Inflation, poor driving habits, increased road fatalities — these are just a few reasons Californians have seen auto insurance rate increases throughout the past couple of years. In 2023, residents saw more than $1 billion in rate increases — an average of $71 to $167 per policyholder — when California Insurance Commissioner Ricardo Lara approved the top six auto insurers to increase their rates in the state.
The increases don’t appear to be over.
“New California law requires an increase in the minimum limits of motor vehicle liability insurance coverage for any private passenger autos, commercial business or recreational vehicles. The law, Senate Bill 1107, goes into effect on January 1, 2025,” says Janet Ruiz, Insurance Information Institute’s director of strategic communications.
Learn more about what the requirements detail and why they’re changing, how they differ from the old requirements and how this impacts your auto policy and pocketbook.
- California auto insurance liability minimums are more than doubling — to $30,000, $60,000 and $15,000 — for the first time in 57 years.
- The increase aims to provide additional financial protections for drivers and cover road-incident cost spikes across the state.
- Drivers could see a rate increase with the new limits. Reviewing current California auto insurance policy coverages could prove cost-effective.
What are the new minimum liability requirements in California?
California is raising its auto insurance minimum liability requirements for the first time since 1967. Approved in late 2022, Senate Bill 1107 requires California drivers to carry new minimum liability requirements starting Jan. 1, 2025. This new bill increases liability insurance coverage for individual and commercial drivers in California and requires drivers to maintain:
- $30,000 for bodily injury or death of one person
- $60,000 for bodily injury or death of all persons in one accident
- $15,000 for damage to the property of others as a result of any one accident
Existing law states that California drivers must have “proof of financial responsibility,” also known as proof of insurance coverage, and maintain at least liability insurance with coverage limits of 15/30/5. The current requirement covers:
- $15,000 for bodily injury or death of one person
- $30,000 for bodily injury or death of all persons in one accident
- $5,000 for damage to the property of others resulting from any one accident
According to a State Farm report, this change aims to provide additional protections for California drivers and to cover the increase in accident claims, repairs and medical costs that have risen significantly since the last increase.
How the new insurance requirements will impact policyholders
The new California auto insurance minimums will likely impact premiums. While drivers won’t need to do anything to their current liability coverage policy — minimums will increase automatically on January 1 — policyholders should contact their insurer to see how their rates could be impacted.
In general, if you’re currently carrying a policy with minimum limits of 15/30/5, your limits will increase in the new year and you could see an increase in your insurance rates.
“We recommend auto owners who have lower liability limits on their auto insurance contact their insurance agent to ask for a quote to find out how much their premium will be impacted,” Ruiz says. “Auto insurance policyholders who already carry the new limits of liability or higher limits will not see changes in the policy limits unless they request them through their current insurance company.”
Additionally, drivers must continue to carry evidence of financial responsibility in their vehicle at all times and provide it in these instances:
- Involvement in a moving violation or accident
- Law enforcement has requested it
- Vehicle registration renewal
Learn more about how much car insurance costs in California
Reasons behind California’s new insurance laws
While the pandemic ended in 2021, its impact could be felt in the U.S. auto industry over the past several years. From inflation of auto parts and repairs to shortages of supplies and newer vehicles, recovering from the pandemic’s halts in production has been a slow rebound.
California’s new auto liability limit requirements aim to help provide additional coverage for accident-related medical expenses and vehicle repairs and offset some current-day inflation costs.
In California, similar to other states nationwide, poor driving behaviors have increased — ranging from upticks in distracted driving and reckless driving to fatalities and hit and runs — spiking auto insurance claims and litigation cases.
California Governor Newsom and the California State Legislature approved the Protect California Drivers Act in 2022, including SB 1107, to increase the minimum liability requirement and ensure drivers are protected and properly cared for during and after a car accident. The goal of this increase is to provide
- Increased financial protection against collisions
- Reduce out-of-pocket injury expenses
- Provide additional protection for damage coverages
Ruiz says that implementing changes required by a new law can take months: “While the law is going into effect now, the process to implement these changes was set in motion in 2022 after the law was passed.”
Check out if your state is raising auto insurance rates in 2025
Prepare for the changes in auto insurance limits
While the California minimum liability limits will automatically update come the first of the new year, you can start to prepare for the changes now. Since this will impact drivers with liability insurance coverage, it may be a good time to review your current insurance policy and determine what changes you need to make.
Additionally, it’s a good time to discuss what other options are available to save money on your policy. Take a look at some ways you can prepare for the 2025 limit increases in California.
Tips for reviewing and adjusting insurance policies
It’s important to understand what coverages you currently have before considering what changes you may need. If it’s been some time since you’ve reviewed your policy, the following tips can help you refamiliarize yourself with your coverages.
- Read the declarations page. Your insurance policy was created to provide specific coverage based on your needs, including who and what is insured, your limits and any additional add-ons you approved. Read through to understand what your insurance currently includes and how much you pay for your policy.
