Auto Insurance
California has the nation’s biggest economy and highest cost of living, but auto insurance protection  has not kept pace. The state needs to update its 45-year-old Minimum Financial Responsibility Limits and coverage of uninsured and under-insured motorists.

Modernizing Minimum Financial Responsibility Limits
California’s minimum financial responsibility law was first mandated in 1974. At that time, the mandatory minimum was established as $15,000 for a single injury or death; $30,000 for injury to, or death of, more than one person; and $5,000 for property damage, in any one collision. This is precisely where it still stands today, 45 years later. For context, the average car today costs about $35,000. 

Our auto financial responsibility law was put in place to enforce personal responsibility. In other word, a driver must be capable of providing the compensation necessary to make an injured party whole after a collision, regardless of the size and scope of the collision. But our current minimum limits in California are dangerously low given the changed conditions since 1974. In reality, the concept that someone is “fully insured” does not exist. Many feel they are doing the right thing carrying the minimums, but in reality, have no understanding of the practical affect if they total someone else’s car or cause injury greater than their coverage limits.

California is among only three states with the lowest financial responsibility limits in the country. When an at-fault driver lacks proper insurance coverage, anyone they injure as well as health care providers and tax payers end up holding the bag.

Modernizing the minimum liability limits would provide all California residents with a much better level of protection.

An upward trend
Since 2007, more states are seeing a need to modernize their limits – Alabama, Illinois, Louisiana, Oregon, South Carolina, Texas, Maryland and Ohio have all modernized their limits. Other recent states include:

  • Connecticut (law passed in 2018)—Raised from 20/40/10 to 25/50/25
  • Delaware (law passed in 2017)—Raised from 15/30/10 to 25/50/10
  • Nevada (law passed in 2017)—Raised from 15/30/10 to 30/50/20
  • Indiana (law passed in 2018)—Raised from 25/50/10 to 25/50/25
  • Kansas (law passed in 2018)—Raised from 25/50/10 to 25/50/25

Consumer Attorneys are strong advocates for modernizing our current outdated limits. One of the main reasons for insurance coverage is to protect people who are involved in a collision, ensuring there are reasonable economic safeguards for those who are hurt. At such low levels, California's minimums clearly fail that test. Not being properly insured puts all Californian's at risk. 

Updating Uninsured and Under-insured Insurance
If you are injured in a collision caused by another driver, their insurance is supposed to protect you, your occupants and your property. Unfortunately, in many cases you could be put in financial jeopardy due to under-insured motorists. That means you could be left to cover hospital bills, doctor visits, surgeries, rehabilitation, lost wages, repairs to your vehicle and other costs even in an accident that was no your fault.

Despite laws that compel the purchase of auto insurance, many people choose to drive without it. According to the Insurance Research Council (IRC), nearly 13% of motorists, or about one in eight drivers, were uninsured in 2014. Even for drivers with the minimum limits, those limits often only cover the costs of minor injuries. That means a vast number of Californians will face accidents with uninsured or under-insured drivers.

Purchasing an uninsured policy (UM) protects you if you're in an accident with an at-fault driver who doesn't carry liability insurance. Under-insured (UIM) coverage steps in when you're in an accident with an at-fault driver whose liability limits are too low to cover the damage or medical expenses. These protections, however, often do not work as intended.

The term “under-insured” in everyday use means you have less insurance than you have losses – your house burns down, you have $200,000 in coverage but it will cost $250,000 to rebuild. Under-insured motorist coverage is not defined this way and is instead extremely limited and difficult for the average consumer to understand. For example, under-insured motorist coverage will only apply if your under-insured motorist policy is higher than the at-fault driver’s insurance. This means that if you sustain a $50,000 injury and have $30,000 in under-insured coverage and the at-fault driver also has $30,000 you will only receive $30,000 from the at fault driver and cannot collect from your under-insured policy.

Current law was intended to allow consumers to protect themselves from at-fault drivers with minimum or no coverage. The final product instead is not consistent with reasonable consumer expectations and has so many twists and turns that on balance it does not provide the protection that the California motoring public deserves.