Navigating Rising Auto Liability Limits: Impacts on Consumers and Insurers

Understanding the New Auto Liability Limits

Recent legislative changes in California and New Jersey have increased the minimum auto liability coverage requirements, aiming to better protect consumers from rising medical and repair costs. In California, the minimum liability coverage has been raised to $30,000 per single injury or death, $60,000 per accident, and $15,000 for property damage. Similarly, New Jersey's new law increases the limits in two phases, ultimately reaching $35,000 per injury and $70,000 per accident by 2026.

Potential Consequences for Consumers and Insurers

While these changes are intended to enhance protection, they may lead to increased premiums, potentially causing price-sensitive consumers to drop their coverage. According to the Insurance Council of New Jersey, approximately 1.36 million drivers in the state could face an annual premium increase of $130. In California, where the uninsured motorist rate is already high, experts fear that affordability issues could exacerbate this problem.

Strategies for Consumers and Insurers

Insurers are adapting by reprogramming their systems and preparing for new product filings. For consumers, shopping around for the best policy that fits their budget is crucial. Strategies to save on insurance costs include choosing higher deductibles, bundling home and auto insurance, and considering dropping comprehensive or collision insurance on older cars with low value.