Liability-Only Auto Insurance: Is It Enough For Californians?

Liability-only auto insurance is the minimum insurance that drivers in California must have. It covers the cost of any damage, injuries or deaths caused by the policyholder in a car accident, but it does not cover the cost of repairing or replacing the policyholder's own vehicle. Liability insurance is typically the most affordable option, but it may not be sufficient in many cases.

California's minimum liability insurance requirements

In California, liability insurance is the minimum insurance that drivers must have. It is required on all vehicles operated or parked on California roads. This type of insurance is designed to protect others in the event that you are at fault for a car accident. It covers bodily injury liability and property damage liability.

The minimum liability insurance requirements in California are as follows:

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

It is important to note that liability insurance does not cover your own vehicle or offer protection against theft, vandalism, weather damage, or falling trees. For that, you would need to purchase additional insurance such as collision insurance or comprehensive insurance.

California also requires insurance companies to offer uninsured and underinsured motorist coverage, which can provide valuable protection if you are hit by a driver without insurance or with minimal insurance.

Liability insurance payouts in California

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

These minimums cover bodily injury liability and property damage liability. Bodily injury liability covers medical expenses for injuries sustained by other people in an accident you cause. On the other hand, property damage liability covers damage to someone else's car or other property, such as fences and mailboxes.

While these minimums may seem adequate for most accidents, they can be quickly exceeded, especially in severe crashes. Therefore, it is recommended to purchase higher coverage limits and additional types of insurance for more extensive financial protection.

California also offers a low-cost auto insurance program for income-eligible drivers, with lower liability limits:

• $10,000 bodily injury or death per person
• $20,000 bodily injury or death per accident
• $3,000 property damage per accident

Additionally, drivers in California have the option to purchase other types of insurance, such as collision coverage, comprehensive coverage, medical payments coverage, and uninsured/underinsured motorist coverage, to further protect themselves financially in the event of an accident.

The cost of liability insurance in California

Liability insurance is a legal requirement for drivers in California. It covers the cost of damage or injury to third parties in the event of an accident where the insured driver is at fault. Liability insurance does not cover the cost of damage to the insured driver's own vehicle or their own injuries.

California law mandates that drivers must carry liability insurance with the following minimum coverage:

• $15,000 bodily injury liability per person
• $30,000 bodily injury liability per accident
• $5,000 property damage liability per accident

However, these minimum requirements are set to change in 2025. From the start of next year, California drivers will be required to carry liability insurance with the following higher limits:

• $30,000 bodily injury liability per person
• $60,000 bodily injury liability per accident
• $15,000 property damage liability per accident

According to NerdWallet, the average cost of minimum liability coverage in California is $462 per year, or about $39 per month. Grange Insurance Association was found to have the lowest rates for minimum liability coverage, with an average annual rate of $239.

For full coverage, which includes liability, collision, and comprehensive insurance, the average cost in California is $1,622 per year, or about $135 per month. Auto Club of SoCal was identified as the cheapest provider of full coverage, with an average annual rate of $1,187.

There are several ways to reduce the cost of liability insurance in California:

• Compare quotes from multiple insurers
• Ask about discounts, such as for low mileage, bundling policies, or being a good student
• Raise your deductible—the amount you pay out of pocket before insurance pays for a claim
• Revisit quotes after your driving record improves (e.g., after three to five years with no accidents or violations)
• Reconsider the car you drive—some vehicles are cheaper to insure than others

When liability insurance is not enough

Liability insurance is a requirement for drivers in most states, including California. It is designed to protect others in the event that you are at fault for a car accident, helping to pay for any bodily damage or property damage. However, liability insurance has its limits, and there are times when it may not be enough.

While liability insurance is essential, it is often not sufficient on its own. In the event that you are at fault for an accident, liability insurance will only cover the damages of the other party up to a certain limit. If the damages exceed your policy limit, you will be responsible for paying the excess cost. This could result in serious financial burden, as medical bills and property damage can quickly add up. For example, an ambulance ride alone averages around $1,000, and even a minor accident can result in thousands of dollars worth of damage to a vehicle.

In addition, liability insurance does not cover your own injuries or property damage. If you are in an accident and require medical attention, your liability insurance will not cover your own medical expenses. Similarly, if your vehicle is damaged or totaled, you will need to pay for the repairs or replacement out of pocket unless you have additional insurance coverage.

To protect yourself financially, it is recommended to consider additional insurance coverage beyond the minimum required liability insurance. Collision insurance, for example, will cover repairs to your vehicle regardless of who is at fault in an accident. Comprehensive insurance will protect your vehicle from damages caused by things like theft, vandalism, weather, or falling trees. Medical Payments Coverage (MedPay) or Personal Injury Protection (PIP) insurance can help cover your own medical expenses and those of your passengers. Uninsured and underinsured motorist coverage can provide additional protection if you are in an accident with a driver who does not have sufficient insurance.

When determining how much liability insurance to carry, consider your assets and savings. If you are found at fault for an accident, you may be legally responsible for damages that exceed your insurance coverage. By carrying higher liability limits, you can help protect your savings and assets. It is also important to review your policy carefully and understand what is covered and what is not.

In summary, while liability insurance is a necessary form of protection for drivers, it is not always sufficient on its own. By understanding the limitations of liability insurance and considering additional coverage options, you can help ensure that you are adequately protected in the event of an accident.

Additional insurance options in California

California requires drivers to have liability insurance to drive legally. This covers others' injuries and property damage if you are at fault in an accident. However, there are several other insurance options available to drivers in California.

Uninsured Motorist Coverage (UMC) and Underinsured Motorist Coverage (UIM):

This covers you if you are in an accident with a driver who does not have any insurance or has insufficient insurance. UMC and UIM are valuable because around 16.6% of California drivers do not have car insurance. You must be offered this coverage, but you can choose to reject it in writing.

Uninsured Motorist Bodily Injury (UMBI):

This pays for injuries to you and your passengers when in an accident with an uninsured driver who is at fault. The limits are the same as your liability coverage limits.

Underinsured Motorist (UIM):

This covers limited costs for bodily injury if you are in an accident with a driver whose insurance is not sufficient to cover the damage.

Uninsured Motorist Property Damage (UMPD):

UMPD covers damage to your car from an accident with an uninsured driver who is at fault, up to a limit of $3,500. This only pays out if the uninsured driver is identified, and you may not need it if you have collision coverage.

Collision Deductible Waiver (CDW):

This pays your collision deductible if your insured vehicle is damaged in an accident with an uninsured driver who is at fault.

Medical Payments Coverage:

This covers the cost of immediate medical care for you and your passengers, no matter who is at fault. The minimum limit you can buy is $1,000 for each person injured, but you can ask for higher limits.

Physical Damage Coverages (Comprehensive and Collision):

Collision coverage pays for damage to your car caused by physical contact with another vehicle or object, such as a tree, rock, or building. Comprehensive coverage pays for damage caused by something other than a collision, such as fire, theft, vandalism, windstorm, flood, or falling objects. These coverages provide compensation based on the market value of your car. You can also buy additional insurance for extra equipment and custom installations.

Rental Reimbursement Insurance:

This covers the cost of renting a car while your own car is being repaired after a covered accident.

Frequently asked questions