This year, California drivers can expect to see several changes to their auto insurance policies. The California legislature has enacted several new laws that affect how insurance companies do business, including changes to liability coverage and the use of time-limited insurance policy limit demands. Whether you’re buying car insurance for the first time or you’re reviewing your policy to ensure you have enough coverage in case you need auto body repair, here are some of the most significant auto insurance changes to be aware of.
Insurance Rate Increases
After two years of steady pricing, many drivers can expect to see increases in their auto insurance rates. Towards the end of 2022, California regulators signed off on eight auto rate increases—half of which were for GEICO. State Farm, Farmers Insurance, and Allstate are also expected to increase their premiums. On average, it’s predicted that most consumers will see an increase of about 8.4%.
Protection Against Illegal Insurance Sales
While not directly impacting your car insurance, this bill will certainly be welcome news for consumers who were targeted in illegal insurance practices. SB 1040 allows Insurance Commissioner to ensure those who have sold insurance without a license pay back the amount they collected from consumers—including people who sold extended vehicle warranties through robocalls or took money from individuals for insurance they weren’t legally allowed to sell.
The Protect California Drivers Act
Passed in 2022, the Protect California Drivers Act updates California’s minimum auto insurance requirements to provide more coverage for victims of car accidents. The current liability insurance limits haven’t been updated since 1967, yet the costs of medical care and vehicle damage have risen significantly. This new law, which goes into effect on January 1, 2025, will increase the minimum liability for physical injury or death and property damage. The limits will increase again in 2035.
As of January 2025, the minimum liability coverage required by California state law will increase to the following amounts:
- $30,000 for physical injury or death of one person
- $60,000 physical injury or death of two or more people
- $15,000 in property damage coverage
In 2035, these amounts will increase to:
- $50,000 for physical injury or death of one person
- $100,000 physical injury or death of two or more people
- $25,000 in property damage coverage
The law also requires drivers to increase their liability coverage by 2025 and purchase additional liability coverage in another ten years and requires uninsured and underinsured motorist coverage to increase to match the liability coverage limits.
Time-Limited Insurance Policy Limit Demands
Lawyers often use time-limited insurance policy limit demands to make insurance companies vulnerable to bad faith claims. These demands seek maximum recovery with minimal detail, which often causes insurance companies to reject the demand. To address this issue, the California Legislature has enacted crucial legislative changes that took effect on January 1, 2023.
With the passing of this law, claimants must follow specific requirements for time-limited demands to settle a claim against an insured person. The demand must be:
- Written
- Labeled as a time-limited demand
- Specify a period of time for the insurer to accept the demands
- Offer to settle all claims within the policy limits
The insurer may seek clarification or additional information, but they must respond in writing if they choose to reject the demand. These changes are aimed at creating a more equitable process for both sides in settling claims and ensuring that cases worthy of early resolution receive the appropriate attention based on the facts and evidence.
Review Your Policy Periodically
The recent changes to auto insurance laws have implications for both insurers and policyholders, particularly the changes in liability coverage; it’s important for drivers to review their policies periodically to ensure they have adequate coverage for their needs. This will help protect you in the event of an accident and ensure your medical bills and collision repair are covered.
If you need an auto body shop, contact European Collision Center. From high-quality OEM repairs and factory repair methods to insurance coordination, we make your repairs as convenient and stress-free as possible. Call us today at (415) 551-9700!