AUTOMOBILE INSURANCE BASICS

 

Having a driver’s license creates a social responsibility that is so serious that every state has passed Financial Responsibility Laws mandating that drivers provide protection to others for adverse actions they may cause. In California, drivers must either post a Financial Responsibility Bond or provide proof of minimum Liability Insurance.

 

Owning a car is likely the second biggest investment one will make in their lifetime. Protecting that investment, although not mandated by law, is mandated by lending institutions that make vehicle loans.

 

Both of these issues can be easily handled with the purchase of a Personal Auto Insurance policy.

 

Bodily Injury (BI) Liability

 

Bodily Injury (BI) Liability coverage covers any injuries to other persons that you may be responsible for as a result of an accident that was caused by you. This coverage is typically sold with 2 separate limits, eg, $15,000/30,000 or $100,000/300,000. The first number is the amount of coverage available for any 1 person that is injured in an accident. The second number is the maximum amount of coverage available in any one accident. No deductible applies to this coverage.

 

Property Damage (PD) Liability

 

Property Damage (PD) Liability coverage pays for any damage to another persons property that is your responsibility as the result of an accident caused by you. No deductible applies to this coverage.

 

Uninsured/Underinsured Motorist Coverage

 

Uninsured/Underinsured Motorist coverage can cover your injuries and damages if another driver is responsible for the accident, but has either no insurance or has inadequate insurance to cover your damages.

 

Physical Damage Coverage

 

Physical Damage is sold as 2 separate coverages, Comprehensive and Collision. Comprehensive generally covers damage to your vehicle caused by other than collision events such as theft or vandalism. Collision coverage generally covers any damage to your vehicle as the result of a collision.  A deductible usually applies to this coverage.