Types of Insurance You (May) Need in California: Mandatory and Optional

September 27, 2023

Home to Silicon Valley, Hollywood, and Disneyland, California may be one of the best states to ski, surf, and gaze at the stars in the desert. Unfortunately, though, the quality of pastime activities in California has nothing to do with the quality of life there. With 430 crimes per 100,000 residents, poor air quality, and busy roads, the Golden State is occasionally claimed to be one of the worst places to live in.

And while opinions and ratings are as different as chalk and cheese – in fact, when it comes to living standards, some ratings place California on a pretty high 19th place – one thing holds true for almost everyone: California is the state where you want – and need – to be insured.

Whether you are among the 7.3% of uninsured Californians, or you just want to know more about the insurance options in the Golden State, the lines below may be of extreme value to you. Read on if you want to find out the details on the most popular types of insurance in California: life insurance, health insurance, car insurance, home insurance, renters insurance, flood insurance, gap insurance, and title insurance.

Before we start, let’s just mention the government website where you can find the crucial information on insurance in California: California Department of Insurance, which also regulates the state’s insurance market.

How Much Insurance Do I Need in California?

There are only two mandatory types of insurance in California: health insurance and car insurance. Not having these two may result in fines and even imprisonment. As for all other types of coverage, you are free to select the policies and the amount of coverage you need depending on your budget, age, lifestyle, and other factors that shape your identity.

Life Insurance in California (Optional)

Occasionally recognized as the state with the largest purchased value of life insurance, California provides two radically different types of life insurance – term life insurance and cash value life insurance – as well as several variations between these two.

  • Term life insurance is valid for a specified time, say, 10 years. If the insured dies during this term, the beneficiary receives the face value payment – the death benefit – which is usually predetermined and unchangeable. However, if the policyholder outlives the duration of the policy, then no payment is made. Term life insurance works best for the insured that has a limited budget and is only interested in short- or mid-term protection. For the long haul – and especially as you age – cash value insurance may be a better option.
  • Cash value insurance includes both the death benefit and the accumulation feature. Compared to term life insurance, it’s more expensive in the short term, but, as the insured lives longer, it accrues interest so that the insured can receive some cash if he or she surrenders the policy. If, however, the premium is paid regularly, then, upon the death of the insured, the beneficiary receives the death benefit (just the way it works with term life insurance).

Duration-wise, in addition to term life insurance, there’s whole life insurance that provides coverage for the entire lifetime of the insured. With whole life insurance, the premium is higher at the younger age so that the insurance company can reserve money for years when the insurance risks are higher.

Last but not least, if you want to get the most flexible policy, you can opt for universal life insurance that allows all kinds of ‘shenanigans,’ including skipping payments, changing the death benefit, and more. Universal life insurance treats all policy elements separately, allowing you to adjust any of them the way you want.

How Much Is Life Insurance in California?

The actual price of health insurance in the Golden State depends on the type of health insurance policy (term life insurance or whole life insurance), as well as the premium, the death benefit, the age and health of the insured, whether the insured is a smoker, and other nuances. The average life insurance monthly premium in California is about $50.

Health Insurance in California (Mandatory Since 2020)

While most Californians acknowledge the importance of health insurance for treating diseases, counseling, and moral protection, it is one of the most complex types of insurance, both in terms of terminology and choice.

Luckily, we still can reduce it to this simple scheme:

  • Public health insurance encompasses
    • Medicare: for individuals aged 65 and older. The ‘expanded’ Medicare, also known as was.
    • Medi-Cal: free-of-charge coverage for low-income individuals; California’s version of Medicaid.
    • Children’s Health Insurance Program: for children from families with income too low for private health insurance and too high for Medicaid.
    • Low-premium and gap coverage: Obamacare (the expanded version of Medicare, adopted in 2010 to cover the gaps in the healthcare system), Cal-Cobra (for those switching jobs), and Coronavirus relief packages.
  • Private health insurance encompasses a cornucopia of options, among which are:
    • PPOs: cheaper coverage through ‘in-network’ medical providers or more expensive coverage from ‘out-of-network’ providers.
    • EPOs: relatively cheap coverage through a local network of hospitals and doctors.
    • HMOs: low-cost basic coverage through a local network in which you have a primary care doctor.

On top of that, health insurance can be individual (family) or group. Relatively cheap group policies are purchased by employers to cover dozens and hundreds of employees by spreading risks among them. Individual policies are usually more expensive as they are tailor-made to fit the needs of every individual or family. That said, in some cases, you may be able to cover your family members with your group policy.

How Much Is Health Insurance in California?

The actual price of health insurance in California depends on multiple factors, including the type of insurance (group or individual) and whether the insured is subsidized.

  • Employee-sponsored plans start at less than $100 a month.
  • ACA insurance will likely cost about $150 a month.
  • Individual plans cost up to $500 a month and more.

Car Insurance in California (Mandatory)

When it comes to car insurance, California has nothing to boast about. Ranked 10th in the list of the states with the lowest percentage of insured drivers, the Golden State has over 2 million uninsured vehicle owners.

California Car Insurance Requirements

  • $15,000 in liability coverage for one person per accident.
  • $30,000 in liability coverage per accident.
  • $5,000 in property damage coverage per accident.

Is It Worth to Buy Car Insurance in California?

The minimum car insurance requirements were established not just like that. California can be called a car accident state. With over 3,500 motor-vehicle deaths a year and the overall 1% probability of dying in a car accident, car insurance can save your life, not just your pocket.

In addition to the mentioned mandatory coverages, you can opt for uninsured (underinsured) motorist coverage, comprehensive coverage, collision coverage, and medical payments coverage. Uninsured and underinsured motorist coverage will help you deal with situations where at-fault drivers are uninsured…well, we’re talking about approximately 16% of all drivers in California.

