Car Accidents and Insurance
What Is Covered by a Basic Auto Insurance Policy?
Your auto policy may include six separate coverages. Each coverage is priced separately and is summarized on the "declaration" page.
1. Bodily Injury Liability
This coverage applies to injuries that you, the designated driver or policyholder, cause to someone else. You and family members listed on the policy are also covered when driving someone else’s car with their permission. It’s very important to have enough liability insurance, because if you are involved in a serious accident, you may be sued for a large sum of money. Definitely consider buying more than the state-required minimum to protect assets such as your home and savings.
2. Medical Payments or Personal Injury Protection (PIP)
This coverage pays for the treatment of injuries to the driver and passengers of the policyholder's car. At its broadest, PIP can cover medical payments, lost wages and the cost of replacing services normally performed by someone injured in an auto accident. It may also cover funeral costs.
3. Property Damage Liability
This coverage pays for damage you (or someone driving the car with your permission) may cause to someone else's property. Usually, this means damage to someone else's car, but it also includes damage to lamp posts, telephone poles, fences, buildings or other structures your car hit.
4. Collision
This coverage pays for damage to your car resulting from a collision with another car, object or as a result of flipping over. It also covers damage caused by potholes. Collision coverage is generally sold with a deductible of $250 to $1,000—the higher your deductible, the lower your premium. Even if you are at fault for the accident, your collision coverage will reimburse you for the costs of repairing your car, minus the deductible. If you're not at fault, your insurance company may try to recover the amount they paid you from the other driver’s insurance company. If they are successful, you'll also be reimbursed for the deductible.
5. Comprehensive
This coverage reimburses you for loss due to theft or damage caused by something other than a collision with another car or object, such as fire, falling objects, missiles, explosion, earthquake, windstorm, hail, flood, vandalism, riot, or contact with animals such as birds or deer.
Comprehensive insurance is usually sold with a $100 to $300 deductible, though you may want to opt for a higher deductible as a way of lowering your premium. Comprehensive insurance will also reimburse you if your windshield is cracked or shattered. Some companies offer glass coverage with or without a deductible.
6. Uninsured and Under-insured Motorist Coverage
This coverage will reimburse you, a member of your family, or a designated driver if one of you is hit by an uninsured or hit-and-run driver. Underinsured motorist coverage comes into play when an at-fault driver has insufficient insurance to pay for your total loss. This coverage will also protect you if you are hit as a pedestrian. With California mandatory minimum liability insurance set so low ( California Insurance Code §11580.1b: $15,000 for injury/death to one person. $30,000 for injury/death to more than one person and $5,000 for damage to property)
California has about a 15% rate of uninsured motorists. If a driver who was at fault for an accident does not have any insurance, it can be difficult for the victim to recover compensation for losses sustained by the accident. People who do not have insurance typically do not have much money, so they have nothing to lose if someone gets a judgement against them. Because of this, drivers in California often carry "uninsured motorist" coverage on their own policies. It is a good idea to make sure you have sufficient UIM coverage since most medical bills and property damage will greatly exceed the mandatory minimums.
What are a few "guiding" legal principles an insurance company most follow?
1. An insurance company must act in utmost good faith in the interpretation of their policies, and in the investigation and payment of claims.
2. If an insurance company unreasonably denies a claim or breaches its duty of "Good Faith and Fair Dealing," forcing you to sue them in order to recover your policy benefits, the insurance company must pay for your legal costs and attorney's fees.
3. If an insurance agent misrepresents the coverage being provided at the time the agent sells you your policy, the insurance company will have to honor the coverage representations made by their agent.
4. If the amount of your insurance coverage is not sufficient to cover your actual loss because the insurance agent recommended that you insure for less than the amount you actually needed, the insurance company may be responsible for paying your entire loss, not just the amount of the policy benefits.
5. Any ambiguity in your policy must be interpreted in your favor and against the insurance company.
6. The insurance company, not the policyholder, has the obligation of providing the applicability of a "limitation" or "exclusion" in the policy.
7. In cases involving your insurance company's duty to defend, its duty to defend is broader than its duty to indemnify.
8. An insurance company that tries to rescind (eliminate) your policy coverage once you have made a claim, on the grounds that you made a misrepresentation on your insurance application, may be violating the law.
9. Punitive damages are awardable against insurance companies of engaging in oppressive, fraudulent or malicious conduct. Use this fact in negotiations where applicable.