Europe requires drivers to carry ~$1.5 million in injury coverage. California requires $30,000

In June 1922, Baltimore put up a 25-foot obelisk in Courthouse Plaza inscribed to the 130 children killed by drivers in the city the year before. Cities across the country were doing versions of this. The dead were overwhelmingly pedestrians and overwhelmingly young, and people had not yet grown accustomed to this fatal risk in their communities.

Cincinnati tried to do something about it. A citizens’ committee spent 1922 gathering signatures to put an ordinance on the ballot requiring every automobile operating inside the city to carry a mechanical governor physically limiting it to 25 miles per hour. Car dealers and the auto clubs organized against it. The measure lost 92,427 to 14,012 (87%-13%). Cincinnati recorded 103 traffic deaths that year, 157 by 1929, and 201 by 1934.

Nationally, 17,870 people died on the roads in 1923, at 21 deaths per 100 million miles driven. The rate today is 1.26 deaths per million miles driven.

Connecticut took a different route in 1925, requiring drivers to prove after a crash that they could pay for the damages they had caused. Massachusetts went further in 1927, requiring proof of insurance as a pre-requisite to registration. The required minimum coverage was $5,000 for the death or injury of one person, and $10,000 for everyone hurt in a single crash. While a speed governor stops a driver from driving fast, a minimum liability limit doesn’t stop anybody from doing anything. It merely promises the dead that they will receive a check (maybe).

The $5,000 that Massachusetts required in 1927 would be ~$96,000 in today’s money. Massachusetts requires $25,000 of coverage today, raised from $20,000 in July 2025 after ~40 years at the lower figure. This shows how insurance mandates for driving have been relaxed over the 100 years in America by quietly keeping the amount de-coupled from inflation.

Meanwhile in the European Union, the EU motor insurance directive requires every EU member state to mandate at least €1,300,000 of cover per injured person, ~$1.5 million, or €6,450,000 per crash regardless of how many people were hurt. The amounts are revised every 5 years against the European consumer price index (inflation) automatically. The United Kingdom requires unlimited cover for personal injury.

California, the largest car market in the United States, requires $30,000, or 1/50th of the European minimum. Pennsylvania and Louisiana require $15,000, which is 1/100th. Florida requires no bodily injury coverage at all, only $10,000 in personal injury protection and $10,000 for property, so there is no ratio to compute. New Hampshire requires nothing. The EU recorded 19,940 road deaths in 2024, ~45/million residents, against ~126/million in the US.

The American mandated minimum was put in place to create a floor on recovery. It was written so victims would not be left with nothing when the driver who hit them turned out to be broke, and it was never meant to price the actual harm. Drawing this distinction is critical, because once the state mandates buying car insurance, the minimum coverage number it picks affects two critical lines in the sand:

1. who can afford to drive a car at all
2. what percentage of drivers on the road carry insurance (i.e. drive without insurance and without registering their vehicle)

This means that the mandated minimum is highly influenced by affordability politics–not by what a person’s life is actually worth. Once the minimum amount is set then it gets left alone, because any politican raising the minimum means directly raising car insurance prices.

California set its minimum at $15,000 per person and $30,000 per crash in 1967. That $15,000 is worth ~$150,000 now, but it remained unchanged for 58 years. Senate Bill 1107, effective January 1, 2025, raised it to $30,000, and writes in a further increase to $50,000 on January 1, 2035.

While ~2.5 million people died on American roads between 1967 and 2024, California did not once touch the minimum car insurance mandate, letting inflation diminish it 57 years. The 2025 increase, celebrated as the first in more than half a century, landed at 1/5th of the 1967 value.

In the US, a driver who kills someone owes the whole judgment for doing so, and the insurance policy limit binds only the insurer. The insurance policy limit works as a ceiling anyway, because past the driver’s policy limit there is usually nothing left to take: the driver’s home equity, retirement accounts, and wage garnishment are either untouchable or capped by exemptions. And to top it off, an ordinary “negligent driving” judgment discharges in bankruptcy anyways. In fatal driving cases, the insurer usually just pays the limit, the lawyer runs an asset check on the driver, and the case ends.

The Insurance Research Council put 15.4% of US drivers uninsured in 2023 and another 18% underinsured (totalling 33% of drivers on US roads). One driver in three cannot pay for the harm they are statistically likely to do. The remainder lands on the victim’s own uninsured motorist coverage, which is sold only as part of an auto policy. Let me spell that out: a pedestrian or cyclist who does not own a car cannot buy uninsured motorist coverage (which is usually bundled with a car insurance policy), so a car-free individual is only left to turn to their health insurance policy when the victim of a car crash, which pays for the hospital and nothing else. Even the ambulance from the crash site to the hospital is an out-of-network cost to the victim ~50% of the time.

From a good public policy perspective: indexing the minimum insurance coverage to inflation would be the cheapest and easiest thing to copy from the EU.

California came close: SB 1107 as introduced in 2022 would have raised the limits 4% every 5 years starting in 2028. But that clause did not survive negotiations with the “Personal Insurance Federation of California.” What passed was a fixed step-up to $50,000 in 2035, which guarantees that the deflationary drift on car insurance coverage starts again in 2035.

But there is reason to be optimistic, if you care about using capitalism to price the harms of driving. Up until recently, insurers could not actually observe how risky drovers actually drove, so for California to raise the minimum coverage limit would raise everyone in CA’s premium without making anyone safer.

That objection is expiring: in-car dongles that track jerky driving, crash event recorders, and driver monitoring systems mean an insurer can now observe behavior directly and adjust pricing based on it. The open question is what gets priced. An insurer will happily use that data to reduce its own losses. Nothing in the current arrangement makes it price the risk a heavy, fast vehicle poses to the people outside it, because that harm still stops at the policy limit, and the policy limit was set in 1967.