California in 2017 set the following minimum limits for driver’s liability coverage (California Insurance Code §11580.1b):
$15,000 – injury/death of one person
$30,000 – damage/death to two or more persons
$5,000 – property damage
But, of course, these minimum values are not enough, because just one treatment of an injured person with a small fracture will cost more than $15,000, and there are also mandatory payments for pain and suffering (moral damages, can be 3 times higher than the hospital bill), physical disability payments (sick leave, calculated by days based on the daily wage of the injured person). Plus lawyers’ fees, fines, payment of damages to the victim’s property, etc.
Naturally, the minimum coverage is not enough and the person will owe a huge amount of money. And then you either have to sell everything or take out a loan. Plus your own car will also be wrecked and you will have to either scrap it for your own money, or sell it without repair. So it is better not to save money on this and find a good company with high limits.
The best limits are $150,000/$300,000 (damage to one person/damage to several people), $150,000 motorist liability, and $50,000 property damage for the same amount.
In addition to coverage limits, you should also pay attention to how much you’ll pay out of pocket before your insurance begins to pay out its main portion. This amount is called the deductible. It can be a flat amount ($100, $250, $500 $1,000, etc.), or it can be a percentage of the final payout (much cheaper to pay, but can backfire on you in the long run).
In other words, when an insured event occurs, you will have to shell out, say, $200 out of your own pocket in order for your insurance to cover the remainder. A simple situation, you park your car on the street, some asocial element decides to get something out of your car and breaks the window, opens the glove compartment, digs there and disappears. You come back a couple of hours later and see this mess.
Your actions: make a police report (report to the police, usually submitted online), take a photo, submit a claim (insurance claim, describe the situation, attach photos, number of the police report) online from your personal office of your insurance company. If you have comprehensive coverage – you’re good, your insurance will cover the repair of your car and valuables missing from the glove compartment/car.
Then you go to an authorized insurance repair center, where the service will bill you for say $1000, plus another $500 worth of missing valuables. Your policy deductible is $200. That means you will pay the $200 out of pocket and the insurance will cover the remaining $1300. You can go to your favorite auto shop, but if you do that you’ll have to negotiate with the insurance company about what to fix and for how much, with all the bills attached, and not everything will be covered.
A similar calculation, if there is an accident, your insurance will compensate the damage to the injured party, minus the deductible, and if there is coverage for you and your car, then another repair for you.
There is also the concept of total damage, which is when the insurance company decides that it is inexpedient to repair the car and pays an amount equal to the market value of the car at the time of the accident. All costs for scrapping, storage and transportation of such a car are covered (but it also depends on the company where you bought the policy, not all insurance companies are so good).
If you decide to keep your car, its status changes to salvaged, and you will have to buy it back from the insurance company for an amount equal to the salvage value of the car after the accident. The insurance company will deduct this amount from the payment for your car. But that will be another question, what you will do with it… Not all salvaged cars can be registered after the accident.