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Moving to California? Here’s What You Need to Know About Car Insurance

Wednesday, September 17th, 2014

1.  You’re required to have certain kinds of car insurance

If you plan on driving your car around the Golden State, you’re going to need a few different types of car insurance.  Specifically, California law requires every driver to have at least $5,000 worth of property damage liability insurance, $15,000 worth of bodily injury liability insurance to cover the injury or death of one person in a crash, and $30,000 worth of bodily injury liability insurance to cover the injury or death of more than one person in a crash.  You’ll need to show proof of this coverage when you go to register your car at your local DMV office — something that must be done within 20 days of establishing your residency here.

But if you think you can get away with just having the bare minimum coverage, think again.

All of this required liability insurance only covers OTHER people who are injured and OTHER property that’s damaged in a crash.  If you want your insurance to actually cover your own injuries and property damage, you’ll need to invest in additional coverage.  A good agent can tell you what kinds and what limits are best for your specific situation.

2.  Insurance companies here keep in touch with the DMV

Every car insurance company that does business in California is required to electronically report your policy information to the DMV.  They’re also required to notify the DMV if your car insurance policy is ever cancelled.  If it is — and if you don’t replace it with a new policy within 45 days — the DMV can suspend your car’s registration altogether.  So, if you run into any insurance issues while you live here, you can rest assured that the DMV will find out about them!

3.  You’ll have a chance to save a bunch of money

Thanks to Proposition 103 — which California’s residents voted in favor of back in 1988 — you’ll have a chance to save some serious money on your monthly car insurance premiums when you move here.  That’s because Proposition 103 created the state’s “Good Driver Discount“, which can save you up to 20% on your premiums.  Because the Good Driver Discount is a state law, every car insurance company that does business in California is required to give it to you if you qualify.

How do you qualify for it?

For starters, you must have gotten your driver’s license at least three years ago (and, yes, your out-of-state license counts!).  You also need a clean driving record over those past three years.  Specifically, you couldn’t be at fault in an accident that caused more than $1,000 in property damage, caused injuries to another person, or killed another person.  And, you can’t be a regular at traffic school.  If you’ve been more than once over the past three years — or if you’ve racked up more than one point on your driver’s license over the past three years — you won’t qualify.

4.  You’ll still need to look for other ways to save money, though

Unfortunately, California’s car insurance premiums are some of the highest in the country (and the further south you live, the higher those premiums tend to get!).  After all, California roadways are congested, and there are high rates of accidents, car thefts, and uninsured drivers — all of which drive up the price you have to pay for insurance every month.  Even if you qualify for the Good Driver Discount, you owe it to your wallet to look for other ways to save money on your premiums.

And that’s where a good agent comes in.

The very best agents will search for all kinds of ways to save you money, so that you don’t have to cut any corners in your insurance coverage.  For example, things like having a short commute, having a car alarm, and even insuring all of your family’s cars with the same company can all save you money every month when your premium bill arrives.

And as an added benefit, an independent car insurance agent can do some comparison shopping for you.  Since they’re not bound to one specific company, these agents can compare rates and coverage from a variety of insurance companies so that you can rest easy knowing you’re getting the very best deal.

5.  Your credit score won’t be a factor

Unlike most other states, it’s illegal for a California car insurance company to use your credit score as a factor in setting your premium rates.  (Once again, you can thank Proposition 103, since it was also responsible for this change in the law!)  So, if you’ve racked up some debt or missed a few payments, you won’t have to worry about it affecting your new car insurance policy.

Now that we’ve gotten all of that out of the way, welcome to the Golden State… Happy driving!