insurance laws in california

Should You Have Insurance?

insurance laws in california

When you grow up, you start to realize all the things you weren’t taught about in school. For example insurance. All insurance, auto, house, and life, are all big giant mysteries. Don’t worry about feeling like you’re the only one who doesn’t understand how it works, a lot of people don’t. We don’t learn about it in school, so why is it even important?

Insurance provides us the means to survive an accident. Whether that’s a car accident, natural disaster, or death, insurance is there to help. The best way of explaining the general idea of insurance, is by thinking back to grade school. In school you more than likely had a best friend that you would do anything for and they would always have your back. Insurance is like your best friend who will always have your back, except with insurance you have to pay them.

If you’ve ever experienced a death in the family, you’ll understand the importance of life insurance. Life insurance is basically putting a value on someone’s life. Say there’s a married couple and the husband is the “bread winner” of the family, while the wife stays home and takes care of the kids. One day, the husband dies. The widow would be at a loss if it weren’t for her husband’s life insurance policy. His life insurance policy helps cover the funeral costs and other expenses. Some life insurance policies are big enough where the widow wouldn’t have to worry about working.

Car insurance is mandatory unless you’re sitting on a pile of gold. In California it’s not illegal to live without it. Under California law, according to Department of Motorized Vehicles, you must have financial means to cover any costs related to accidents. California law requires proof of your ability to pay or cover the costs. This essentially means that you don’t need insurance but you also have to be able to pay up to $30,000 in possible damages. Unless you have an extra $30,000 laying around, you’re probably going to need car insurance.

House/Renters insurance is a practical must if you’re not living at home anymore. It’s especially necessary when you live in a place that is earthquake prone. While the state of California doesn’t require homeowners insurance, or renters insurance, you’re probably still required to have it by someone. Your bank who you financed your home may require it. Your landlord may require it. It’s not necessarily a bad thing to have either. You’ll be surprised at what home/renters insurance could include.

If you feel overwhelmed by it all, don’t worry, you’re not alone. Just remember that whenever you don’t understand an insurance policy, ask the insurance provider for more information. Understanding what is covered, who is covered, and how they’re covered can make being an adult much easier.