In spite of recent insurance rate drops in the last few years, California is still known to have one of the most expensive car insurance rates in the country. In such a scenario, it is warranted that a car owner looks for competitive rates before opting for the right one. This article deals with relevant information regarding car insurance in the state of California.
Minimum requirements and monetary limits of California car insurance: The laws of the state of California imply that a car owner has car insurance that covers bodily injury as well as property damage. The bodily injury coverage should be a minimum of $15,000 for one person or a maximum of $30,000 for all the bodily injuries caused in a single accident. Similarly, the minimum coverage for property damage or injury is pegged at a minimum of $5,000.
In case such limits seem too small, an uninsured motorist coverage can be purchased to cover the short fall. If the car insurance purchased is above these limits, the uninsured motorist coverage can be purchased for a lesser value. PIP (Personal Injury Protection), Collision coverage, Comprehensive coverage and No-Fault Coverage are optional and are not required to be purchased under the California state laws.
Factors that affect the California car insurance rates: In California, as well as in other states, car insurance premiums are affected by a large number of factors. However, specific to California, the following factors play a major role in determining the insurance rate for your car.
California car insurance companies are not required to pay sales tax and registration money as prevalent in many other states. In the event of an accident, the car insurance company states that it will make you “whole”. This means that they will restore you an you car to the state before the accident subject to monetary limits of the coverage.
A car insurance claim from any California car insurance company would increment your future insurance rates by as much as 40%. This is at the discretion of the insurance company, and many of them also follow a “forgive the first accident” policy where there is no hike on the premium. As relevant, every subsequent accident will set you back in monetary terms by increasing the insurance premium rate.
Your personal credit rating will also affect your car insurance premium in the state of California. It is permissible in the state and the insurance companies creates an “insurance risk score” depending on which you car insurance premium is calculated. You can save money on your premium by keeping your credit rating healthy. In short, pay your bills on time and keep your car insurance premiums low.
Depending on your credit rating, many insurance companies know that the likelihood of making a claim is high if your credit rating is low. This correlation has been established by statistical research.
In case you want to terminate your car insurance policy for switching companies or any other reason, the insurance company needs to have a written statement of cancellation. In case you cancel it by not paying the next premium, your credit rating will take a hit and would potentially increase your premium with the next car insurance company. You can get a cancellation request from the present car insurance company, fill it in and send it back for cancellation.
A potential method of increasing your car insurance premium is to add a teenager to you list of drivers. Teenagers are considered high-risk due to being new to driving and less experienced. If you do not declare your teens, they may be covered but the car insurance company, but it will charge you extra premium from the day your teen acquired the driving license.
Regulation of car insurance rates: All California car insurance companies are directed and regulated by the California Department of Insurance [CDI]. This department audits and regulates insurance business in the state and ensures that the insurance companies are run successfully by catering to the specific requirements of the customers. The department also makes sure that each car insurance company renders a 24×7 customer service and makes sure the rates offered by companies are competitive and reliable.
Competition amongst California Car insurance companies: Although the car insurance rates are regulated by the CDI, California car insurance companies face a lot of competition amidst themselves in order to get the maximum business. A lot of special discounts and alternatives are offered by California car insurance companies to drive down the riders in order to attract more customers. Some of them are the low mileage discount, senior discount, good student discount, rural discount, occupational discount, safe vehicle discount, good driver discount, internet discount and professional membership discounts.
Uninsured motorists: Uninsured motorists across the United States have been estimated at 14.6% as per figures released by the IRC (Insurance Research Council) in 2006. The figures however pertain to 2004 and have shown an upward trend. These figures vary between states and in California the percentage of uninsured motorists has been put at a whopping 25%. California is ranked the third highest after Mississippi and Alabama with the lowest being Maine with 4%. This information has been estimated by the IRC using data generated from accidents of insured drivers and caused by the uninsured ones. The statistics also take into account the bodily injury claim frequency; uninsured motorists claim frequency and their ratio. This data has been collated from eleven major insurers who control more than 58% of the car insurance market. The result is that drivers who drive with proper insurance are being made to pay for uninsured.
All in all, taking into consideration the above factors, car insurance rates in California are on the higher spectrum, and it is a major expense for car owners on an annual basis. Regardless of what discounts are offered by California car insurance companies, it is always wise to shop around a bit before buying car insurance.
Check, research and explore all your options and get the best quotes available. It is possible that you may not be eligible for all discounts, but make an effort and get it right. Do not opt for a car insurance quote just because your parents always stuck to them or because most of your friends opted for it, use your own intellect since you know your own car and finances the best.