Understanding the 2025 California Auto Insurance Rate Increase

On Jan. 1, 2025, a new law went into effect in California, which may cause some California drivers to see another increase in their car insurance premiums. However, this time it isn’t just due to the normal ebb and flow of rising insurance costs. For the first time in 50 years, California’s legislature passed a new law requiring the minimum liability limits to go up with Senate Bill 1107.

Now that the rates have increased, some drivers may see an increase of up to 54% in their premium. This will have a large impact on drivers with non-standard insurance and may increase California’s already large population of uninsured drivers to more than 4.7 million. To help combat these increases, Cost-U-Less Insurance offers affordable insurance and bilingual agents who can help drivers compare insurance quotes to get the best rates.

Keep reading for a breakdown on how and why California’s auto coverage rates will change now that 2025 is here.

Revving Up for Change: California’s 2025 Insurance Shift

For many years, California minimum liability limits have been woefully inadequate. As repair and medical costs have steadily increased over the years, the liability limits in California have not kept up. Before this change, the minimum limits have been:

• $15,000 for injury or death to one person
• $30,000 for injury or death to more than one person
• $5,000 for property damage

This means drivers who only carry the minimum required and cause a bad accident will only have those amounts from their insurance companies to help pay for other people’s damages and injuries. Just the property damage liability at $5,000 is almost funny, when you think about what today’s repairs cost. The new levels will bring the minimum up to a level more in line with today’s costs. They are:

• $30,000 for injury or death to one person
• $60,000 for injury or death to more than one person
• $15,000 for property damage

Insurance premiums will go up to reflect these new limits.

Under the Hood: Why CA Insurance Rates Are Accelerating

Over the years, California’s low minimums have caused drivers to reach into their own pockets in order to pay for damages and injuries above the state-required levels. This move is intended to help people pay for the damage they cause when they are at fault for an accident.

In addition, this state shares many common factors with other states that cause rates to increase, even without a minimum level increase, including:

• Climate change: This phenomenon is causing insurance claims to rapidly increase in certain parts of the country, including California where wildfires and flooding have caused insurers to raise their prices.
• Automobile crime: California, along with other states, has seen an uptick in car theft. These statistics compel insurers to raise their rates to compensate for the risks.
• Inflation: The cost of vehicle maintenance and repair have risen by more than 6.5% in 2023, according to Consumer Affairs. People are combating rising costs by hanging on to their vehicles longer, meaning more repairs and automobiles that are less road-worthy, especially in a crash.

Keep in mind even the safest driver can have a bad accident. All it takes is one hydroplane during a rainstorm.

These higher rates will provide more protection, as well as better peace of mind so that you won’t be stuck holding the bill for another driver’s mistake. Keep reading to find out how these increases will affect you and how you can get cheaper car insurance in California.

Navigating the Scenic Route of Higher Rates Ahead

In order to prepare for the new normal in California liability insurance limits, drivers should understand their premium will be increasing. It’s almost become the norm for rates to increase every year when you renew your policy, but this increase will likely be even bigger. There are things you can do to help – and even lessen the burden.

Keeping Pace: Strategies to Manage Increased Premiums

When your policy comes up for renewal again, you will need to purchase a policy with the new limits that took effect on Jan. 1, 2025. Here are some simple steps to reduce your policy in California – even with higher liability limits.

On Cruise Control: How This Affects Your Wallet

Ultimately, you are in charge of some of the factors that go into determining your policy premium. Unfortunately, the liability limits you must have to drive legally are not negotiable. However, the decision to raise those limits is entirely within your hands. Many drivers do raise them to $100K/$300K/$100K. This may sound excessive, but it is more in line with today’s cost for damages and injuries.

You are not required to carry uninsured motorist coverage (UM) in California, but many people add it because it’s a smart buy. There are plenty of uninsured drivers in the Golden State (about 17 percent) and if one of them hits you and leaves the scene, you may be left holding the bag for your damages and medical costs. With UM, your insurer will step in to help you pay for those costs.

If you are financing or leasing your vehicle, you may be required to carry full coverage insurance. This is a combination of the required liability, plus collision and comprehensive.

Remember, keeping your driving record clean is the best way to save money on your auto coverage.

When Accidents Happen: Liability Insurance Limits in Action

What exactly is liability insurance and what does it do? Your liability limits are what helps you pay for injury and damages you may cause when you are at fault for an accident. It consists of two parts: bodily injury and death, and property damage.

Bodily injury and death liability will help pay for the medical costs others have after a wreck you cause, up to your policy limits. Anything after that comes out of your pocket, including your own injuries and damage.

Property damage liability helps pay for the repairs to any vehicles, structures or any other things you may hit and damage when you are at fault. Again, it will not pay anything at all towards your own damages. Having roadside assistance in combination with your car insurance can save you money in these types of scenarios.

Stay Ahead of Rising Auto Insurance Costs. Get A Free Quote Today and Find The Best Coverage Options To Fit Your Budget!

At Cost-U-Less Insurance, we are here to help you stay protected and legal while on California’s roads. Now that you know your rates will likely increase this year, give one of our professional and bilingual agents a call to find out how you can keep your costs as low as possible.

Let our independent insurance agents answer all your questions and find you the most affordable car insurance on the market. Just call us at (800) 390-4071 or get a quick quote online. We also invite you to find cheap car insurance at a California Cost-U-Less location near you.

FAQs: Smoothing Out the Bumps in Understanding

Will Everyone’s Insurance Rates Go Up in 2025?

All California drivers will likely see an increase in their rates now that new minimum levels have gone into effect. Drivers who already have an existing policy will be grandfathered into the old rates and limits until their next renewal.

How Can I Get Ahead of the Looming Insurance Increase?

At Cost-U-Less, we have some great strategies for helping you fit these new limits into your auto coverage budget.

What If I’m Already Struggling with High Insurance Costs?

Many drivers will be affected by these higher prices. However, there are ways you can make it easier on your wallet. For one thing, shop around. Let one of our independent agents find you several options to choose from, so you get what you need at a price you can afford.