By Dale Gribow
We all know the legal requirement for auto insurance and most of us purchase it to protect ourselves and our loved ones from liability in case of an accident. However, few of us have any idea what we are getting (or not getting) and what we legally need.
When we study for our California Driver’s License test, the review booklet explains our license is a privilege and NOT a right. With privileges come responsibilities and the need to follow California’s Vehicle Code.
California’s financial responsibility law specifies that the minimum insurance needed is $15,000/$30,000. This insurance limit covers the driver of the at-fault car for up to $15,000 for any one person, and $30,000 total for all the people in the other car, with no one person getting more than $15,000.
If damages to the not at-fault driver are valued at more than $15,000, the at-fault driver is still responsible for the additional amount. The innocent driver can decide not to accept the money and to sue. The not at-fault driver can sue the at-fault driver, attaching wages and assets, and can renew the judgment every 10 years. The only way to escape such a responsibility is to file for bankruptcy.
The best way to protect your self is to purchase Uninsured Motorist (UM) coverage and Under Insured Motorist (UIM) coverage. These types of coverage kick in when the at-fault driver has inadequate insurance. For example, if the at-fault driver has a $15,000 policy and your injuries are worth $100,000, you would make a claim against your own UIM policy for up to the amount your policy would cover for your damages (the difference between the policy amount of the at-fault driver and your maximum UIM policy amount). If the at-fault party has NO insurance, you would make a claim against your UM policy.
Some of us want higher limits of protection and unnecessarily purchase a $1,000,000 liability policy. A trick is to find out what limits are required by your insurance company to allow you to purchase an UMBRELLA policy. For instance, I bought a $250,000/$500,000 auto policy and then purchased a $1,000,000 umbrella policy for a few hundred dollars a year. The umbrella policy only kicks in when there is not enough insurance.
The liability portion of your auto policy protects you from the DMV’s requirement of minimum coverage. It pays for claims related to bodily injury and for property damage to third parties caused by the at-fault driver. However, any losses, such as bodily injury or property damage, sustained by the not at-fault driver is covered by UM and UIM, and NOT the liability portion.
If you fail to obtain liability insurance, you can be fined, ordered by the court to do community service, and even lose your driving privileges for up to one year. Here, in the greater Palm Springs area, we regularly read in the Desert Sun and Coachella Valley Weekly about CHECKPOINTS. Checkpoints not only cite Drunk Drivers, but during the checkpoint stop the officers also request a copy of your Driver’s License and proof of insurance.
A checkpoint or traffic violation stop will disclose your warrants for outstanding tickets and non-payment of fines. Additionally, if the officer learns you are not covered by insurance you can lose your privilege to drive for one year. The officer can also impound your car for 30 days and take it to a tow yard where you will have to fork over many hundreds of dollars to get your car back after 30 days.
Insurance is purchased to protect you from the “big hit” when you are at-fault. Not only does it protect you financially, but it does so legally. If you are in an accident and do not have insurance your license will be taken away for a year.
After an accident, the law requires both parties to fill out and file an SR1. Even if you do not file this form, the other side will, and the DMV computers will flag your accident and ask for your insurance. Obviously, no insurance means a suspension of your driver’s license. You must understand your insurance policy!
If you have any questions regarding this column or ideas for future columns please contact Dale Gribow 760-837-7500 or firstname.lastname@example.org.
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