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Low-Cost Insurance Program Does Not Eliminate Need to Purchase Underinsured Motorist Coverage


California, like other states throughout the country, requires that drivers purchase liability automobile insurance coverage. Liability coverage protects motorists with whom a driver may be involved in an accident. For instance, when someone with liability coverage causes a crash and damages property or injures people, his or her liability policy will pay for the damage to those who were hit, up to the limit of his or her policy, explains a California personal injury attorney. Liability coverage does not provide protection to the insured for either injury or property damage; additional coverage would need to be purchased by the insured if such protections were desired.

Liability coverage is required because California is a fault state. This means that a party who is at fault for causing an accident is expected to bear the financial burden that results from that accident. Under California tort laws, a car accident victim may sue or otherwise make a claim against the person who caused the accident in order to collect compensation for property loss, medical bills, and lost wages arising from an injury, as well as for pain and suffering and emotional distress related to the injury.

To ensure that the party who caused the accident can pay these damages, California law generally requires that all drivers purchase a policy minimum of $15/$30/$5. This essentially means that they must purchase $15,000 in bodily injury liability coverage that will pay a single person they injure up to $15,000. The $30,000 refers to the total amount of bodily injury coverage purchased (i.e. if more than one person was injured in a single accident, the insurer would pay up to $30,000 total spread among those who were injured). The $5,000 refers to property damage coverage.

Many people choose to buy more than these required coverages since the protection they provide is somewhat limited.

Others, however, buy no insurance at all due to the cost. In order to try to encourage more people to actually purchase insurance, California has instituted a program designed to allow good drivers with a low income to buy insurance at affordable rates. This program is called California’s Low Cost Automobile Insurance Program (CLCA), and it was established in 1999 to try to combat the problem of uninsured drivers. The program provides auto insurance for premiums promised to be less than $400 per year.

However, there is an important difference between the insurance provided by CLCA and standard policies. The insurance provided by CLCA offers only $10/$20/$3 instead of the standard minimum required limits. This means a person has liability coverage only for $10,000 for injuries, $20,000 for the accident as a whole, and $3,000 for property damage.

If an individual is involved in an accident with an insured with low policy limits, that individual may have difficulty obtaining the full compensation he or she is afforded under California law. The difficulty is exacerbated by the fact that CLCA caters to low-income drivers: even if the injured plaintiff received a judgment in excess of the defendant’s insurance policy limit, the defendant likely would not have the resources or funds to pay the judgment.

While the program may have removed a significant number of uninsured drivers from the road, it has unfortunately replaced them with underinsured ones. Although receiving a fraction of a judgment is most likely preferable to nothing at all for many plaintiffs, the program has not eliminated the need for many drivers to purchase uninsured and underinsured motorist coverage to ensure they are fully compensated after an accident.

Additional information on California’s Low Cost Automobile Insurance Program, uninsured and underinsured motorist policies, and the personal injury claims process, is available to the public free of charge through our office’s Preferred Friends and Clients Program.

If you would like to request one of these free resources, or to discuss a specific legal matter with a California personal injury attorney, feel free to call 866-981-5596.

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