Forget the Fine$. What Are the BENEFITS to Auto Liability Insurance?



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We already once wrote about the dangers of not having auto liability insurance. Fines, suspension, limitation on damages if you are injured, impound, traffic court, all that stuff.

Now for something completely different. This article is about the many important Benefits of having a valid Auto Liability insurance policy.

#3. Valid Car Insurance Brings Peace of Mind

It is a lot harder to drive when you are worried about being pulled over. No proof of auto insurance in your car? You should be afraid of being pulled over. Why? Because the fine for not having proof of auto insurance with you in the car is more than the cost of 1 year’s worth of auto insurance for most safe drivers.*

Driving is also a lot more stressful when you are scared to death of even the tiniest everyday collisions. How many cars was it that passed within inches of your VW van last Friday afternoon on the 405 Freeway? 10, 20 thousand maybe? Inches, less than inches?

Hwy 405 Los Angeles
Source: Wikipedia File on 405 Frwy

Eventually you are going to bounce off someone, and even if there is very little property damage and no injuries, a lack of auto insurance when it happens is going to hurt.

When you have proof of valid liability insurance in your car, you don’t have to be constantly afraid of being pulled over, nor afraid of the consequences of the unavoidable everyday fender bender.

That peace of mind can make legal drivers safer, and might help you live longer.


#2. Auto Insurance Companies Have to Pay for Damages When the Policy Holder is Negligent.

If you have valid auto insurance and you accidentally crash into a parked car, the law probably requires your auto insurance company to pay for those damages in your place. The technical term for this process is called “Indemnification“. Although the exact terms of an auto insurance policy can vary, nearly all US States require auto insurance policies to INDEMNIFY the policy holder for any negligently caused damages, up to to the limits of the policy.

Even if you caused the damage by being an idiot, your auto liability insurer must pay for covered damages upto the limits of the policy that you bought.


#1. Duty to Defend the Policy Holder Against Covered Claims in a Lawsuit.

Let’s face it, everyone knows that if you are involved in a car accident you can get sued in court even if it was not your fault. The other driver(s) may claim it is your fault, and may hire a sly attorney to sue you even though the police report says you legally entered that intersection.

So what if that happens to you? If you have valid auto insurance, good things start to happen and this is where you run into the #1 benefit of having valid auto insurance, the Duty to Defend.

The law in nearly all States also requires auto insurance companies to include a “Duty to Defend” in all auto liability insurance policies they sell.

The “Duty to Defend” means that if a policy holder is sued in civil court for a claim of damages from a collision, the law requires the insurance company (Insurer) to defend the Policy Holder in court whether or not the claim is true. Although auto insurance policies are really contracts, the required “Duty to Defend” is defined by law in nearly all states. When a Policy Holder is sued on an auto accident claim, nearly all states require the Insurer to hire licensed Defense Attorneys to represent and defend the policy holder in civil court.**

It turns out that this “Duty to Defend” is actually the most valuable benefit to having valid auto liability insurance coverage by far. This is due to the fact that if you are sued in civil court for damages after a collision, even for as little as $12,000 in property damage, the cost of defending yourself against even a false claim can . . .

Tips for Enjoying the Benefits of Your Valid Auto Liability Policy:

3. Do not ever fail to pay for the policy on time. Insurance companies make their money by cancelling people. Do not give them a legit reason to cancel your policy just because you are procrastinating;

2. Let the insurance company handle it all. Send all auto negligence claims against you, whether you believe they are legit or not, to your insurance company immediately. Let them deal with all car crash claims.

1. Next time you bounce off someone at 5mph on the 405 on Friday after and it causes you to bounce off 3 more people – Just relax, look down at the coconut buttons on your shirt, turn the radio on to some reggae, pull up your issuance policy info on your phone, and tell everyone to talk to your attorneys.

______
* See CA Vehicle Code section 16028 for example which can have a first offense fine of approx $870.
** In CA, there is no duty on the insurer to hire attorneys to defend an insured in small claims court. However, the duty of the insurer to indemnify for damages does apply for small claims judgments.

More Info:

CA Insurance Requirements for Drivers
California’s Low Cost Insurance Program
Florida Insurance Requirements for Drivers
Texas Insurance Requirements for Drivers
New York State Auto Insurance Resource Center (Dept of Financial Services

Questions? Leave a reply.


About Attorney Christopher Dort

Public Interest Attorney. CA State Bar #196832. Licensed to practice law in California 1998, and then the US Federal District Court in 2000. Civil Litigation Trial Attorney (Insurance Defense Firms) 2000-2003. Private practice 2003 - present. First Solo Criminal Jury Trial 1998 (Santa Cruz County). First Civil Jury Trial 2002 (Orange County). Santa Cruz County Public Defenders Office 1996-1999 (law clerk). BA in Politics from UC Santa Cruz, 1995. JD, University of California, Hastings, 1998.
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