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Outdated Insurance Laws and the Financial Burden of Crashes

Outdated Insurance Laws and the Financial Burden of Crashes
Photo Courtesy: Carl Nagle

Car accidents are a frightening reality. Beyond the immediate physical and emotional trauma, financial burdens can linger for victims due to inadequate mandatory auto insurance coverage. While mandatory auto insurance provides a vital safety net for those involved in collisions, the question remains: are current minimum coverage levels enough to truly protect drivers and victims in today’s world?

The Legacy of Financial Responsibility Laws

The concept of financial responsibility after an accident is not a new one. The first state, Connecticut, enacted a mandatory car insurance law in 1925. These laws, known as “financial responsibility laws,” were created with the intention of ensuring that drivers could cover the costs of medical bills and property damage inflicted on others in an accident they cause.

However, these initial mandates have seen minimal adjustments over time. Attorney Carl Nagle highlights a critical issue: “The current amount of required coverage is tragically low in every state.” For instance, the minimum required property damage liability coverage in California, New Jersey, and Pennsylvania sits at a meager $5,000. Considering the average cost of a new vehicle exceeding $48,000, this translates to covering a mere 10% of a total loss claim. Even moderate collisions often generate repair and rental car costs far exceeding this limit.

Recent attempts at reform, like the 2022 California bill raising the minimum property damage coverage to $15,000, offer a step in the right direction but remain insufficient. In multi-vehicle accidents, this revised limit would be divided amongst all damaged vehicles, further limiting its effectiveness.

Injury Claims: A Looming Financial Abyss

Minimum coverage for bodily injury liability, which compensates victims for their injuries, is equally concerning. This coverage typically comes with “split limits,” meaning there’s a maximum payout per person injured and a total cap for the entire accident. For example, North Carolina recently increased its mandatory limits to $30,000 per person and $60,000 per accident. However, if a driver causes serious injuries to multiple victims, each receives a maximum of $30,000, with the total $60,000 shared amongst all. Even with planned increases in 2025, these limitations pose a significant financial risk.

These limitations become even more alarming when compared to healthcare costs. According to, a three-day hospital stay averages around $30,000, excluding surgical expenses. Accidents requiring ongoing care or surgery can easily surpass minimum mandated coverage, leaving victims with crippling medical debt and no compensation for lost income or pain and suffering. This burden is a major contributor to personal bankruptcies across the country.

The Path Forward: Advocacy and Reform

Change is slow and often insufficient. California’s recent increase in property damage coverage, from $5,000 to $15,000, is a step in the right direction but still inadequate. States like Michigan and Alaska, requiring $50,000 per person and $100,000 per accident, serve as positive examples. These more robust coverage levels provide a far greater degree of financial security for those involved in serious accidents, reflecting a more realistic understanding of current medical costs and the broader economic landscape.


Outdated mandatory insurance laws leave everyone vulnerable. Significant gaps exist between the original intent of financial responsibility laws and the realities of today’s roads. While mandatory auto insurance provides a baseline of protection, outdated minimums leave drivers and accident victims exposed to substantial financial burdens. Moving forward, a collective effort is necessary to ensure that these laws are reformed to reflect the true costs of accidents and medical care.

To learn more about Carl Nagle and his work, please visit his website or about page. 

Disclaimer: The content in this article is provided for general knowledge. It does not constitute legal advice, and readers should seek advice from qualified legal professionals regarding particular cases or situations.


Published By: Aize Perez

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