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By: Garrett Zagrodzky, Straus Meyers LLP
California’s minimum auto liability limits were low, often forcing claimants into the Underinsured Motorist (UIM) lane when the at-fault driver’s liability limits are insufficient to cover the insured’s damages.
According to the Assembly Appropriations Analysis, Senate Bill (SB) 1107 was intended to “modernize California’s outdated minimum auto limits,” which has not been adjusted in decades. SB1107, enacted January 1st, 2025, increased the minimum coverage from $15,000 per person/$30,000 per accident /$5,000 per person for bodily damage to $30,000 per person/$60,000 per accident for bodily injury/$15,000 per person for bodily damage.
The minimum auto liability insurance limits will also increase on January 1st, 2035. The required minimums will rise by $20,000 per person, $40,000 per accident and $10,000 for property damage, moving the 2025 floor to $50,000 per person/$60,000 per accident/$25,000 per person for bodily damage.
Even though we see higher minimums, we often see serious injuries exceeding available third-party coverage, keeping UIM relevant for the next decade until we see the next hike in minimums in 2035.
What does this mean for UIM Coverage?
Higher liability minimums will likely reduce some lower severity UIM incidents, but UIM will still be prevalent for moderate and severe losses. The raise in these minimums has narrowed the gap for minor claims; however, after emergency transport, medical bills, etc, as we see in moderate and severe accidents, it can quickly approach or exceed to $30,000 threshold.
Looking ahead to 2035, it will further reduce and narrow the gap of minor claims but will still not affect catastrophic injury losses.
SB 1107 ultimately raises California’s liability minimums and will thin out the minor UIM matters, but it does not displace UIM. Through 2035 and after, UIM will remain active in moderate and severe injury cases.
