California’s financial responsibility laws require all drivers to carry active automobile insurance to drive within the state. Despite this requirement, as of 2021, it was estimated that 16.6% of drivers in California were uninsured. This means that 1 in every 6 drivers on the roads in California does not have the insurance to cover your medical bills, lost wages, and other expenses if they cause an accident that harms you or your family.
The minimum requirements in for car insurance in California are:
- $15,000 for injury or death to one person
- $30,000 for injury or death to more than one person
- $5,000 for property damage
While $15,000 is certainly a lot of money, the property damage, injuries, and medical bills that come as a result of a car accident can quickly exceed this amount. Depending on the severity of the injury, medical bills alone can easily total over $100,000. On the other hand, the average settlement amount for a car accident is only $21,000.
Thus, if the at-fault driver only has a minimum policy of $15,000 or isn’t insured at all—you may recover nothing unless you have specific types of coverage discussed below.
The following are several different types of coverages you should strongly consider getting to make sure that you’re covered even when the other driver isn’t. These additional layers of insurance are cost effective coverage options that are far cheaper than being stuck with medical bills.
Uninsured Motorist Coverage (UM)/Underinsured Motorist Coverage (UIM)
UM/UIM is an optional coverage that the state requires your auto insurance to offer. UM/UIM covers when another driver is at fault for the car accident and either:
- Has no insurance; or
- Doesn’t have enough insurance to cover the injured party’s damages.
While UM/UIM coverage isn’t mandatory in California, we highly recommend it.
It is easy to think of UM/UIM as back-up insurance for yourself. California requires you to carry insurance to protect the other driver, and without UM/UIM on your own policy, you are relying on the driver who caused the accident to do the right thing and also have proper insurance. With UM/UIM, you are making sure that you and your family are taken care of even if the other driver does not.
UM/UIM is even more important in major California cities like San Diego, Los Angeles and Sacramento, as California has the most uninsured drivers of any state. (https://www.carinsurance.com/Articles/uninsured-motorist-coverage-state-averages-of-uninsured-drivers.aspx). Usually, uninsured drivers have fewer assets and less income than drivers with insurance. This means that if you’re injured in a car accident by an uninsured or underinsured driver, your recovery will be limited to what they can pay, and may even nothing at all. UM/UIM is such a crucial part to having complete insurance that if you choose not to have this type of coverage, you must sign a waiver stating that you declined it.
UM coverage has two different types: bodily injury (UMBI) and property damage (UMPD).
UMBI pays for the medical bills related to your and your passanger’s injuries when there is an uninsured driver at fault. The limits are the same as your liability coverage, meaning if you have $100,000/$300,000, the maximum amount of UMBI coverage you can get is$100,000/$300,00. UMBI will help cover your hospital and doctors bills. We cannot stress the importance enough; everyone should have sufficient UMBI coverage to protect themselves in the event of an automobile accident.
On the other hand, UMPD pays for damage to your car from an accident with an uninsured driver who is at fault. The UMPD limit in California is $3,500. UMPD coverage may not be necessary if you have collision coverage.
UM/UIM coverage makes up the difference between the at-fault driver’s insurance policy and your own. To recover the difference, you must have higher policy limits.
For example, if you do not have UM/UIM, the at-fault party has a minimum policy of $15,000, and your damages come to a total of $100,000, the maximum you can recover is $15,000. This means that there is $85,000 of unpaid medical expenses. You then have the option to sue the person individually to seek the remainder, however, recovery of any kind is highly unlikely as they probably don’t have any assets to go after. However, if you have a UM/UIM policy of $100,000/$300,000, then you will be able to get the original $15,000 from the at-fault party’s insurance and then file a UIM claim for the difference of $85,000 with your own insurer.
This is why we recommend not only getting UM/UIM coverage, but also making sure that your policy limits are higher!
Medical Payments Coverage (MedPay)
MedPay is a type of insurance coverage that is designed to pay immediate medical treatment or funeral costs. This type of coverage is effective immediately and you don’t need to wait for compensation. MedPay will cover not only the driver, but also passengers and family members in the insured car no matter who is at fault!
An additional benefit of MedPay is that it follows the policyholder even when they aren’t driving. What this means is that if you’re riding a bike, walking, a passenger in a friend’s car, or out of state, you will still have MedPay coverage if you are involved in an accident.
Another benefit of MedPay is that there are no deductibles or co-pays. The policy limits are usually much lower than your liability coverage because the idea behind it is to cover emergency medical costs associated with the car accident.
If MedPay is used, your insurer will usually be reimbursed out of the total settlement amount. Although the limits are low, this is a good extra safeguard that helps to offset medical bills and costs in an accident.
As we said earlier, it’s always a good idea to look at raising your base liability coverage limits to fully protect yourself. We recommend $100,000/$300,000 policy simply because the cost of a car accident can go up very quickly. This, coupled with UM/UIM insurance at the same limits ensures that you are protected even if the other driver is uninsured or underinsured.
If you’ve been in an accident with an uninsured driver, we may be able to help. We offer free case evaluations and we would be happy to review your case with you.
Photo by Mikhail Nilov.