Did you know that it is mandatory to have liability insurance coverage on your automobile in the State of California ?
Bodily Injury Liability is the most important coverage on your automobile insurance policy as every driver in California is required to have this coverage (under Proposition 213 effective as of January 1, 1997). This coverage is applied when you are responsible for an automobile accident and another party is injured and/or another party’s property is damaged. This coverage allows the injured party (or claimant as referred to by the insurance company) to file a claim against your insurance company for property damage and bodily injury including medical bills, loss of earnings, future medical treatment, future loss of earning as well as pain and suffering. However, if the injured party did not have liability insurance on their own automobile insurance, as required by law (Proposition 213), then the injured party could only recoup their economic damages for medical bills and property damage but no non-ecomonic damages for pain and suffering.
The State of California requires the minimum amount of bodily injury (BI) liability coverage to be $15,000.00 per person and $30,000.00 per accident and $5,000.00 for property damage (or 15/30/5 as is usually denoted on the Insurance Declaration Page or Auto Insurance Coverage Summary of an automobile insurance policy.) There are various increments of increased coverage available depending upon the insurance company. Of course, the higher the amount of coverage, the higher the premium. Generally speaking, an individual will usually want to obtain a higher amount of coverage (such as 100/300 or $100,000.00 per person and $300,000 per accident or higher) when the individual has significant assets to protect. If the injured party or claimant has very serious injuries (ie. broken bones, herniated disc, bulging disc, surgery required or future surgery necessary) and there is not enough liability coverage then the claimant can demand that the insured also contribute to the settlement with their own funds. If you have little or no assets, lower liability limits may be appropriate.
When a claim is opened with an insurance company it is handled or divided into two claims – one is for property damage and the other is for bodily injury. The property damage is related to the repair or total loss of the other party’s vehicle, car rental or loss of use of vehicle and/or any other property damaged as a result of the accident (ie. items in the vehicle damaged such as computers, phones, glasses, clothing, etc.).
Next, we will go more into the property damage coverage as part of your liability coverage.