Back To The Basics: Understanding Your California Auto Insurance Coverage


To reduce your insurance cost effectively is to understand the basic terms of insurance itself. I have known many people who are still unfamiliar with the terms, even if they had it for a long time already. New policyholders can be forgiven but for somebody who has been insuring his vehicle for many years is not. This article will guide you to some the common terms regularly used in the car insurance industry.

Deductibles. You will pay this amount before filing a claim. Auto insurance companies will ask how much deductible you are willing to pay. The rule is, the lower your deductible the higher your insurance premium rates. Therefore, if you want to save money, go as high as you can afford. In return, discounts can be extended to you.

Minimum Liability Coverage. Most states are requiring each driver to have at least a minimum coverage. This takes care of all the personal and property damages sustained during an accident. Let us say that you ran into your neighbor’s car, the liability coverage would pay him / her for the repairs and property damages up to the policy limit.

Collision Coverage.  If you want to be paid during the accident regardless of who caused it, then you should get a collision coverage insurance. When filing a claim, you are required to pay for a deductible. If your car is already old you can always decide not to buy this policy. This could save you hundreds of dollars a year.

Comprehensive Coverage. This type of coverage will pay for damages not covered by collision coverage such as theft, vandalism or fire. Also, comprehensive coverage pays you for accidents not related to collisions such as a storm, hail or typhoon.

Personal Injury Protection or PIP. This type of policy covers your passengers including yourself from medical expenses to lost wages. Injuries to pedestrians can also be applied regardless if you or the other party caused the accident. There are states that do not require drivers to purchase PIP but if you are thinking of getting one, remember that it will surely add up to your insurance premium payments to the max.  You can also choose to drop this policy if you have a personal health insurance. 

Accident Forgiveness. One of the key factors involved in determining your insurance rates is your driving record itself. If you have been a loyal customer and has a spotless driving history, your insurance provider could forgive you for the first accident where you are at-fault This could only mean one thing, your rates will not increase until your next at-fault mishap.

Insurance Score. Insurance score is yet another factor used by your insurance provider to calculate your premiums. Insurance score, per se, is not made available to policyholders to look at.  However, you can easily determine what is yours by examining the elements that affect it including your payment history, credit history or bankruptcy record (if you had one). Basically, an insurance score determines your ability to pay for your insurance premiums.