California, like most states, requires registered drivers to carry car insurance. If you don’t have a policy, you could face penalties. However, the way the state requires insurers to structure policies means the amounts of money you might receive from a claim can vary based on the types of losses. The state requires auto liability coverage that is commonly called split-limit coverage. Here’s how it works.
What is Auto Liability Insurance?
California is an at-fault car insurance state. This means, if you cause an accident, you are responsible for covering the damage costs of yourself and others involved.
To ensure that you can cover the damage of other parties, the state will require you to carry auto liability insurance. The following minimum limits are required of all drivers registered in California:
- $15,000 bodily injury liability coverage per one person
- $30,000 bodily injury liability coverage per accident
- $5,000 property damage liability coverage
The bodily injury coverage pays for the injuries and lost income you might cause to another driver, their passengers, or a pedestrian if you cause a wreck. The property damage coverage will pay those third parties for their property damage (like the damage done to their cars).
While you might see that the total amount of the 15/30/05 limits equals $50,000, this is not the sum you will receive from an accident. The required liability coverage is made up of insurers call split limits. Depending on the type of losses that occur, you might only receive up to $15,000, $30,000 or $5,000.
Per One Person Bodily Injury Coverage
This limit kicks in when only one person gets hurt in a wreck. Therefore, if you have only the minimum required $15,000 coverage, your policy will pay up to $15,000 for that person’s recover costs.
Don’t confuse this limit. It will not pay $15,000 to each injured party if more than one person gets hurt.
Per Accident Bodily Injury Coverage
If more than one person gets hurt in a car wreck, then the minimum policy will distribute up to $30,000 among the injured parties. It will not pay $30,000 to each injured individual. In other words, the injured parties will have to split this money among themselves, as determined by your insurer.
Property Damage Coverage
Regardless of how many vehicles or properties get damaged in an accident, your policy will only pay to the maximum property damage liability limit. Therefore, if you only have the minimum coverage, the most it will pay on your behalf is $5,000.
The good news is that you usually have the option to increase your liability policy limits. Therefore, the policy can award more money in cases of at-fault accidents. This can reduce your own burden of having to pay for someone else’s losses out of pocket. Keep in mind, you can’t pay for your own losses using liability coverage. It’s a good idea to buy additional coverage for this reason.