We have successfully navigated the historic California Insurance Crisis of 2024. Now is the ideal time to assess what we learned and how you can prepare to stay ahead in 2025.
Last year, many insurance carriers reduced their exposure in California, which left numerous consumers with fewer “full coverage” options and, in some cases, without insurance entirely. We also saw many agents and brokers lose their contracts due to non-compliance or failure to properly educate clients on adequate insurance coverages.
Our clients remained protected, and our agency stayed operational because we consistently adhere to best practices in insurance. We believe in providing proper coverage and informed advice. If you are primarily seeking the absolute cheapest price or aiming to adversarial with carriers, our agency is not the right fit.
- Avoid Relying on Commercials: Be aware that companies with extensive advertising often prioritize denying claims to fund those campaigns. In our experience, carriers with the highest commercial presence are often the least responsive when a serious claim occurs.
- Permissive Use Coverage: This coverage extends your policy privileges to others driving your vehicle. Some companies offer full permissive use, while others limit it to reduce the premium. If you are on a strict budget, you can opt out of this coverage only if you can fully control who operates your vehicle.
- Prioritize Uninsured Motorist (UM) Coverage: Uninsured Motorist Bodily Injury (UMBI) is arguably the most crucial coverage on an auto policy today. It protects you financially if you are injured by someone who is uninsured or underinsured. Consumers who choose the highest available UMBI limits typically allow their own insurance carrier to manage the claim process seamlessly. Those with low limits often find themselves forced to personally sue the responsible driver. Uninsured Motorist Property Damage (UMPD) is also part of this coverage and is what waives your deductible in these situations. Choose the UM amount you can truly rely on in a time of need.
- Max Out Medical Payments (Med Pay): If you have a high-deductible health plan or no health insurance, we highly recommend maximizing your Medical Payments coverage. Med Pay covers ambulance rides, emergency room visits, chiropractic care, and, in many situations, provides compensation for Pain & Suffering. It can also reimburse your co-payments or out-of-pocket costs when you are injured in an auto accident.
- Set Appropriate Liability Limits: Liability coverage protects others and shields you from bankruptcy after a car accident. In California, the average wrongful death suit from a vehicle accident can range from $250,000 to $500,000. Your liability limits should reflect the value of your assets (equity in your home, investments, and annual salary). Also, note that your liability coverage cannot be lower than your UMBI limit.
- Choose Deductibles Wisely: While you don’t want to drive a damaged vehicle, claiming small incidents can lead to rate increases. We generally suggest carrying a $1,000 or higher deductible on Collision (excluding glass damage) to keep monthly premiums manageable.
- Consider Usage-Based Plans: If you are a safe driver, choosing a plan based on your driving habits can lead to savings. Most insurance companies now offer telematics programs that provide a discount for participation in the first year and help ensure claim accuracy by verifying true annual mileage.
- Bundle with Caution: Bundling policies can save money, but ensure the discount is not masking basic and overpriced coverage on your other policies. We can often offer agency bundle discounts even when your policies are placed with different carriers (e.g., Auto with Mercury and Home with Stillwater/Fidelity), which sometimes results in better coverage and pricing than keeping them all under one company.
- Disclose All Household Drivers and Information: Full disclosure of everyone living in the household and any anticipated changes (like a teen soon getting a permit) is critical to prevent a claim denial due to Material Misrepresentation. By understanding your full household situation and future plans, we can help you build an insurance plan that can evolve with you. For example, we can place you with a carrier that does not charge for permit drivers, giving you time to prepare for the high cost of insuring a new driver.
- Invest in an Umbrella Policy (with UM Coverage): Always ensure your coverage is better than that of others, so you are prepared for the worst. I personally had to utilize my umbrella policy when my teenage son was hit by a teen driver while crossing the street for the school bus. The at-fault driver’s coverage was insufficient and only paid 10% of the substantial medical bills (ambulance, hospital, rehabilitation). Having my umbrella coverage in place protected my family during an incredibly difficult time.
We are here to provide advice. We will not try to sell you a policy if proper counsel is all you need. Please reach out if these tips are useful and if you have other questions or an insurance problem that your current provider cannot resolve.
Blog post written by Domingo Ramos, CA Lic. 0F53636, National Producer Number 9071660
Want us to help you with Auto Insurance?
No obligation to buy, complete the quote request below and I or one of my amazing licensed brokers will reach out.
