Why California Decided to Increase Minimum Liability Coverage Limits
California recently passed a law that increased minimum liability insurance coverage limits, effectively increasing the total amount of insurance coverage the average driver is required to have. But what are the ramifications of this decision? Why was it implemented? And what can you do about it?
The Basics
Recently, California increased its minimum personal injury liability coverage limits.
But what exactly does that mean?
As you’re likely aware, every driver in the state of California is required to have car insurance. But car insurance itself is typically a composite of many different forms of coverage, stitched together in a singular, cohesive policy. For example, your policy will likely cover a certain amount of property damage and a certain amount of damages that arise as a result of being in a collision with an uninsured motorist.
One of the most important types of coverage you’re required to have is personal injury liability coverage. Essentially, this form of insurance seeks to cover you for any personal injury damages you’re responsible for compensating if you’re ever responsible for an auto accident. If you hurt someone as a result of negligent driving, you’ll be legally responsible for reimbursing them for any damages they sustained, such as compensating them for medical bills, the costs of prescription medications, lost wages, and even their pain and suffering.
You can get about as much personal injury liability coverage as you want, but as the coverage level increases, so do the premiums. California, like most states, has a minimum coverage figure in place to guarantee that all drivers on the road have insurance to cover any injuries they might be responsible for.
Recently, California increased this minimum. Accordingly, every driver in the state of California is now required to have more insurance coverage to legally drive on the road.
Is This a Good Thing or a Bad Thing?
So is this a good or a bad thing for Californian motorists?
As you might imagine, there are some good and bad consequences here. Let’s start with the good.
· More coverage. First, more insurance coverage isn’t exactly a bad thing. If you’re injured in a car accident and you suffer $250,000 of damages, but the driver’s insurance policy only covers $200,000 of damages, you might not get the full compensation you deserve.
· Bigger safety nets for victims. This move also creates bigger safety nets for victims of car accidents. You’ll typically be in a better position to negotiate for the full amount of damages you sustained.
· Pace with inflation. Inflation rates have been high lately. The cost of everything is going up. Accordingly, it only makes sense that minimum liability insurance coverage requirements should also go up.
So what are the bad things?
· Higher insurance costs. The obvious drawback here is that the cost of average auto insurance premiums is going to go up. Greater coverage doesn’t come from nowhere, and insurance companies must increase prices to continue making money.
· Fewer choices. Previously, drivers had the option to choose a greater level of coverage if they wanted. Now, motorists have fewer choices available to them.
· Ripples in the insurance industry. Keeping up with changing legislation costs both time and money. Accordingly, increased complexity can create ripples in the insurance industry, leading to a host of downstream, chaotic consequences.
What Should You Do?
So what should you do in this new landscape?
· Understand the new rules. First, do everything you can to understand the new rules. Too many motorists are driving around with insurance policies that they don’t fully understand, trying to comply with laws that they also don’t understand. It’s complex territory, but you owe it to yourself to try and navigate it.
· Look at your policy. This is a great time to look at your policy and review its details. Are you confident you have ample coverage for everything you need? Do you have more coverage than you really require?
· Consider shopping around. Different insurance companies offer different rates and terms. If you’re not happy with your premiums going up, this might be a good opportunity to shop around and see if you can find a better policy for your needs.
· Rely on legal advice when necessary. Car accident and insurance matters get complicated fast, so don’t be afraid to get legal advice when necessary. If you’re ever involved in a car accident, calling a lawyer should be your top priority after getting the medical help you need.
Although this change is relatively minor, it might have a big effect on how we shop for insurance, pursue car insurance claims, and deal with car accidents in general. Hopefully, you’ll never need to tap into your car insurance policy, but it pays to be aware of these nuances.
