Several states across the country have just introduced new rules increasing minimum coverage requirements for car insurance in an attempt to better protect owners, but is likely to hit them in the pocket..
Drivers in California, North Carolina, Utah, and Virginia can expect car insurance rates to rise in the near future as a result of the higher mandatory minimum liability limits required as of January 1, according to experts.
Newsweek contacted Bankrate, Insurance.com, Triple-I, and Insurify for comment on Thursday morning.
Why It Matters
California, North Carolina, Utah, and Virginia have all increased their mandatory minimum liability limits with the idea of helping against the rising costs of car repairs and medical bills. At the moment, the minimum is not enough to cover most claims, Insurance.com wrote.
But this move, in time, will have the likely effect of putting an additional financial burden on car drivers.
Cars sit in traffic in downtown San Diego on November 22, 2024. Drivers in several U.S. states could face higher car insurance rates as a result of a new law increasing minimum coverage requirements.
Cars sit in traffic in downtown San Diego on November 22, 2024. Drivers in several U.S. states could face higher car insurance rates as a result of a new law increasing minimum coverage requirements.
Kevin Carter/Getty Images
What To Know
The cost of car insurance rose considerably last year. According to data from consumer financial services company Bankrate, car insurance rates surged by 26 percent throughout 2024, reaching an average of $2,543 for full coverage.
Considering that the national median household income is $74,580, based on the latest data from the U.S. Census Bureau, Americans spend 3.41 percent of their wages on car insurance, Bankrate reported.
“Auto insurance premiums are going to go up,” North Carolina State University economist Mike Walden told ABC11. “I think the average household, whatever they would save on this income tax cut, would be more than counteracted by increases in insurance rates.”
In North Carolina, a new law which came into effect on Wednesday raised the minimum liability limits for car insurance to $50,000 for one person and $100,000 for two or more people per accident. Property damage coverage will also rise to $50,000 in July—the highest amount in the country.
In California, minimum coverage car insurance requirements have risen to 30/60/15 from 15/30/5 as of Wednesday—the first increase in 56 years. In January 2035 it will rise again to 50/100/25.
In Utah, the limits have increased to 30/60/25 from 25/65/15 as of the same day, and in Virginia the limits have gone up to 50/100/25 from 30/60/20 with the new year. In the Old Dominion, as of July 1, 2024, all drivers must purchase a car insurance policy.
Drivers in these states don’t have to take any action to adapt to the changes, as it will be up to their insurance companies to adjust their clients’ liability coverage levels. What they might notice, however, is that their premium “may increase slightly,” as Bankrate puts it. According to the company, the changes are likely to be “fairly marginal.”
Those who already had coverage limits higher than those that the new regulations are requiring won’t be affected by the change.
What People Are Saying
Insurance expert Leslie Kasperowicz wrote for Insurance.com: “Drivers in affected states with minimum coverage will likely see an increase in their car insurance rates. Although some limit increases are minor, such as in Utah, others, like North Carolina, have significant increases. More coverage equals higher rates, although increases will vary.”
Bankrate insurance expert Natalie Todoroff: “Keep an eye on your premium, as it could rise slightly to account for the higher limits. Remember, with car insurance, higher coverage limits typically result in higher prices. However, the price increase is expected to be fairly marginal.”
State Farm Mutual Automobile Insurance Co said in a report from AM Best: “These adjustments reflect the growing costs of accidents and the need for adequate coverage.”
What’s Next
Drivers in the states affected by the new minimum limits would have noticed potential changes in their rates after their policy renewed on January 1 in California, Utah, and Virginia; or, in the case of North Carolina, when it will renew on July 1.
Are you a car owner in the U.S.? We’d love to know how you feel about your current car insurance, and if you’re worried about costs going up. Contact g.carbonaro@newsweek.com.
Car Insurance ‘Going To Go Up’ for Millions of Drivers
