The truth about minimum coverage requirements in California

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In this article, CheapInsurance.com dives into required minimum liability limits in California and across the country. Those shopping for valid coverage, particularly in the context of financing or leasing a vehicle, should also note why simply meeting the minimum may be risky.

What “Minimum Liability Coverage” Means and Why It Exists

Every U.S. state, with one exception, requires drivers to carry a minimum level of auto insurance to legally operate a vehicle.

Liability coverage is designed to protect other people and their property when the insured driver is at fault in an accident. Specifically, it includes two main components:

• Bodily Injury (BI) Liability: This is the amount the insurer will pay for others’ medical expenses, lost wages, or legal claims when the insured driver injures someone.
• Property Damage (PD) Liability: This is the amount the insurer pays for damage to someone else’s vehicle or property when the insured driver is at fault.

These limits are typically expressed as a set of numbers, such as 25/50/25. This format means $25,000 per person for injury, up to $50,000 per accident for injury to all persons, and $25,000 for property damage.

In California, the minimum bodily injury liability is $30,000 per person and $60,000 per accident, with property damage liability at $15,000.

States mandate these minimum coverage levels to ensure that victims of accidents have some source of compensation and that drivers assume financial responsibility, preventing others from having to absorb the cost of the damages.

Why You Might Need Coverage Beyond the Minimum

Meeting the legal minimum protects one legally, but often fails to provide adequate financial protection or ensure a smooth auto insurance experience. Insurance experts frequently recommend consumers consider higher limits or additional coverage for several common financial and risk management reasons:

When a vehicle is financed or leased

When financing or leasing a vehicle, the lender or lessor usually requires the driver to maintain not only liability coverage but also full coverage, which includes collision and comprehensive insurance, to protect their investment. Furthermore, if a driver causes an accident and the costs for repairs or negligence exceed their liability limits, the lender or other parties could pursue them for the difference. Choosing only minimum limits frequently leaves a driver underinsured.

When other valuable assets are owned

For individuals who own assets such as a home, savings, investments, or other personal property, a lawsuit resulting from a serious car accident could easily exceed minimum liability limits. This exposure creates a significant risk to personal assets. Opting for a higher liability limit helps shield and protect those valuable possessions.

When protection from uninsured or underinsured drivers is desired

Many states’ minimum liability coverages do not include, or only minimally include, uninsured or underinsured motorist (UM/UIM) coverage. This coverage is essential because it protects the insured if another person causes a crash and does not carry enough insurance to cover the damages. Adding higher limits or optional coverages significantly increases the margin of financial safety.

When repair and replacement costs are high

Modern vehicles often cost substantially more to repair than the property damage liability minimums established in many states. Similarly, medical costs continue to rise. Minimum limits may not adequately cover a multi-vehicle accident or a more serious injury, leaving the driver responsible for substantial out-of-pocket expenses.

How to Interpret and Use These Minimums

Always check a state’s required minimum. For the most accurate and current data, one can consult state Departments of Insurance or regulatory guides, such as those from the National Association of Insurance Commissioners (NAIC).

• Understand the three number format: Coverage limits are presented as “per person/per accident/property damage.”
• Minimum coverage is legal, not always safe: Recognizing that meeting the minimum is legally valid, it may not be the safest choice financially.
• Interstate driving considerations: Policy coverage must meet the registered state’s requirements; if driving in a state with higher minimums, the insurer may need to adjust accordingly.
• Cost of increased limits: When shopping for an upgrade on liability limits, ask an agent about the additional cost, as often the incremental cost is modest.

Determining adequate coverage

The legal minimum liability coverage is the baseline. CheapInsurance.com recommends evaluating assets, vehicle value, and risk exposure to determine if coverage should exceed the minimum.

If a vehicle is financed or leased, or if significant assets exist (home, savings, investments), it is wise to consider coverage well above the state minimum.

When shopping for the next car insurance policy or comparing quotes, do not simply stop at “meets the minimum.” Explore liability limits, optional coverages, uninsured or underinsured motorist protection, and whether the policy covers more than the basics

Note: Always confirm with your state’s current regulatory source or your insurance agent, as limits may change.

• Alabama – 25/50/25
• Alaska – 50/100/25
• Arizona – 25/50/15
• Arkansas – 25/50/25
• California – 30/60/15
• Colorado – 25/50/15
• Connecticut – 25/50/25
• Delaware – 25/50/10
• Florida – (Property damage only) 10/20/10
• Georgia – 25/50/25
• Hawai’i – 20/40/10
• Idaho – 25/50/15
• Illinois – 25/50/20
• Indiana – 25/50/25
• Iowa – 20/40/15
• Kansas – 25/50/25
• Kentucky – 25/50/25
• Louisiana – 15/30/25
• Maine – 50/100/25
• Maryland – 30/60/15
• Massachusetts – 25/50/30
• Michigan – 50/100/10
• Minnesota – 30/60/10
• Mississippi – 25/50/25
• Missouri – 25/50/25
• Montana – 25/50/20
• Nebraska – 25/50/25
• Nevada – 25/50/20
• New Hampshire – 25/50/25 (or proof of financial responsibility)
• New Jersey – 25/50/25
• New Mexico – 25/50/10
• New York – 25/50/10
• North Carolina – 50/100/50
• North Dakota – 25/50/25
• Ohio – 25/50/25
• Oklahoma – 25/50/25
• Oregon – 25/50/20
• Pennsylvania – 15/30/5
• Rhode Island – 25/50/25
• South Carolina – 25/50/25
• South Dakota – 25/50/25
• Tennessee – 25/50/25
• Texas – 30/60/25
• Utah – 25/65/15
• Vermont – 25/50/10
• Virginia – 50/100/25
• Washington – 25/50/10
• West Virginia – 25/50/25
• Wisconsin – 25/50/10
• Wyoming – 25/50/20

Note: Always confirm with your state’s current regulatory source or your insurance agent, as limits may change.

• The legal minimum liability coverage represents only the most basic requirement. Every driver should thoroughly evaluate their total assets, vehicle value, and personal risk exposure to determine the appropriate liability limits.
• For drivers financing or leasing a vehicle, or those with significant assets such as a home, savings, or investments, securing coverage well above the state minimum is a prudent financial decision.
• When shopping for a new car insurance policy or comparing quotes, avoid simply settling for the “meets the minimum” option. Instead, explore higher liability limits, valuable optional coverages, and adequate uninsured or underinsured motorist protection.
• Use this article as a foundational reference for understanding state minimums, but always check with a licensed insurance agent or the state Department of Insurance for the most current and specific requirements.

This story was produced by CheapInsurance.com and reviewed and distributed by Stacker.