Minimum Auto Insurance in California, Arizona, and Colorado
If you’re shopping for car insurance, and you’re trying to decide how much insurance to carry, you’ve probably encountered discussions about minimum auto insurance. This is the very least amount of coverage that you need to have on your policy, as required by state laws, which vary from state to state.
To explore some examples of state requirements, in this article we’ll look at minimum auto insurance in California, Arizona, and Colorado.
Minimum Auto Insurance in California
Under California law, the minimum liability insurance requirements for private passenger vehicles are:
- $15,000 per person for bodily injury or death
- $30,000 per accident for two or more persons’ injuries or death, and
- $5,000 for property damage
The three amounts are known as “split limits,” and are generally broken down in the following fashion: 15/30/5. These numbers indicate the maximum amount that your carrier will pay out for each category of coverage.
The first amount, for bodily injury or death liability, covers costs if you are involved in an accident in which you are considered at fault and must pay an individual victim’s medical bills, lost wages and pain and suffering damages.
The second amount, for bodily injury or death liability, is to cover the costs for all people involved in the accident.
The third amount is for the damage that you have caused to someone’s property.
Minimum Auto Insurance in Arizona
Under Arizona law, drivers must carry liability insurance with at least the following amounts of coverage:
- $25,000 per person for bodily injury or death
- $50,000 per accident for two or more persons’ injuries or death, and
- $15,000 for property damage
Arizona’s state-mandated minimums for car insurance were increased on July 1, 2020.
Minimum Auto Insurance in Colorado
For motor vehicles, Colorado law requires the following minimum amount of liability insurance:
- $25,000 per person for bodily injury
- $50,000 per accident for two or more persons’ injuries or death, and
- $15,000 per accident for property damage
California, Arizona, and Colorado Are “Tort States”
Despite the differences in minimum auto insurance in California, Arizona, and Colorado, these states all function under a traditional “tort” or “fault” automobile insurance model. In other words, if you cause an accident in California, Arizona, and Colorado, you must pay for any damage you’ve caused. For this reason, drivers must carry liability insurance to cover injuries to others and damages to others’ cars and property.
Drivers who are involved in a vehicle accident in which they sustained injuries, or property damage, may:
- File a claim with the at-fault driver’s automobile insurance company, or
- File a personal injury lawsuit in court seeking damages from the at-fault driver, or
- File a claim with your own automobile insurance company (if coverage allows for a claim to pursued against your own insurance company)
Although drivers must legally carry automobile insurance on their vehicles at all times, it is frightening to think how many people do not carry automobile insurance. A study by the Insurance Research Council found that one in eight drivers are uninsured.
Why You Should Buy More than State-Minimum Insurance
At Negretti & Associates, we recommend carrying as much underinsured and uninsured coverage as you carry in liability coverage.
We also recommend carrying a bit of medical payment or personal injury protection coverage. But don’t overdo it with this coverage type.
As for liability coverage, ask yourself, “How much coverage should I have to protect myself personally if I caused a crash?” Think about liability coverage as a way to protect you and your family in the event that you cause a crash.
For more context, please see our article “State-Minimum Car Insurance Is Not Enough,” where we write, “When considering how much car insurance to purchase, start your analysis by asking yourself how much insurance you would want to carry so that you wouldn’t have to write a check from your personal bank account to pay for damages.”
Remember, if you have state-minimum car insurance and are judged to be at fault in an accident, you may be expected to pay out of your own pocket to cover the difference between your insurance and the other driver’s actual expenses.
California’s minimum requirement of $5,000 for property damage coverage is extremely low. It’s hard to find a fully functioning replacement vehicle for less than $5,000. Even a small fender-bender can cost far more than $5,000 to repair.
In neighboring Arizona, the required $15,000 state-minimum property damage liability coverage does not stretch far. Used cars are more expensive than ever, and many cars on the road have values surpassing $15,000. State-minimum insurance often does not account for loss of use and diminished value.
In the final analysis, purchasing state-minimum car insurance means that you’re complying with law, but you’re still left with a bare minimum of financial protection. An attorney or a person injured in the accident could look to you to personally contribute toward resolving a claim. The other driver can sue you, seize your assets, and have your wages garnished.
As you shop for car insurance, explore your options. Think about what kind of coverages you would want in the event that you had to tap into your liability coverage. Try to find ways of covering yourself well above state-minimum limits. Don’t wait for a bad outcome to happen and wish later that you had an adequate amount of coverage.
