Effective December 22, 2013 state financial responsibility minimums were raised from $12,500 per person to $25,000 per person. Trial lawyers and other consumer groups had lobbied the legislature for years to increase this limit which had become woefully inadequate to cover even basic medical bills in all but the smallest auto collisions. This limit was one of the lowest in the 50 states and was an embarrassment for our great state.

While $25,000 is an obvious improvement, it still trails behind simple inflation and the cost of living. Additionally, medical bills have increased drastically since these limits were last addressed in 1973. (This was an era when movie tickets cost less than $2.00, gas was about 40 cents a gallon, and a stamp was 8 cents.)

All those prices have gone up 500% to 1,000%.  So this recent increase in insurance limits still falls far below where it should be even when looking at simple inflation, let alone the increased costs of medical treatment over the last 40+ years. 

On straight inflation terms, even this new increase is equal to about $5,000.00 in 1973 dollars.  (It takes about $5.25 to buy what a dollar could in 1973.)  Just to keep pace with inflation, the state minimum limits would need to be about $65,000.00.

Meanwhile, it’s a safe bet that your auto insurance premium is 500% to 1,000% more than in the early ‘70’s.  As insurance consumers, we are constantly hit with increased rates most of which have nothing to do with our own claim history.  So the insurance companies get the benefit of increased premium dollars every year and yet this state minimum has not increased a penny in four decades. 

Insurance companies have raised premiums of their policyholders while the slow and steady process of inflation reduces the insurance companies’ risk every year.

Drivers with state minimum limits tend to be younger, higher risk drivers.  Higher risk drivers are those drivers that are the most likely to cause an accident injuring you or your loved ones.  This is one of the main reasons you need to make sure you and your loved ones are protected by maintaining uninsured/underinsured motorists coverage, with limits as high as you can afford.  Liability coverage just protects your assets.  Uninsured/underinsured coverage protects you and your family if you are injured, miss work, and incur medical expenses.  Talk to your agent; you’d be surprised how affordable it can be to maintain this vital coverage.