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California insurance is not one to play by the rules, and that’s good news if you’re in the market for insurance and call the Golden State home. What accounts for the guarded optimism? Whether you’re looking for auto insurance, home insurance, life, or health coverage, insurance rates in California tend to rank in the middle-of-the-pack when compared with the rest of the nation, despite a prevalence of insurance related red flags that would drive costs up in most of the rest of the nation. That isn’t an excuse for Californians to get lazy when seeking out coverage, however. All favorable rates aside, there are a number of considerations particular to the Golden State that every California resident needs to be aware of before they start shopping around if they want to get the best value for their money when they solicit California insurance quotes.
For starters, it’s important for anyone seeking insurance coverage in California to understand how insurance companies determine the rates they offer their customers, and that formula can be summed up in a single word: risk. To make a long story short, when you apply for insurance in California, insurance companies calculate the money they stand to make on your policy versus the potential risk that they’ll have to back that policy by paying out on claims. Yet despite having bragging rights to some high risk statistics, the rates you’ll get when you solicit California insurance quotes remain surprisingly middle-of-the-road. Here are a few examples to illustrate the point:
California Auto Insurance — According to a study done by the Insurance Information Institute (III), Californians pay auto insurance premiums of $800 per year on average. That may look pretty steep at first glance, but when you take into account the fact that California ranks 20th in the nation for auto insurance premiums, and that states with comparable populations and profiles, such as Florida and New York, pay annual premiums of $1,000 or more per annum, that $800 per year takes on a whole new light. And when you consider the fact that California ranks second in the nation in fatal car accidents according to the National Highway Transportation Administration (NHTSA) with 3,434 deaths per year, and that California’s uninsured motorist rate ties for second highest in the nation at 25% according to the Insurance Research Council (IRC), that $800 a year is a bargain anyway you cut it.
California Home Insurance — Similar anomalies apply to quotes for homeowners insurance in California. According to HomeInsurance.com, the average price for homeowners insurance in California was $676 annually as of September of 2009, just below the national average of $696. Take into account the fact that California regularly makes headlines when it comes to wildfires, earthquakes, isolated flooding, landslides, and other natural disasters, and you can see why Californians ought to be taking a deep breath when it comes to their home insurance premiums. To put things in perspective, residents of Florida paid an average of $1,016 per year in the same study, Louisianans paid average premiums of $1,113 annually, and Texans shelled out an average of $967 per annum.
While the good news on rates for insurance in California is certainly worth celebrating, it’s important that Californians don’t get complacent when it comes to meeting their true insurance needs. Considering the highway safety statistics mentioned above, for example, the California state required minimum auto insurance coverages of $15,000/$30,000 for Bodily Liability, and $5,000 for Property Damage Coverage, should give any Californian pause. Coverage amounts along the lines of $100,000/$300,000 for Bodily Liability, and $50,000 for Property Damage Coverage are much more realistic starting points if you want to adequately protect yourself and your finances in the event of a serious auto accident. And where home insurance is concerned, making sure that you’re not underinsured if you live an area where wildfires or landslides are a serious risk, and that you acquire additional Earthquake Coverage in high risk areas of the state, are just a few examples of the unique insurance considerations that make understanding California insurance so important when you start shopping around.
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