Woodland Hills Personal Injury and Car accident attorney, Barry P. Goldberg, has been a strong advocate for raising California’s Minimum Liability Auto Insurance Limits for over a decade. As a practicing injury accident law firm, we know all too well that the State’s outdated minimum liability limits are a big problem and damage California drivers on a daily basis. Any Californian who has experienced a significant impact auto accident knows that they are likely to be short-changed on a recovery because there is simply not enough liability insurance available to fix a car or pay for bodily injuries. Anecdotally, about 50% of the cases our firm handles are either uninsured or underinsured motorist situations.
On September 29, 2022, Governor Gavin Newsom signed SB 1107 into law without much fanfare. Various consumer groups have been trying to raise the minimum liability limits for literally decades. The current minimum liability limit: $15,000 per person, $30,000 per accident, and $5,000 for property damage— was established in 1974. In fact, California essentially led the way for the rest of the country and, why not? California is the commuter capitol of the world and is synonymous with “car culture.” What is unusual is that the limit amounts have not been raised since 1974. California has now lagged to last among the 50 states!
Good news! Effective in 2025, California will once again become a leader with the passage of SB 1107— $30,000 per person, $60,000 per accident, and $15,000 for property damage. These revised amounts are expected to be adequate for most “standard” automobile accident claims—as it should be. The delay gives the insurers sufficient time to calculate rates and apply for the premium increases. Make no mistake California auto insurance premiums will be going up. The initial estimate is that rates will rise at least $400. Frankly, our office expects the rates to go even higher.
“It’s been more than half a century since California took a hard look at whether or not its insurance laws are adequately protecting drivers,” said Craig Peters, president of Consumer Attorneys of California. “As a result, low-income and even middle-income crash victims are at risk of crippling debt when the cost of recovery is so much steeper than what the negligent drivers’ insurance will cover. The Senate Insurance committee’s support brings California one step close to making sure crash victims won’t have to pay the price for someone else’s negligence on the worst day of their lives.”
Frankly, the motoring public thinks it is unfair that the driver that caused your injuries and property damage does not have enough insurance at the state minimum to take care of reasonable costs after an accident. Many consumers are simply forced to “eat” the damages in excess of the minimum.
Of course, the trade off for adequate insurance is higher premiums. These increases have come at very difficult financial cross-roads for many California families fending off inflation from everything from gas to groceries. California already has the highest number of uninsured motorists in the country, estimated to be over 2,000,000. Again, make no mistake, this number will go up as a result of the higher premiums. So, while the minimum insurance is better, Californians will need uninsured motorist coverage more than ever. We are concerned that this will be lost among the higher limits roll out over the next two years.
So, if you are hit by someone with the new higher limits, you will benefit by getting your bills paid. However, if you are hit by an uninsured motorist who could not pay the increased premiums, you will still have to look to your own insurance company to pay for your uninsured motorist damages. Do not drop that coverage in 2025!
Although California personal injury law firms expect the number of “Uninsured” motorist cases to rise, we will also see a decrease in the number of “Underinsured” motorist claims. “Underinsured” is when the amount of your uninsured motorist limits is higher than the at fault driver’s liability limits. (Higher liability limits = fewer Underinsured motorists.)
Many groups opposed SB 1107, including some consumer groups that complained that rising premiums simply cannot be afforded by their constituents. Also, the insurance industry has blocked efforts to raise the minimum limits in California for decades. Remarkably, insurance companies did not want to sell more insurance! Rather, the insurers figured out how to “over sell” minimum liability policies and turn a nice profit. The insurers also benefitted form the cost savings of not having to adjust and handle large costly claims. If the case was significant, the insurer simply tendered the $15,000 minimum limit with virtually no administration costs.
By 2022, even the insurers realized that having the same limits as California had in 1974 was unsustainable in the long run and was not good for business. The backlash from injured consumers being routinely shortchanged after their accident was becoming palpable. The insurers were already not very popular!
Our office will lead the way in advising our family, friends, clients, and neighbors about purchasing adequate coverage as the new insurance and rates are rolled out. In the meantime, we will be here working to obtain the fairest settlements and highest car accident jury verdicts possible.