- Review your coverage limits. Your insurance policy includes coverage limits — the highest amount your insurer will pay for a claim. After you’ve reached your limits, you will owe out-of-pocket for any remaining expenses. Review your coverage limits thinking through what you can afford out-of-pocket with your current limits and after the upcoming minimum limit increases.
- Understand the different coverage types. Often when selecting car insurance coverage, drivers opt for what is most affordable and what is required. This may save you monthly, but it could cost you more out-of-pocket should an accident occur. Learn more about the various coverages available to ensure you make the best choice for your needs and budget.
- Liability coverage: Also known as state minimum insurance, liability coverage protects you from financial loss if you’re in an accident by covering the other driver’s damages and injuries. Under this coverage, drivers are protected by bodily injury liability and property damage liability, which includes medical and funeral expenses, legal defense and property damage to cars or structures.
- Collision coverage: If you’ve been involved in an accident, collision coverage kicks in to pay for repairs, replacements or other damages regardless of fault. This type of coverage applies to collision damages incurred by other vehicles or objects, such as sliding on ice and colliding with a structure.
- Comprehensive coverage: There are other incidents where your vehicle may need additional insurance coverage, which is where comprehensive protections come in. This includes fire, theft, vandalism, weather-related damage and animal strikes.
Once you’ve reviewed your current policy and coverages, you’re ready to begin to compare your coverages. It’s a good idea to prepare to talk to insurers about the upcoming changes and how they would impact your current premiums.
Want to know more? Learn how legislation affects your wallet: 2024 auto insurance changes for 2025
How can you save money and get the best coverage
There are several ways you can save money on car insurance and get the best coverage for your budget.
While car insurance continued to climb in 2024 — the consumer-price index for auto insurance was up 16.5% year-over-year, according to the U.S. Bureau of Labor Statistics — the cheapest car insurance isn’t always the best option.
“All existing policies with lower limits will renew at the new minimum limits on or after January 1, 2025, as mandated,” Ruiz says. “However, it may be a good time to reach out to your insurance agent to review all your coverages and potential discounts.”
Some of the following saving strategies could help you not only cut costs but also improve your policy offerings and coverage. Several savings possibilities include:
- Bundle your auto, home and life policies
- Discuss what discounts you qualify for
- Enroll in driving monitoring programs
- Increase your deductible
- Shop around for auto quotes and compare insurers
- Remove any coverages you don’t need
The bottom line
As part of the 2022 Protect California Drivers Act, California state minimum liability limits were approved to be increased to help provide additional financial coverage for drivers should they be involved in a collision or serious car accident. The state has seen a significant uptick in accidents, claims and litigation since the pandemic and aims to reduce related auto insurance costs through this increase.
While the 30/60/15 limit increase is automatic as of Jan. 1, 2025, California drivers should contact their car insurer to discuss how this impacts their premium and discuss their options and available options to ensure they are getting the best rate for their budget.
Why is California car insurance so expensive?
Frequently ask questions
Is this new requirement going to affect my current insurance policy?
The 2025 limit increases will impact the minimum liability coverage and these drivers’ policies will see increases; however, how much this may affect your current insurance policy depends on the types of coverage you’ve elected. This is a good time to discuss with your insurer how this change impacts your policy and what updates should be made to include discounts and other cost-saving options.
How can I avoid higher premiums?
If you haven’t reviewed your coverage options, policy details and potential discounts, now is a good time to do so. By understanding what your premiums include, you can begin to shop around and compare rates to avoid higher car insurance costs.
It’s advisable to discuss higher deductibles, discounts and full coverage options to learn how costs compare, as well as what options are available to you to lower your overall premium cost for liability-only insurance. The best way to avoid a higher premium is to discuss all your options to find the best one for your budget.
What happens if I don’t comply with the new requirements?
All California drivers must carry current car insurance with the state minimum liability limits, increasing to $30,000, $60,000 and $15,000 at the start of the new year. Since the new requirements automatically update for all policyholders on January 1, you’ll be in compliance without having to do anything.
However, if you currently do not have car insurance coverage or do not renew your policy in 2025, violating your car insurance coverage can lead to tickets, fines and potential suspension of your vehicle registration. If you continue to not carry insurance despite a first-time offense notification, you could have your license suspended and your vehicle impounded, according to the CA DMV.
Methodology & Resources
Sources
- California Legislative Information. “Senate Bill No. 1107.” Accessed December 2024.
- California Legislative Information. “Today’s Law As Amended – SB-1107 Vehicles: insurance.” Accessed December 2024.
- California Department of Motor Vehicles. “Financial responsibility (insurance) requirements for vehicle registration.” December 2024.
- Consumer Watchdog. “Commissioner Lara approves over a $1 billion in unjustified auto insurance rate hikes.” Accessed December 2024.
- U.S. Bureau of Labor Statistics. “Consumer Price Index Summary.” Accessed December 2024.
- West Coast Trial Lawyers. “California’s new auto insurance limits.” Accessed December 2024.
- California Department of Insurance. “Auto insurance.” Accessed December 2024.
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