As of January 1, 2025, millions of drivers in California, North Carolina, Utah, and Virginia will face increased car insurance rates due to new minimum liability limits. In California, the limits will rise to 30/60/15, marking the first increase in 56 years. North Carolina's limits will jump to $50,000 for one person and $100,000 for multiple people per accident, while Utah will see changes to 30/60/25 and Virginia to 50/100/25 [764e4eb3].
These adjustments come in the wake of a significant surge in average car insurance rates, which rose by 26% in 2024, reaching an average of $2,543. This increase has placed a financial burden on many households, particularly as the U.S. median household income stands at $74,580, with approximately 3.41% of that income now spent on car insurance [764e4eb3].
Experts predict that the new coverage requirements will lead to slight premium increases, further straining budgets for drivers already grappling with rising costs in other areas, including the purchase of used vehicles. In Southern California, for example, the average price for a 10-year-old car has surged to $13,984, reflecting a 53% increase since 2014 [9978473c].
The combination of rising vehicle prices and insurance rates underscores a broader trend in the automotive market, where affordability remains a critical concern for consumers. As automakers shift towards producing more affordable electric vehicles, the demand for used cars, particularly older models, is expected to remain strong, even as insurance costs climb [9d60d9a5] [6ecd10bd].