Auto Insurance is required in order to drive in California. Auto insurance is expensive. In order to legally drive in California you have to have a minimum of $15,000.00 ($15K) in Liability coverage to protect anyone you accidentally injure. That $15K is the limit and if the person you hurt has more than $15K in damages they are out of luck. If there is more than one person in the vehicle and more than one person is injured then there would be a maximum of $30K available to reimburse all of the passengers for their damages. If there are three or four people in the car they will have to split the $30,000.00.
If you pay more money you can increase your limits to $25K/$50K, $50K/$100K, $100K/$300K, $250K/$500K.
What most people do not understand is that auto insurance limits should also be used to protect yourself, your family and your passengers from uninsured drivers and underinsured drivers.
Uninsured/underinsured coverage costs more money but it is worth it because it protects you, your family and your passengers.
The liability limit you choose to protect other people will also be your uninsured/underinsured limit. The way it works is if you get hit by an uninsured driver or you are a victim of a hit and run driver then you will submit a claim for your damages to your own insurance company under your uninsured policy. The amount available to you will be determined by the liability limit you choose.
Another important aspect of uninsured coverage is that it includes underinsured coverage. Most people cannot afford high limits so they choose the cheapest coverage they can afford. That limit is usually $15K/$30K. If someone causes you and/or your passengers to suffer more than $15K in damages or more than $30K between all passengers than you will be out of luck because the maximum you will be able to recover is $15K or $30K total.
This is where your underinsured policy kicks in. Once you settle with the responsible party you provide proof of the settlement amount to your insurance adjuster along with all of your medical bills and proof of your total damages and your insurance company pays you the difference between your settlement amount and the amount of your damages. So if you settle for $15K and your damages are $25K and your underinsured limits are $25K/$50K then you will get the difference of $10K. If you settle for $15K and your total damages are $300K and your underinsured limits are $250K/$500K you will get the difference of $235K.
Keep in mind that if you also choose a low underinsured limit of $15K and their limit is $15K there will be no additional payment. This is why it is important to have limits that are as high as possible. That way you, your family and your passengers will be protected from uninsured drivers and underinsured drivers.
I just settled a case for two passengers who had over $400K in medical bills between the two of them. The liable driver was 23 years old and only had $15K/$30K in liability coverage so each of my clients got $15K. One client’s hospital bills are over $350K.
The client that was driving had $25K/$50K in underinsured coverage so there was only an additional $10K available for him. In total he got $25K. He has over $350K in hospital bills.
This is why it is so important to have the highest uninsured/underinsured coverage as possible to protect you, your family and your passengers.