In California, a driver is only required to carry $15,000 in liability insurance coverage. That is the second lowest in the nation (only Florida is lower with $10,000). A car crash can cause well over $100,000 in medical expenses (not to mention lost wages). So if you are wondering why the amount is so ridiculously low, it is because the amount has not been raised in 40 years:
Enacted in 1974 when the average new car cost $4,440, California Vehicle Code 16056 dictated that drivers need to have insurance with $15,000 to cover bodily injury or death to one person in a motor vehicle accident, $30,000 to cover two or more people and $5,000 to cover property damage.
California is one of only seven states in the U.S. — the others are Arizona, Delaware, Louisiana, Nevada, New Jersey and Pennsylvania — with limits that low, according to the Property Casualty Insurers Association of America. Only Florida has lower minimums, at $10,000, $20,000 and $10,000, respectively. Alaska and Maine have the highest at $50,000, $100,000 and $25,000.
Adjusted for inflation, $15,000 in 1974 dollars is equivalent to $70,800 in today’s dollars.
Systemic Failure 
Wow. I had no idea.
There was a story in the Boston Globe a few months back about how taxis had exceptionally low requirements. Wonder if its the same in Sf and LA
[…] today: The Greater Marin says transit officials should be required to use their own service. Systemic Failure balks at the super-low minimum car insurance coverage required in California. And The Active […]
In British Columbia, with government run single payer car insurance, the general minimum is $ 1,000,000 with an option to increase to $ 2,000,000 or more.
Is there a relationship between your low insurance coverage and the number of people bankrupted through medical costs? With ‘Obamacare’ will costs that should properly be covered by motor vehicle insurance instead be charged to the new health care providers/insurers?
So in other words, drivers generally pay less than it ACTUALLY costs to insure them, because if you’ve got $15,000 insurance and cause $100,000 in damage/harm, you’re just going bankrupt and the burden ends up being borne by the person/object you hit, or the government.
It seems obvious that a campaign for increased minimums would be a no-brainer, but it seems likely that there would be a “populist” opposition to it. I can imagine the slogans now: it’s just a giveaway to the insurance companies (somehow); it punishes poor drivers.
In general, government subsidies to encourage more driving are popular, especially if they’re hidden.
That’s absurd. Here in New York:
“A motor vehicle registered in NYS must have liability insurance. Insurance coverage must be a minimum of $25,000/50,000 for injury, $50,000/100,000 for death, and $10,000 for property damage caused by any one accident.”
And that’s generally thought of as too low; most people get supplemental.
Now, if we had a National Health Service or pure single-payer health care, the issue of medical bills would largely go away. But there would still be death liability. 50/100 is honestly a bit low for death liability. California’s 15/30 is *ridiculously* low.
What’s even worse is that in the guise of helping low income drivers (making less than 250% poverty line), 10/20/3 coverage is acceptable if you buy into the program. http://www.mylowcostauto.com advertises it is “Stop worrying, start driving.”
While I carry 100/200/100 primarily to protect my assets, I think 25/50/25 is sufficient for a minimum. The policy issue is, is the $10,000 coverage for bodily injury or $3,000 for property damage better than nothing, since a low income person with no assets would likely immediately declare bankruptcy anyway? I carry high insurance because I don’t want to be bankrupted if I cause significant damage. But a study should be done to determine the actual damages paid out due to injury and property damage, and set it to cover something like the 80th percentile of all claims. Instead we get these arbitrary numbers that are never updated.
@calwatch: the problem with low minimum coverage is that it exposes people who are not driving (pedestrians mostly) to enormous medical costs when hit by a car, even if they are at no fault.
Mandatory higher minimum coverage is a good policy that would ultimately push insurers to better practice price discrimination (in the actuarial sense) between low and high risk drivers, or push things like driver behavior data recording on those who want lower premiums.
These days, any medium-speed pedestrian hit can easily cost $ 80,000 in medical costs if hospitalization and treatment for some limb simple fracture is required. If ICU, concussions and brain trauma are involved, put that at $ 250,000 -easily.
[…] state of California has not increased its minimum insurance coverage in 40 years. In California a driver is only required to carry $15,000 in liability insurance […]
I’ve never understood why legislators don’t just index various taxes, fees, fines, tolls, minimum insurance requirements, etc. to inflation. This could avoid many problems, and it would even save the legislators the trouble and political cost of having to take action to raise said taxes etc.
Politicians, especially the geniuses we have in Sacramento, seem to “glaze over” when numbers are ever discussed. Let’s chalk it up to their degrees in communication studies…