Minimum Coverage, Minimal Coverage - Strong Tie Insurance

Why Minimum Coverage is Actually Minimal Coverage

Strong Tie Insurance July 27, 2020 StrongtieInsurance

If you’re looking for auto insurance, you want quality coverage at the best price. There’s no doubt that going with the state minimum coverage requirement will reduce the amount of your payments, but are you truly covered?

Here’s what you need to know about why minimum coverage is actually minimal coverage:

What is California Fleet Auto Insurance?

Many companies rely on multiple vehicles to conduct their businesses. From taxi and car rental companies to commercial trucking firms, fleets are more common than you might think. In fact, estimates suggest that there are over 5.4 million fleet vehicles in the U.S. today.

In California, a business is considered to have a fleet when it either:

  1. Has 15 or more vehicles registered under the company’s name
  2. Purchases five company vehicles with the same year

Companies that reach this level receive a fleet number that is to be displayed on all fleet vehicles.

But until a company has enough vehicles to become a fleet, each vehicle has its own commercial vehicle insurance policy. As the company and the number of cars it owns grows, keeping track of the multitude of insurance policies can become overwhelming.

California fleet auto insurance allows a company to combine all of their vehicles into a single plan. The types of available coverages don’t change, but how you manage the overall plan does. Vehicles under fleet auto insurance do not need to be the same or need to be used for the same purpose. That means a company fleet could be made of cars, delivery trucks, cargo vans, and more.

Just like other personal and commercial insurance policies, you have a host of options for how you’re covered. You can add coverages depending on your needs or merely stick with the state minimum.

What is State Minimum Coverage?

Every state has its own laws regarding the minimum amounts of insurance that you need. This is typically referred to as liability insurance. Liability coverage is meant to pay for any damages you cause another driver, their passengers, or property.

For personal auto insurance, California requires the following:

– $15,000 bodily liability per person

– $30,000 bodily liability per accident

– $15,000 property damage liability per accident

Commercial vehicles in California have different rules. Because these vehicles are potentially on the road more often, carry particular goods, or are more massive than personal cars, they often require higher levels of liability. Check with your state’s department of transportation to learn more about your state’s specific rules. 

Minimum Coverage Barely Covers You

Keep in mind that minimum liability coverage is just what the state requires drivers to have to be on the road. It is not meant to cover every possible instance when driving.

According to California’s state minimums, you have $15,000 to help cover bodily injuries for another, single driver. Imagine that your vehicle rear-ends someone waiting at a stoplight. The other driver needs to go to the emergency room. While $15,000 may seem like a lot of money, it can also leave you in a lurch.

An average ride in an ambulance is around $800 for a basic trip. If there are extenuating injuries or the need to use medical supplies en route, the cost of that ambulance ride is gone. If the accident happens a reasonable distance from the hospital, a helicopter could be dispatched. Hitching a ride on a helicopter costs between $12,500 and $25,000 per flight.

On top of that passenger getting to the hospital, there are the costs associated with visiting the emergency room. The average price of an emergency room visit in 2017 was $1,389. It continues to climb each year. Unique treatments, surgeries, medicines, etc. add to the total bill.

And the cost of an accident doesn’t stop at being admitted to the emergency room. There are also costs associated with ongoing treatments, rehabilitation, etc. If the other party is permanently injured or disabled, those costs grow exponentially. A judge doesn’t know if you are a good person or if the other party was up to no good. All they know is that you injured another person on the road and need to grant the injured party a pretty hefty sum.

That $15,000 could quickly be spoken for in no time. Now imagine that the other vehicle had four passengers each requiring similar attention. The minimum coverage allows $30,000 in bodily injury per accident, which means the money would be spent well before you even realize what happened. 

What If You Don’t Have Enough Coverage?

Simply put, if your insurance policy doesn’t cover the total costs of the accident, the other party will come after you or your business. You are still responsible for the damages, even if you don’t have that kind of cash lying around.

Imagine you’re driving a company vehicle for a delivery, and you hit a guard rail on the highway. Maybe you blew a tire, or perhaps the weather made it slippery. While there may not be any injuries and the company car just has a few scratches, the guard rail is pretty beat up.

Since a large section of railing needs removed and replaced, you could easily get a bill for $25,000. Your minimum coverage only allows for $10,000 in property damage. That means you’re on the hook for the other $15,000. While this amount may not be enough to close your business, it could hurt.

Imagine now that you collide with a truck delivering high-tech computer equipment. If that equipment is destroyed, you could be on the hook for tens or hundreds of thousands, if not millions. You could lose your fleet or your business to make up for the damage. 

The Hard Truth

We started this out by saying minimum coverage is minimal coverage. Well, we were wrong: minimum coverage is barely minimal coverage. While it keeps you and your business on the legal side of having insurance, it doesn’t actually protect you. A single accident could ruin your entire operation, which just isn’t worth the risk.

Luckily, California auto insurance has a variety of policies that can be added to your existing plan. You can customize your policy to actually work in your favor without breaking the bank.

Instead of going along with the minimum, contact Strong Tie Insurance to learn about your options and to get a free quote today.