Besides, there are medical payments coverage, physical damage coverage, rental reimbursement coverage, road service coverage, and other types of car insurance you can take advantage of. The world is your oyster.

How Much Is Car Insurance in California?

The average premium for full coverage auto insurance in California is floating around $175 per month, but you can get the minimum coverage for as much as $60 a month. As a low-income driver, you can qualify for California’s Low-Cost Auto Insurance Program.

Best Cheap Car Insurance in California 2022

Looking at the customer satisfaction rates, Wawanesa was named the leading auto insurance company in the Golden State in 2021.

Wonder how much auto coverage you need for your own or rented car? Here’s the guide.

Gap Insurance in California (Optional)

Gap insurance covers the difference between the actual market value of your car and the remaining sum of money you owe on your car loan provided your car was declared a total loss.

  • If you’ve taken, say, a $50,000 loan and your car was totaled, your standard auto insurance will only pay the actual value of your car – say, $25,000. But if you still owe more than $25,000, then – if you don’t have gap insurance, that is – you will have to pay the rest of your pocket.

Gap insurance is recommended to owners of old and quickly depreciating vehicles – for example, sports cars – as well as those involved in a long-term lease or paying high interest on their car.

How Much Is Gap Insurance in California?

The actual price of gap insurance depends on the insurance company – among the most popular gap insurers in California are Allstate, Progressive, Nationwide, and USAA – as well as your car, driving history, and some other factors. The average annual price of gap insurance in California is about $50.

Home Insurance in California (Optional)

Encompassing property coverage (sections A through D) and liability coverage (sections E and F), a typical homeowners insurance policy will protect you against pretty much everything, from explosions and theft to damage caused by fire, hail, windstorm, and lightning. The exceptions are floods, earthquakes, and water damage.

How Much Is Home Insurance in California?

The average monthly premium for home insurance in California hovers around $100. Aside from the location, the actual cost of homeowners insurance depends on how much it would cost to rebuild your home, as well as your credit history, the other types of insurance you have, and more.

When shopping for homeowners insurance, you can use this helpful tool that compares the most popular types of home insurance depending on your location, the age of your building, and the amount of coverage you need.

Earthquake and Flood Insurance in California (Optional)

Now, earthquakes are one of the most common natural disasters in California. There may be up to 1,000 earthquakes a week in California, including several earthquakes of magnitude 4.0 and higher. Luckily, earthquakes insurance – as well as other ‘exotic’ types of insurance – is there for you.

The same goes for floods. Vulnerable to floods – and with the ever-growing flood risks – California begs for flood insurance, which you can buy through the National Flood Insurance Program or individual insurers.

How Much Is Flood Insurance in California?

Flood insurance is pretty expensive. The monthly cost of flood insurance in California averages about $90.

Renters Insurance in California (Optional)

Just like in other states, in California, you may not be able to move in until you provide your renters insurance to the landlord. The gist of renters insurance, though, is to protect your personal belongings on the landlord’s property.

A typical renters insurance policy provides coverage C through F, which encompasses personal property, loss of use, liability, and medical payments. But then again, floods and earthquakes are not covered.

How Much Is Renters Insurance in California?

Renters insurance is cheap. The average monthly payment is about $15.

Title Insurance in California (Optional)

Being the most expensive investment, real estate deals have to be approached with the utmost care by both the seller and the buyer. Both parties can protect the title of the house they buy or sell via one of the two types of titles insurance available in California:

The insured buyer and sellers are guaranteed that the property will be examined for its clear title, absence of judgments, and other possible issues that may impair the validity of the deal and the market value of the property in question.

Who Pays For Title Insurance in California?

More often than not, the buyer pays for title insurance – both the CLTA and the ALTA policies – in California.

How Much Is Title Insurance in California?

To know the title insurance premium in California, use this title insurance calculator. The actual price is based on the transaction type, sale price, and loan amount.

From the Insured to the Insurer: How to Get an Insurance License in California?

In California, insurers make about $62,000, which is almost two times more than the median personal income in the U.S. To become an insurance producer in California, you have to:

  1. Complete a prelicensing course. California establishes the minimum preliminary educational threshold for all applicants, with the number of hours varying depending on the type of license. The longest preliminary education – 40 hours – is required for life, accident, and health niches. At the other end of the scale, ethics requires only 12 hours of courses.
  2. Pass the state licensing exam, either in-person or online. Having completed the prelicensing course, you can schedule your licensing exam on the PSI website. The number of questions and the time allowed vary depending on the type of license.
  3. Submit your fingerprints before or after the exam. Here’s how you can do it.
  4. Apply for your license. Here’s the official information on how to apply
  5. Get ready to continue your education. Every licensed producer has to study for at least 24 hours so that he or she can receive the minimum number of CE credits required to prolong the two-year license.

How to Become an Insurance Adjuster in California?

Becoming a claims adjuster in California is no different from becoming an insurance producer. You have to complete the same 5 steps. What’s more, even the average salary of claims adjusters in California is roughly the same as that of insurance producers.

Top-Tier Insurance Lawyers in California

When your business or even life depends on your insurance coverage, you don’t want law-related accidents to happen, do you? If so, you might be interested in getting help from one of the top-tier California insurance coverage attorneys.

Types of Insurance You (May) Need in California: Mandatory and Optional 1

Oleksandr Rohovnin is a Content Marketer at Phonexa.com and an expert contributor to CoverExplore. His passion is digital marketing, innovative technologies, tech industries, and – above all – distilling vast amounts of complex information into engrossing narratives anyone can relate to. At CoverExplore, Oleksandr stokes passion for auto insurance and the automotive industry in general in every story he curates.