Nearly every state requires drivers to carry auto insurance, but that doesn’t mean every motorist carries the required amount. With car insurance rates increasing, some motorists are deciding to opt out of car insurance despite the legal ramifications. But what will happen if you are a victim of a collision with someone uninsured? Your uninsured/underinsured motorist coverage will help financially protect you in these scenarios. Here are just a few reasons why carrying proper uninsured motorist coverage is important and why you may want to increase your coverage limits in California.
How Many Uninsured Motorists Does California Have?
Approximately 17% of California drivers are uninsured, according to the Insurance Information Institute. With a driving population of around 27 million, that means there are some 4.59 million drivers on the road who do not carry the proper amount of insurance. What will happen if one of these motorists causes a collision and damages your vehicle? Depending on your coverage, you could be left responsible for any repairs or medical bills.
After an accident with an uninsured motorist, you’ll need collision coverage to repair or replace your vehicle up to its actual cash value. However, if you’re seriously injured, state-required liability insurance won’t provide you with any coverage for your medical bills, nor will collision insurance. In such cases, you’d need uninsured motorists coverage (UM) to file a claim for any medical bill, lost wages, or death. But shouldn’t health insurance cover that? Although health insurance can cover your medical bills, it will not apply to any passengers with you in the car.
Uninsured Motorist Coverage Vs. Underinsured Motorist Coverage
You’ve likely encountered underinsured motorist insurance (UIM) when researching uninsured motorist coverage. The Golden State requires auto insurance companies to offer you this coverage. However, you can decline the coverage by signing a waiver saying you were offered the coverage but decided against it. But what exactly is the difference between the two? UM applies to accidents with a motorist who does not carry any insurance. On the other hand, UIM applies to accidents with a motorist who carries only some insurance but less than state requirements and what is needed to cover the damage they are responsible for.
Here’s how UM will provide coverage when involved in a collision with an uninsured driver:
- Uninsured motorist bodily injury (UMBI): Will pay for medical bills, lost wages, and funeral expenses that result from an accident with an uninsured motorist for you and your passengers.
- Uninsured motorist property damage (UMPD): Will pay for damage done to your car from an accident with an uninsured motorist if you do not carry collision insurance. The limit in California is $3,500, but the uninsured driver must be identified to receive a payout.
Here’s how UIM will provide coverage when involved in a collision with an underinsured driver:
- Underinsured motorist bodily injury (UIMBI): Will cover your medical bills, lost wages, or funeral expenses when a motorist causes an accident but doesn’t carry enough insurance to pay what they are responsible for. In such cases, the underinsured motorist’s insurance will cover initial costs, and your UIMBI will cover the rest up to your policy’s limits.
- Underinsured motorist property damage (UIMPD): Will provide coverage when a motorist causes an accident but doesn’t carry enough insurance to cover damage to your vehicle or other property.
UM and UIM coverage limits typically mirror your liability coverage limits. For example, suppose you have liability limits of $50,000 per person and $100,000 per accident (50/100). In that case, you will also carry 50/100 in UM/UIM coverage.
How California’s Auto Insurance Requirements Will Increase in 2025
Despite having such a large number of residents and drivers on its roads, the Golden State is home to some of the country’s lowest minimum auto insurance requirements.
California drivers have been required to carry liability insurance limits of 15/30/5, representing $15,000 for bodily injury per person, $30,000 for bodily injury per accident, and $5,000 for property damage per accident since 1967. Although these numbers may sound like a lot, a $5,000 limit won’t provide much protection if you damage a brand-new car in a severe accident. This is why carrying higher limits and additional coverage types, such as UM/UIM and collision insurance, is highly important.
Officials in California understand that the state has significantly low insurance limit requirements, which is why they are set to change in 2025. On January 1, 2025, Senate Bill 1107 will go into effect and amend California law to increase the state’s required car insurance liability limits. Under SB 1107, California’s current limits will change to:
- $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
Under SB 1107, these limits will remain active until 2035, when they will increase again. On January 1, 2035, California drivers will be required to carry:
- $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
How will this affect insurance rates? Although we understand that liability limits will increase, we cannot say for certain how everyone’s insurance premium will change. That’s because multiple factors determine your car insurance rate. However, we’ve begun to see a rise in insurance costs since 2022, so consumers can likely expect to see some form of higher rates when the new law goes into effect.
If a motorist does not currently carry auto insurance because it is too expensive, they’ll likely feel the same way when the liability limits increase. Although this will not directly affect repair or medical costs, it could cause some motorists not to renew their insurance policies. If this should happen, we can expect to see even more uninsured motorists on our roads.
Speak to a California Insurance Specialist
At Orion Indemnity, we specialize in providing California auto insurance coverage to Californian drivers. Whether you’re searching for a new policy or have questions regarding California’s insurance limits increase, our professionals can help.
As we prepare for the forthcoming rate increases, consumers must begin research now rather than later. Building good insurance habits, such as comparing quotes regularly, can help avoid significant cost increases. With over 4 million uninsured drivers on the road, it’s essential to protect yourself financially from accidents involving someone who does not have insurance. If you’d like to learn more about your options, call us at (833) 336-7466.
The information in this article is obtained from various sources and offered for educational purposes only. Furthermore, it should not replace the advice of a qualified professional. The definitions, terms, and coverage in a given policy may be different than those suggested here. No warranty or appropriateness for a specific purpose is expressed or implied.
