Insurance policies include insurance limits. This part is important when it comes to processing claims. The limits of your policy affects the settlement of the aggrieved party.
It is important to regularly check your insurance policy to ensure that you are aware of the limitations. This leads to the question, what if you’re underinsured?
This blog explains the role that California insurance limits play in vehicle accident cases. Also, it will tackle the recent increase mandated in California Senate Bill 1107.
California Insurance Limits Increased
This January 1, 2025, policy limits in California increased. The change was brought about by medical treatments and vehicle repairs continuously becoming more expensive.
Governor Newsom signed the Senate Bill 1107 or Protect California Drivers Act on September 28, 2022. At that time, this law was supposed to raise the state’s auto liability limits that were the 47th lowest in the country. Additionally, it wasn’t updated for almost 50 years.
However, the economic inflation pushed lawmakers to increase the limits from 15/3/5 to 30/60//15.
Minimum Liability Requirements for California Insurance Limits
A liability insurance coverage protects other drivers from bodily harm that they might sustain from a vehicular accident. These minimums are often expressed as numbers. For example, 15/3/5 or 30/60/15.
Specifically, the first number stands for the amount that will be covered for each person’s bodily injury. The second digit stands for the total coverage amount per incident. Lastly, the third number represents the covered amount for property damage.
Therefore, these numbers represent the least amount of insurance coverage that a driver should have in California.
A clearer breakdown of this is:
- $30,000 coverage for bodily injury or death per individual
- $60,000 total coverage for bodily injury or death per accident
- $15,000 coverage for property damage per accident
Do policy limits include car protection?
Insurance policy coverage does not include protection for vehicles. Hence, some vehicle owners prefer to get insurance add-ons that specifically provide collision coverages.
Collision coverage helps pay for repairs to your vehicle if it’s damaged in an accident, whether you hit another car, a wall, or object. On the other hand, comprehensive coverage protects against non-collision incidents beyond your control, such as theft, vandalism, weather-related damage, or animal-related incidents.
What Happens if You’re Underinsured?
Being underinsured means that your insurance coverage is not enough to fully cover the damages and costs resulting from an accident. If you’re at fault in a collision, your policy will only pay up to the limits of your coverage. Anything beyond that becomes your financial responsibility.
For example, if your insurance covers $30,000 in bodily injury per person, but the injured party’s medical expenses total $50,000, you may have to pay the remaining $20,000 out of pocket. Similarly, if your property damage limit is $15,000 but the repair costs exceed that amount, you’ll be liable for the difference.
Underinsured drivers may face legal consequences, financial strain, and potential lawsuits from injured parties seeking compensation. This is why it’s crucial to review your policy limits and consider additional coverage, such as underinsured motorist coverage (UIM), to protect yourself from unexpected expenses.
Scheduled Increase in California Insurance Limits
The additional increase mandated under SB 1107 will be in effect for 10 years. Consequently, the next hike in amounts will happen in 2035. By then, the minimum liability requirements will become 50/100/25.
The revised minimum liability coverage limits will be:
- Bodily Injury or Death (Per Person): The minimum requirement will rise by $20,000, totaling $50,000.
- Bodily Injury or Death (Per Accident): The minimum coverage will increase by $40,000, reaching $100,000.
- Property Damage: The minimum requirement will go up by $10,000, setting the new total at $25,000.
What You Should Know
With the passing of Senate Bill 1107, California has significantly increased its minimum auto insurance liability limits for the first time in nearly 50 years. Effective January 1, 2025, these changes aim to address rising medical and repair costs. If you’re underinsured, you could be financially responsible for damages exceeding your policy limits, potentially leading to legal and financial consequences. To stay protected, review your policy and consider additional coverage, such as underinsured motorist coverage (UIM), to safeguard against unexpected expenses.
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