Several U.S. states will enforce higher mandatory automobile liability insurance limits in 2025 due to previously enacted legislation. California, Virginia, North Carolina, and Utah are among the states implementing these changes.
In California, the minimum limits for auto insurance policies will rise significantly. Starting 2025, coverage for bodily injury or death of one person will increase to $30,000.
The limit for bodily injury or death of all persons will go up to $60,000, while the property damage limit will increase to $15,000. These limits will see another increase in 2035, according to a December 2024 report by BestWire.
Virginia’s new law raises liability limits to $50,000 for bodily injury to one person, $100,000 for two or more injured parties, and $25,000 for property damage. This law came into effect following its passage in 2023.
Similarly, Utah’s liability limits will rise under a 2023 law to $30,000 for bodily injury, $65,000 for multiple injuries, and $25,000 for property damage.
North Carolina will increase its mandatory minimum limits to $50,000 for bodily injury, $100,000 per accident, and $50,000 for property damage. These changes will take effect in October 2025.
According to Largest U.S. Auto Insurance Companies, the top 5 private passenger auto insurers in California by market share in 2024 were:
- Farmers Insurance Group – 9.85%
- State Farm Group – 12.87%
- Auto Club Enterprises Insurance Group – 11.55%
- Berkshire Hathaway Insurance Group – 10.92%
- Allstate Insurance Group – 10.23%
According to US Auto Insurance Rates by States in 2025, auto insurers are racing to increase premium rates as they seek to offset historically poor underwriting results. The year-to-date nationwide average increase for private auto insurance is 15% in January 2025. There is a wide variance in the effective rate change between individual states.
The increases will provide greater financial protection for policyholders involved in accidents, said Mark Friedlander, corporate communications director at the Insurance Information Institute. However, he noted that drivers carrying only state minimum coverage could see slight premium increases as insurers adjust their rates to account for higher risk exposure.
While the cost of auto insurance depends on factors like driving record, claims history, and driver age, Friedlander recommends carrying higher coverage limits of $100,000/$300,000/$100,000 for better protection in at-fault accidents.
Tony Cotto, director of auto and underwriting policy at the National Association of Mutual Insurance Companies, explained that there’s no perfect formula for determining minimum coverage limits. He noted that lawmakers often test various approaches to balance safety, affordability, and availability.
Cotto highlighted a potential downside to higher minimum limits. Some drivers may drop their coverage altogether due to rising premiums, increasing the risk of uninsured motorists on the road.
Despite these concerns, the Insurance Information Institute projects that auto insurance premiums will moderate in 2025. The average personal auto rate is expected to rise by 7%, down from 14% in 2023 and 12% in 2024. Friedlander attributed a portion of this increase to higher repair costs, which are expected to rise by 3.8% due to parts and labor expenses.
Several factors continue to drive up auto insurance premiums. Rising litigation, accident rates, and health care costs all play a role. Severe weather events, wildfires, vehicle theft, and vandalism are additional factors that impact local market rates, Friedlander said.
