North Carolina personal injury lawyer Carl Nagle has issued an important warning to drivers across the country – “Buy enough car insurance coverage or you risk losing your home and your other personal wealth and assets”: All states require drivers to have liability insurance, which compensates innocent victims if a motorist causes an accident. The laws that require auto insurance are known as “financial responsibility laws”. Mandatory car insurance pays innocent crash victims for their damaged vehicle and for their injury claims and medical costs.
While these laws provide important protection to motorists, the original mandates have been very slow to change. According to attorney Nagle, “the current amount of required coverage is tragically low in every state”. For example, in California, New Jersey and Pennsylvania, while a driver must carry auto insurance that pays for damage to other drivers’ vehicles, the total amount of required coverage for “property damage liability” is just $5,000.00 per accident. According to data released by Kelly Blue Book and Cox Automotive in late 2022, the average cost of a new vehicle in the U.S. is just above $48,000.00. In a total loss case, required coverage would fund only 10% of a total loss claim. Even modest collisions sometimes result in repair and rental automobile costs that exceed $5,000.00. As a result, the minimum insurance coverage required by these jurisdictions is insufficient to pay the majority of property damage claims.
When reforms are implemented, they are usually too little and too late. For example, in late 2022, California Governor Gavin Newsome signed Senator Dodd’s bill into law, reforming California’s law to increase the state’s mandatory insurance limits. However, the legislative amendment for property damage coverage only increased the overall maximum from $5,000.00 to $15,000.00. This is the first change in 55 years. Obviously, the “new” limit of $15,000.00 certainly will fall short for property damage claims arising from thousands of collisions for years to come. Remember, many accidents involve multiple vehicles. In these cases, the New Jersey or Pennsylvania limit of $5,000.00 or California’s revised limit of $15,000.00 must be divided and shared to pay for all vehicles damaged by the at-fault driver plus all other personal property damaged in a collision.
Injury claim coverage is likewise severely limited under present laws. Bodily damage liability coverage provides for the harm sustained by an innocent victim in an automobile accident. The coverage is often offered as “split limits” coverage, with a per-person amount limiting the amount that each individual victim can receive and a per-accident limit determining the total amount of injury claim coverage that all accident victims must share. In North Carolina, state lawmakers made the first change to our Financial Responsibility Act in three decades. This is excellent news, albeit long late.
North Carolina currently requires drivers to carry $30,000.00 per person and $60,000.00 per accident to cover crash-related injury claims. If a motorist causes catastrophic injuries to many victims, no one victim will receive more than $30,000.00 to cover all ambulance, hospital, and medical fees, lost income, and any further claims for pain and suffering. Furthermore, even if several people sustain serious injuries, the entire group of victims must divide and share the per-accident limit of $60,000.00. New legislation will bring change for all policies issued after January 1, 2025. The new laws require liability coverage of $50,000.00 per accident for property damage, $50,000.00 per person/$100,000.00 per accident for bodily injury.
North Carolina’s laws are actually more favorable than the vast majority of other states and, in most states, there is no movement to increase mandatory coverage limits. Most states currently require bodily injury liability limits of just $25,000.00 per person and $50,000.00 per accident, and lower limits are required in some states. For example, in Louisiana and Pennsylvania, the total amount of bodily injury liability coverage required is just $15,000.00 per person, and $30,000.00 per accident. Iowa and Hawaii have required limits for injury claims of $20,000.00 per person and $40,000.00 per accident.
According to Healthcare.gov, the average cost of a 3 day hospital stay is approximately $30,000.00. This does not include surgical costs and, in many areas, typical medical costs are much higher. For a car crash that results in ongoing medical care or surgery, the claim for medical bills alone vastly exceeds most states’ minimum mandatory limit for bodily injury liability coverage. Thus, victims are often left with significant medical debt and zero payment for lost income or for pain and suffering. Unfortunately, unexpected medical debt is a leading motivation for personal bankruptcy filings throughout America.
Very little is being done across the country to alter these outmoded regulations, and as we see in California, when change does occur, it is sometimes much too small to make a significant effect. Consumers, victims and drivers everywhere should invest the time to contact local legislators to request meaningful change. Michigan, Maine, and Alaska now require all drivers to have bodily injury liability limits of $50,000.00 per person and $100,000.00 per accident. North Carolina followed this lead and passed new legislation that moves the limits to $50,000.00 per person and $100,000.00 per accident beginning January 1, 2025. Even these revised limits are quite low considering today’s medical care costs. However, the statutes of Michigan, Maine, Alaska, and North Carolina demonstrate that greater obligatory restrictions are considered reasonable in today’s economic marketplaces. All states should follow their lead.
Carl Nagle says, “I speak with collision victims every day.” I observe how frequently wrecks result in exorbitant medical expenses and other financial losses. If you cause an accident and do not have enough insurance to meet all victims’ claims, you will be personally liable for any expenses or damages that exceed your auto insurance limits.” To avoid losing your wealth due to an accident, you should always carry liability insurance limits higher than the minimum required in your state. Attorney Nagle recommends that every driver who has wealth to protect should carry at least $100,000.00 in property damage liability coverage, and $100,000.00 per person and $300,000.00 per accident in bodily injury liability coverage. Also, to protect yourself, your family and your guest passengers, always carry high limits of Uninsured Motorist (UM) and Underinsured Motorist (UIM) coverage. UM coverage pays your injury claims if you are injured either by a driver who failed to carry insurance, or by a hit & run driver who cannot be identified after the accident. UIM coverage pays you additional money in the event that a careless driver caused injuries to you or your guest passengers, but doesn’t have enough insurance to fully fund all of your injury claims. UIM also covers your family members if they are riding in another person’s vehicle.
When it comes to auto insurance, drivers should make informed decisions. Always carry more than the minimum coverage required by law, and always invest in high limits of UM and UIM coverage. Since auto accidents are quite common, and since collisions are a leading cause of serious and fatal injuries, this is the cheapest and easiest way to protect your personal wealth and assets.
