New Auto Insurance Minimums Could Expose Coverage Gaps for HVAC and Plumbing Contractors
Author, Matt Gorham, Account Executive, Rancho Mesa Insurance Services, Inc.
The State of California has raised its minimum auto insurance limits effective January 1st of this year, and it could be problematic for some HVAC and Plumbing contractors.
Although the intention of the limits increase was to expand coverage for victims of accidents, there is concern that it will marginalize many drivers.
According to a 2023 study from the Insurance Research Council, California was already among the nation’s leading states for share of uninsured drivers at 17%, with many anticipating that number to be increasing.
Drivers that had carried the previous minimum limits due to financial constraints may not be able to afford policies with the higher limits and may choose to forego insurance altogether. For those that qualify for the California Assigned Risk Plan, their policy limits ($10k/$20k/$3k) will actually be lower than the previously imposed minimums ($15k/$30k/$5k).
Other drivers that had previously carried higher limits may now choose to reduce their limits to the state minimum due to the rising cost of auto insurance statewide.
With the commercial auto insurance marketplace already facing challenges, many carriers have chosen to reduce coverages they are willing to provide.
One key area of concern for HVAC and Plumbing contractors is Uninsured/Underinsured Motorists coverage, which provides coverage when an accident is caused by a driver who either does not have insurance or whose policy limits are inadequate to cover the costs of medical care and property damage arising from the accident.
Without appropriate coverage, an HVAC or Plumbing contractor could be found responsible for significant financial costs caused by medical expenses, lost wages, and pain and suffering due to injury to drivers and passengers of their vehicles – even if they are not at fault for the accident.
Here are 3 steps to help insulate your business from such a loss:
Review the personal use policies in your company’s fleet safety program.
Do employees drive company vehicles home and/or are allowed to use company vehicles outside of the course of work? Who else can drive or be in the vehicle as a passenger? Establish clear answers to these questions and enforce your policies, reminding employees of them, as well as the risk of neglecting them.
Review your current insurance coverages for limits and symbols.
Uninsured/Underinsured Motorist coverage limits can vary greatly from one carrier to another, while California allows policyholders to waive the coverage completely. Also, verify that the limits apply to the appropriate vehicles for your company with the relevant auto symbols.
Meet with your broker early in the renewal cycle.
Discuss auto coverages, review vehicle and driver schedules, and develop a strategy to approach the market to secure the appropriate coverage for your business.
If you have questions on auto insurance coverages or would like to complete a policy review, you can reach me at (619) 486-6554 or mgorham@ranchomesa.com.