Imagine paying the insurance premiums on your home for years, thinking you’re protecting yourself against disaster. Then, horribly, one day your house burns to the ground in a catastrophic fire.
Only then do you find out the shocking news that your insurance policy will pay the cost to replace your home – but only up to the value of what the home was worth in 1967, back when Lyndon Johnson was President.
It’s time to bring California’s mandatory auto insurance laws into the 21st century.
This story sounds preposterous, mostly because we all know how home prices have skyrocketed over the last 55 years, and that policy limits for property insurance have steadily increased in order to keep pace with the true cost of replacing one’s home.
But for thousands of California motorists, this story is not preposterous.
In fact, for many it is a story that has plunged them deep into debt after being victimized by a car crash. These Californians found out the hard way that the benefit levels of mandatory auto insurance policies have been frozen in time for more than half a century.
Consider how much the costs of medical care and automobiles have climbed since 1967. One of the most popular cars, the Chevy Impala, had a sticker price of $2,845. The average salary for a doctor was $33,600.
Fast forward to 2022 and consider the plight of Estella Magallanes of Azusa. Her car was struck by a driver who carried the bare minimum auto insurance coverage required by law. The impact of the crash knocked her car into a storefront, sending shattered glass shards into her neck and tongue.
The other driver was at fault and was insured, but the liability insurance coverage maxed out at $15,000. That meant Estella was on the hook to pay for thousands more to buy a new car and cover her medical bills. $15,000 might have gone a good way in 1967, but certainly not in 2022.
Also consider the tragic story of young Carla of West Covina, a minor whose last name I will protect. Carla lost both parents in a car crash caused by a negligent driver. She lost the most important two people in her life and her means of support. Somehow Carla must chart a course for her future with a financial cushion of only $30,000 – the maximum she was able to receive for the wrongful death of both parents.
It’s time to bring California’s mandatory auto insurance laws into the 21st century. The minimum coverages the law now requires — $15,000 liability for a single injury, $30,000 for the injuries or deaths of more than one person, and only $5,000 for property damage – rank in the bottom three of all 50 states.
One might think that the uninsured motorist coverage included in auto insurance policies would make up the difference, but it doesn’t. Under current law, if a person is victimized by a minimally insured driver, the victim’s own insurance will not cover the difference between what an at-fault driver’s insurance will pay and the actual cost of the loss.
But it is possible to change this.
Legislation has been proposed — Senate Bill 1107 by state Sen. Bill Dodd (D-Napa)– to increase the minimum required limits of auto insurance and restore the sense of security promised by uninsured motorist coverage. Those changes, which would cost the same per month as one coffee drink, are essential if the concept of mandatory auto insurance is going to actually cover and protect California consumers and drivers.
Mandatory auto insurance is a social good that California long ago decided was a necessity. All motorists need to be protected in the event of a crash, so if you want to drive a car, the car must have insurance. The minimum required coverage has been kept low to make insurance as affordable as possible.
But those limits are now so low that they are virtually meaningless and fail to adequately protect millions of Californians. We can and must do better for people like Carla and Estella.
Editor’s Note: Robert Herrell is executive director of the Consumer Federation of California.