Under recent changes made under the California low cost auto insurance program, the minimum liability limits have been reduced further. This has been done with a view to make auto insurance more affordable at times when people are not sure about whether or not they can retain their jobs over the next month given the prevailing economic situation. Before the change, the minimum coverage for personal injury or death was $15000 per person and $30000 for all the individuals involved in the said accident. And in order to cover for property damages, a minimum of $5000 was required.

The minimum liability limits under California state law was already very low, but in the year 2009 it was further decreased. Since that year, the state reduced the personal injury liability to $10000 per person injured or dead in the accident. And for the accident as a whole it is $20000 for all the individuals involved. And the minimum coverage required for property damage is a measly $3000 which will pay for a set of allow wheels or a set of bumpers and skirts for a mid range car. And we are not even discussing power train damage or damage to the suspension system.

Consider a motorcycle accident where the person has injuries to the extent of a hundred thousand dollars. in such a case, the person can claim just an amount not exceeding ten thousand dollars for himself. And for all the others injured in the said accident, the claim must not exceed ten thousand dollars. And he can claim just three thousand dollars for a totaled bike. The bike could have cost anywhere above ten thousand dollars if it was from a good Japanese make and was bought brand new. Thus the guy is now left bedridden with a medical bill running into around $90000 and a totaled bike. This clearly shows that the coverage is just not sufficient.

And with relaxation in the laws regarding who is called a good driver by insurance companies, every body has become eligible for low cost auto insurance policies. And in such a recession prone economy, everybody is taking advantage of this scenario. And this brings about fears that a repeat of the sub prime mortgage crisis can be expected in the auto insurance sector is proper steps are not taken. It must be realized that reducing premiums and coverage is not going to solve the problem. Drivers must be educated about safe driving and defaulters and fraudsters must be penalized severely.

As more and more people are going for such low cost low coverage insurance policies, we must start taking protective measures. Try going for un-insured or under insured motorist coverage. This sort of coverage will cover you like a first party insurance or comprehensive coverage policy if in case the other party is not adequately insured. And also try going for collision coverage. This is useful in cases where your car is totaled as a result of a serious accident. And in such cases, if the other motorist has a very cheap car with not enough insurance coverage, your under insured motorist coverage will kick in and cover for the extra amount that you will need to repair your car. 

Auto insurance basics

Impact of low cost California auto insurance

 

Under recent changes made under the California low cost auto insurance program, the minimum liability limits have been reduced further. This has been done with a view to make auto insurance more affordable at times when people are not sure about whether or not they can retain their jobs over the next month given the prevailing economic situation. Before the change, the minimum coverage for personal injury or death was $15000 per person and $30000 for all the individuals involved in the said accident. And in order to cover for property damages, a minimum of $5000 was required.

 

The minimum liability limits under California state law was already very low, but in the year 2009 it was further decreased. Since that year, the state reduced the personal injury liability to $10000 per person injured or dead in the accident. And for the accident as a whole it is $20000 for all the individuals involved. And the minimum coverage required for property damage is a measly $3000 which will pay for a set of allow wheels or a set of bumpers and skirts for a mid range car. And we are not even discussing power train damage or damage to the suspension system.

 

Consider a motorcycle accident where the person has injuries to the extent of a hundred thousand dollars. in such a case, the person can claim just an amount not exceeding ten thousand dollars for himself. And for all the others injured in the said accident, the claim must not exceed ten thousand dollars. And he can claim just three thousand dollars for a totaled bike. The bike could have cost anywhere above ten thousand dollars if it was from a good Japanese make and was bought brand new. Thus the guy is now left bedridden with a medical bill running into around $90000 and a totaled bike. This clearly shows that the coverage is just not sufficient.

 

And with relaxation in the laws regarding who is called a good driver by insurance companies, every body has become eligible for low cost auto insurance policies. And in such a recession prone economy, everybody is taking advantage of this scenario. And this brings about fears that a repeat of the sub prime mortgage crisis can be expected in the auto insurance sector is proper steps are not taken. It must be realized that reducing premiums and coverage is not going to solve the problem. Drivers must be educated about safe driving and defaulters and fraudsters must be penalized severely.

 

As more and more people are going for such low cost low coverage insurance policies, we must start taking protective measures. Try going for un-insured or under insured motorist coverage. This sort of coverage will cover you like a first party insurance or comprehensive coverage policy if in case the other party is not adequately insured. And also try going for collision coverage. This is useful in cases where your car is totaled as a result of a serious accident. And in such cases, if the other motorist has a very cheap car with not enough insurance coverage, your under insured motorist coverage will kick in and cover for the extra amount that you will need to repair your car.