Out of all the states, California takes the prize for having the highest number of licensed drivers on the road. However, the Golden State is also home to some of the country’s lowest auto insurance requirements. California’s required minimum limits haven’t changed since 1967, but recently introduced legislation will change that for the first time in over five decades. So, how will California’s auto insurance requirements vary over the next few years? Before covering the upcoming changes, let’s review our state’s current minimum limits.
California’s Minimum Auto Insurance Requirements
Under current law, all motorists in the state of California must carry liability insurance with minimum limits of:
- $15,000 for bodily injury or death per person
- $30,000 for bodily injury or death per accident
- $5,000 for property damage per accident
The current auto insurance requirements in the Golden State were set in 1967 and have remained unchanged since. Because of this, a driver that only carries the minimum liability requirements could find themselves lacking coverage if found responsible for an accident in 2023—and insurance officials seem to agree. According to California’s Insurance Commissioner Ricardo Lara, California’s “current minimum coverage levels often [leave] California drivers at risk of being one accident away from financial ruin.”
In order to increase the state’s minimum coverage limits that better reflect the current cost of repairs and medical care, California signed Senate Bill 1107 into law in September of 2022.
How Will Senate Bill 1107 Change California’s Auto Insurance Requirements?
Senate Bill 1107 will amend the California Vehicle Code to increase the state’s required auto insurance liability limits. SB 1107 was signed by Governor Newsom last September and will officially go into effect on January 1, 2025. Under the new legislation, California’s liability limits will be replaced with the following in 2025.
- $30,000 for bodily injury or death per person
- $60,000 for bodily injury or death per accident
- $15,000 for property damage per accident
Increasing California’s auto insurance requirements will make drivers less likely to find themselves in debt following an accident. However, SB 1107 won’t stop with just one increase. The new 2025 limits will remain in effect for ten years until 2035 when they will increase again. On January 1, 2035, California drivers will be required to have the following minimum liability limits:
- $50,000 for bodily injury or death per person
- $100,000 for bodily injury or death per accident
- $25,000 for property damage per accident
Insurance commissioner Ricardo Lara says the changes will “ensure auto insurance keeps up with the change in times and that California’s drivers are more adequately protected.” However, some groups have announced their stance against the bill, citing current economic difficulties for opposing the increased limits.
California allows drivers to meet their minimum financial responsibility through cash deposits with the DMV. With the new law, the current $35,000 required will increase to $75,000 in 2025. In 2035, the cash deposit will increase again by $50,000.
Does Liability Insurance Cover Damage Done to My Car?
Although California law requires you to purchase insurance that meets the state’s minimum auto insurance requirements, it’s vital to understand that liability coverage does not cover your vehicle. Liability insurance protects you financially from damage or injuries you cause to another person due to a collision. To repair the damage done to your vehicle, you must carry collision or comprehensive coverage.
Comprehensive and collision insurance covers repair or replacement costs—up to your policy’s limits—if your vehicle is damaged in a covered peril. Comprehensive coverage applies whenever your car is damaged in a non-collision event, such as theft, vandalism, or weather accidents. Collision coverage applies when your car is involved in an accident with another vehicle or stationary object. Neither of these coverages are required in any state, but your lender may require them if you lease or finance a vehicle. Although not legally required, carrying collision and comprehensive coverage can give you ease of mind, knowing you are covered after an accident.
Orion Indemnity Can Help You Prepare
Although California’s insurance limits will increase in 2025, we can’t precisely predict how much each person’s insurance premium will change. As we prepare for the increase, it’s essential to build a habit of understanding the agent’s role in helping you find quality insurance coverage. Additionally, you may want to consider increasing limits now rather than wait for changes to take effect if you own a home or bundle.
At Orion Indemnity, we pride ourselves on providing quality insurance to California drivers. Whether you’re interested in seeing what coverages are available to you or want to speak to a rep about the change, our team can help. Give us a call today at (833) 336-7466 to learn more.
The information in this article is obtained from various sources and is offered for educational purposes. Furthermore, it should not replace manuals or instructions provided by the manufacturer or the advice of a qualified professional. No warranty or appropriateness for a specific purpose is expressed or implied.
