Beginning Jan. 1, 2025, California drivers will face higher minimum liability insurance requirements due to the enactment of Senate Bill 1107, the Protect California Drivers Act.
The law doubles previous liability limits.
According to the bill, vehicle owners are required to maintain “$30,000 for bodily injury or death of one person, $60,000 for bodily injury or death of all persons, and $15,000 for damage to the property of others as a result of any one accident."
While the law is intended to help accident victims by covering medical and repair costs, it also raises concerns about its impact on California’s legal environment and auto insurance market.
Experts warn that these changes could affect lower-income and younger drivers, who are more likely to bear the burden of higher premiums, and contribute to an increase in uninsured drivers.
The increase in insurance coverage comes at a time when car insurance premiums in California have already risen more than 50% in the past two years.
With the average annual premium now exceeding $2,500, the new law is expected to raise rates further, particularly for drivers with minimum coverage policies.
The law’s implementation could also have significant effects on California’s legal landscape.
California is known for high numbers of auto-accident cases, which account for more than 35% of the state’s record-setting verdicts.
According to the American Agents Alliance, the higher liability limits could lead plaintiffs' attorneys to pursue lawsuits more aggressively.
“[T]he higher limits could have a ripple effect in the legal realm,” American Agents Alliance reported. “With more coverage available, there may be a financial incentive for plaintiffs’ attorneys to pursue lawsuits more aggressively. This could lead to more frequent litigation following car accidents, placing additional pressure on insurance providers and the court system alike.”
The legal environment in California has been influenced by the power of plaintiffs' firms.
Since 2017, the state’s top 20 plaintiffs' firms have donated more than $15.5 million to political campaigns.
This political influence has contributed to an environment where new theories of liability are frequently tested in court, increasing litigation and, in turn, insurance rates.
The law originates from 2022, when Gov. Gavin Newsom signed Senate Bill 1107. Although the law was passed in 2022, it will not take effect until Jan. 1, 2025.
Newsom received more than $1.8 million in campaign contributions from trial lawyers over the past six years, making him the largest beneficiary of such donations in the state.
The contributions, which included more than $1 million from 20 law firms, supported his re-election efforts and helped defeat the 2022 gubernatorial recall.