 or “Proposition 213” as it is commonly known.
Civil Code Section 3333.4 states that a person “shall not recover non-economic losses to compensate for pain, suffering, inconvenience, physical impairment, disfigurement, and other nonpecuniary damages if… (2) The injured person was the owner of a vehicle involved in the accident and the vehicle was not insured…” Civil Code § 3333.4 [emphasis added].
Thus, even if you did not cause the motor-vehicle accident, you may be unable to recover for, among other things, pain & suffering, physical impairment, and disfigurement, if your vehicle was not insured at the time of the accident.
You could become horribly disfigured because someone was texting while driving and not be able to recover for this disfigurement because you were not, yourself, carrying an insurance policy at the time of the accident. This is certainly a drastic example; however, it should be reason enough to ensure that your vehicle is always insured – at any level of coverage.
Protection Against Others (Uninsured/Underinsured Coverage)
A third, extremely important, reason to have auto insurance is to protect yourself against the harms caused by others.
Won’t my injuries be covered by the at-fault party’s insurance? Yes, no, and maybe. As mentioned earlier, California permits one to carry an insurance policy as low as $15,000.00/$30,000.00. If this is the only insurance policy held by the at-fault party, and they have no assets, this may not be enough to compensate you for your damages. Furthermore, what if the other party has no insurance!?
Fortunately, Insurance Code § 11580.2 requires every policy of auto insurance issued in California to include coverage equal to the minimum required coverage ($15,000/$30,000) against owners or operators of uninsured motor vehicles. Therefore, if you are insured, but the at-fault party is not, you should at least be covered for the minimum amounts allowed by law… unless you specifically decline this coverage in writing. I cannot fathom why anyone would decline this type of coverage in exchange for minimal savings on their insurance premium. Do not decline this coverage – you are only hurting yourself.
Additionally, uninsured motorist coverage can also be accompanied with “underinsured” coverage. This type of coverage will protect you in the event that the at-fault party has neither an insurance policy large enough nor other assets available to fully compensate you for your injuries. If you sustain serious injuries for which you will require life-long care, discovering that the at-fault party has no assets and only carries $15,000.00 of coverage only adds insult to injury. With underinsured motorist coverage, you can protect yourself against such a scenario. Using the previous example, if you carried $500,000.00 in underinsured coverage, you would still have $485,000.00 in coverage after the at-fault party’s minimal insurance was depleted.
Protect yourself against those who do not fully insure themselves! Many people on the road carry only minimal insurance policies. The risk is too great that you will be injured by someone with low to minimal policy limits. It does not make sense to decline uninsured motorist coverage or to carry anything other than maximum underinsured coverage.
In addition to compliance with the law, these are only a few of the many reasons it is a good idea to have an insurance policy with maximum coverage. Not only will you be protecting yourself, you will also be protecting others.