Insurance laws across all states have made it mandatory for all owners and drivers of automobile to carry the minimum prescribed automobile liability insurance coverage. This mandatory requirement is met by all drivers/ owners by purchasing the minimum prescribed liability coverage and any additional coverages depending upon one’s needs. An example of mandatory minimum liability coverage required in California is shown in the box.
Liability Coverage: The Mandatory Insurance
The minimum prescribed limits of liability insurance varies from state to state but their basic concept remains same. Given below is an example of features of liability insurance in California. The statutory minimum limits of liability insurance in California are as follows:
Bodily Injury Liability
- $15,000 for death or injury of any one person, any one accident.
- $30,000 for all persons in any one accident.
Property Damage Liability
- $5,000 for any one accident.
Coverage: It only covers other’s loss.
When your car is in an accident due to your fault or you have been legally held responsible for all damages, the bodily injury (BI) liability covers your responsibility to others for injuries to them. Property damage (PD) liability covers your liability for damage to others property.
Please read carefully, the coverage of Liability Insurance. It only covers others injury and property damage. It does not cover damage to your own vehicle.
Do you need higher limits?
As given in the box, the minimum prescribed liability coverage pays for injuries and property damages causes to others due to your fault. It will not cover injury or damages caused to you. Also, an important aspect here is that the liability coverage pays for injuries and damages to others only up to a limit. However, you may be personally responsible for damages above the policy limits. In this case, you may have to pay the damage cost over and above the liability limits and therefore you should consider purchasing additional coverages. Moreover, with increasing cost of health and medical care and auto repairs, it is judicious to pay a little higher premium for additional coverage now than paying huge damages later.
Shopping for Auto Insurance Rate Quote
According to premium rating acts and laws, insurance companies are allowed to calculate their own rates based on their past expenses and losses. Now, since each company’s loss and expenses differs even within the geographic area, the rates will therefore also vary.
Therefore by getting quotes from different insurance providers, you will be able to easily compare different quotes. Compare auto insurance rate quotes on the basis of price as well as risk coverages. While comparing, you should also consider factors such as insurance provider’s track record of claim settlements, customer service, financial strength etc. Through this comparison, you can not only select the best coverage but also save money. Above all, you will be able to choose the coverage that suits your specific needs.
Factors That Affect Auto Insurance Rate Quote
Your Driving Record: Driving record impacts the auto insurance rate quotes the most. If you have accidents, tickets, traffic violations, your rates will be quite high because you will be considered as high risk drivers.
Where You Live: This plays a role in deciding auto insurance rate quote because insurance providers consider various factors about your area such as vehicle and population density, road conditions, repair rates, hospital and medical costs, and the number of accidents and other claims in a particular area. Similarly, urban areas have higher rates than rural areas because urban areas are more prone to problems such as accidents, theft etc.
Type of Automobile: There are few models which are stolen the most. Similarly, there are few types of cars which have cost of repair and replacements. Therefore, theft, repair cost, type of car e.g. luxury, sports, SUV etc also affect the auto insurance rate quote.
Use of Automobile: The more you use your vehicle, the higher the auto insurance rate will be. For example, if you use your car for going to and from office and have to take the route of highway every day, it means, you have high risk potential and therefore higher auto insurance rate quote. But, if you have a Ferrari that you use occasionally that too for luxury, it means you use this Ferrari very rarely that too on week ends when traffic remains very low, it means you have low risk potential.
All of these factors can affect your auto insurance rate quote positively as well as negatively. However, through proper comparison and shopping you can get better rate for auto insurance quote.