California drivers: Important changes are coming in the new year.
Following years of static car insurance limits, California’s Senate Bill 1107 — set to take effect Jan. 1, 2025 — will require an increase in California car insurance minimum insurance coverage for all vehicles. This includes personal vehicles as well as those used for commercial purposes that aren’t managed by the Public Utilities Commission, such as ride-hailing and delivery services like Uber and Lyft, and private transportation providers including charter buses and limousines.
Drivers can expect their insurance premiums to rise as well if their coverage amounts need to be increased to comply with the 2025 minimums. Car insurance carriers have told Jerry that the new law will come with a rate increase of 20% to 50% for drivers.
California’s new liability minimums
Currently, California requires all car insurance policies in the state to carry liability insurance with minimum coverage amounts of $15,000/$30,000/$5,000. Starting next year, the minimums will be $30,000/$60,000/$15,000.
This means a standard auto insurance policy for a California driver will have these built-in minimum coverages:
- $30,000 for bodily injury per person.
- $60,000 for bodily injury of all persons (meaning per accident).
- $15,000 for property damage per accident.
Technically, California law allows drivers to skip traditional car insurance by demonstrating financial responsibility in other ways. These options include depositing cash with the Department of Motor Vehicles (DMV), obtaining a self-insurance certificate from the DMV or acquiring a surety bond from a licensed California company. The minimum amount required will increase from $35,000 to $75,000 in 2025.
Will CLCA be impacted?
No, the California Low Cost Auto (CLCA) insurance program’s limits will not change.
The program, designed to provide basic coverage for those who cannot afford higher premiums, helps make insurance affordable for income-eligible California residents.
CLCA coverage levels will remain:
- $10,000 for bodily injury per person.
- $20,000 for bodily injury per accident.
- $3,000 for property damage per accident.
How will this affect me?
Starting Jan. 1, all new insurance policies will automatically include the higher coverage minimums. If your current 15/30/5 policy renews after that date, it will be updated to the new minimums at renewal time later in 2025. Until then, you can continue driving with your existing policy.
Drivers should expect their monthly premium to rise upon renewal if their coverage amounts increase to comply with the new law. Several car insurance carriers have informed Jerry that the new minimums will come with a premium rate hike of 20% to 50% for drivers.
Make sure you understand your current coverage amounts and what they mean. Depending on your policy, you may need to increase your coverage to comply with the new law when your car insurance renews. You may consider renewing your policy early to increase your coverage limits and better protect yourself in case of an accident.
What are the benefits of higher liability limits?
Higher liability limits reduce financial risk for drivers and bring more peace of mind. These changes will help California drivers cover at-fault accident costs with less financial strain, particularly as the costs of medical care and car repairs continue to rise.
The costs of car repairs are steadily climbing, due in large part to inflation, labor shortages, the complexity of modern vehicles and supply chain disruption.
While the new law raises the bar, many drivers may still seek even higher coverage limits for greater financial security. The state minimum coverage may not be enough to provide adequate protection in case of an accident.
Does liability coverage protect my car?
Liability coverage protects you financially, but it doesn’t protect your car. It covers the costs of damage or injuries to other people or their property in an accident that you cause, including medical bills, lost wages and legal fees.
To protect yourself and your car from extensive medical or repair costs, you’ll need to purchase additional coverage like collision, comprehensive, and MedPay or Personal Injury Protection (PIP).
As insurance premiums rise, more people may drive illegally without insurance. Approximately 17% of California drivers are currently uninsured, exceeding the national average of 14%, according to 2022 data from the Insurance Information Institute. This means you’re more likely to be involved in an accident with an at-fault uninsured driver in California than in other places. In these scenarios, if the at-fault driver’s insurance is insufficient (or nonexistent) to cover your losses, you’ll be on the hook to pay out of your own pocket.
To safeguard yourself financially from these situations, consider adding Uninsured Motorist (UM) / Underinsured Motorist (UIM) coverage to your policy. This way, you are covered even if the at-fault party cannot pay you.
Do I need to do anything?
No action is necessary.
If you’re happy with your current 15/30/5 coverage and the rate, it might be more cost-effective to stick with your current insurer until your policy renewal. However, if you’re open to exploring other options and potentially saving money, shopping around on the Jerry app before the end of the year could be beneficial.
As mandated, existing policies with lower coverage amounts will automatically renew at the new minimums in 2025.
