What California’s New, Higher Liability Limits Mean for Auto Premiums

Higher required insurance minimums could route more drivers to the state’s low-cost insurance program.

Julia Taliesin
Written byJulia Taliesin
Julia Taliesin
Julia TaliesinInsurance Content Writer

Julia Taliesin is an insurance content writer at Insurify. She began her career as a journalist, covering local government and business in Somerville, Mass.

Chris Schafer
Edited byChris Schafer
Chris Schafer
Chris SchaferSenior Editor
  • 15+ years in content creation

  • 7+ years in business and financial services content

Chris is a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more.

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John Leach
Reviewed byJohn Leach
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John LeachSenior Insurance Copy Editor
  • Licensed property and casualty insurance agent

  • 8+ years editing experience

John leads Insurify’s copy desk, helping ensure the accuracy and readability of Insurify’s content. He’s a licensed agent specializing in home and car insurance topics.

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Published December 17, 2024 at 4:00 PM PST | Reading time: 2 minutes

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California’s auto insurance costs have climbed steadily over the past few years and could increase even more in 2025, when the state’s higher liability insurance requirements begin.

The Golden State is more than doubling its mandatory liability limits starting Jan. 1, 2025. Previously, California was among the five states with the lowest requirements. The need to keep pace with higher vehicle repair and medical costs likely prompted California to increase its car insurance requirements, Mark Friedlander, director of corporate communications for the Insurance Information Institute (Triple-I), told Insurify.

The new limits take effect in January and will impact new and renewing policies.

How this could affect auto policyholders

State insurance regulators expect the price of car insurance to increase because of the new mandatory limits. But the exact increases remain unknown.

California’s auto rates are already above the national average, according to Insurify’s auto insurance report. Drivers in California pay an average of $287 per month for a full-coverage policy and $140 per month for a liability-only policy.

The national monthly averages are $204 for full coverage and $104 for liability-only coverage.

These potential new rate increases mark a blow for consumers in a state where insurance rates were already rising rapidly. Insurify data analysts predicted a 54% increase in California car insurance rates in 2024, and rates had already increased 45% by June.

“The increases that have occurred have been largely driven by a continuation of people driving more, resulting in an increasing frequency of claims and inflationary pressures related to vehicle prices and repairs,” Gabriel Sanchez, a spokesperson for the California Department of Insurance, told the Los Angeles Times in August.

Low-income driver program could spike in popularity because of new requirements

As premiums on standard policies increase, state regulators expect lower-income drivers to search for alternatives. California’s Low Cost Auto Insurance program (CLCA) could become “the only viable option,” the state insurance department wrote in a July news release.

The CLCA’s coverage limits are lower than California’s standard liability requirements. With the state’s new, higher limits, drivers with CLCA policies will carry liability coverage that’s a third or less of the state’s standard coverage.

CLCA coverage requirements will remain at their current levels. California drivers can qualify for the CLCA program by having a valid license, meeting income requirements, owning a vehicle valued at less than $25,000, and having a good driving record

Here’s how the CLCA coverage limits compare to California’s current and updated standard liability limits.

What’s next? Consumers search for affordable options

Since experts expect California’s increased liability requirements to influence premiums, drivers across the board may start to feel the squeeze in the new year.

For consumers looking for lower rates and better coverage options, Triple-I’s top two recommendations for lowering auto insurance costs are to shop around and compare at least three quotes before settling on a new insurer. Triple-I also recommends bundling insurance policies, taking advantage of discounts, and reducing optional insurance on older cars.

Julia Taliesin
Julia TaliesinInsurance Content Writer

Julia Taliesin is an insurance content writer at Insurify. She began her career as a journalist, covering local government and business in Somerville, Mass. She reported multiple investigative stories about municipal finances and budget allocation, building development and inspection, and personnel. When the pandemic began she became a de facto public health reporter, writing daily and weekly reports using available data to quickly communicate rates of infection and city response.

She's worked for print and digital outlets, writing everything from quick-hit breaking news to long-form community features. More recently, Julia managed content strategy at a startup creating a social platform for licensed nurses, overseeing a team of nurse freelancers and editing interview transcripts and news articles for publication.

She holds a Bachelor's degree in communications from Simmons University, with a focus in journalism. Outside of work, Julia enjoys working on crafting projects, learning about homesteading, and singing in cover bands.

Chris Schafer
Edited byChris SchaferSenior Editor
Chris Schafer
Chris SchaferSenior Editor
  • 15+ years in content creation

  • 7+ years in business and financial services content

Chris is a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more.

Featured in

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John Leach
Reviewed byJohn LeachSenior Insurance Copy Editor
Photo of an Insurify author
John LeachSenior Insurance Copy Editor
  • Licensed property and casualty insurance agent

  • 8+ years editing experience

John leads Insurify’s copy desk, helping ensure the accuracy and readability of Insurify’s content. He’s a licensed agent specializing in home and car insurance topics.

Featured in

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