California’s 2025 Commercial Auto Liability Insurance Update: What Business Owners Need to Know
November 2025
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Starting January 1, 2025, the State of California is raising the minimum required liability limits for all auto insurance policies, including those held by businesses that operate commercial vehicles. This change affects any company that owns, leases or uses vehicles for work, including contractors, delivery services, mobile businesses and fleet operators.
If you’re a business owner in San Diego or anywhere in California, this update is important. You may need to adjust your existing policy to avoid falling out of compliance or being underinsured in the event of an accident.
In this article, we’ll break down:
- What changed in 2025
- Who the new law applies to
- How it affects your business coverage and premium
- What steps you should take now to stay compliant
Let’s start with the specifics of the change.
What Changed in 2025?
Effective January 1, 2025, California law increased the minimum liability insurance limits for all motor vehicles, including those used for business and commercial purposes.
New Minimum Liability Limits (as of 2025)
| Coverage Type | Previous Minimum | 2025 Minimum |
|---|---|---|
| Bodily Injury (per person) | $15,000 | $30,000 |
| Bodily Injury (per accident) | $30,000 | $60,000 |
| Property Damage (per accident) | $5,000 | $15,000 |
This change was enacted under California Senate Bill 1107 (SB-1107), signed into law in 2022, with implementation set for January 2025. The goal of the law is to update outdated coverage limits that hadn’t been changed since the 1960s – despite modern medical, legal and repair costs rising significantly.
For business owners, this means that any commercial auto policy that doesn’t meet these new limits is now noncompliant with state law and may not provide enough protection in a serious accident.
Who Is Affected by the New Liability Limits?
The 2025 update to California’s minimum auto insurance limits applies to any vehicle registered and operated in the state, including those used for business. That means it affects a wide range of industries and professions, from self-employed contractors to companies managing large commercial fleets.
If your business owns or uses vehicles, you’re affected.
This includes:
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- Contractors and tradespeople (electricians, roofers, HVAC, etc.)
- Delivery services and courier companies
- Food trucks, catering vans, and mobile vendors
- Landscapers and service professionals
- Fleet operators in transportation, logistics and construction
- Sales teams or mobile workers using business-owned vehicles
- Self-employed individuals using personal vehicles for work
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Even if you don’t own a company vehicle, if you or your employees drive for work (such as using personal cars to visit clients or deliver goods), you may need to adjust your hired and non-owned auto insurance (HNOA) coverage to ensure compliance with the new limits.
What about personal auto policies used for business?
If your team uses personal vehicles for business purposes, their personal auto insurance likely won’t meet commercial requirements and won’t reflect the new liability minimums. In this case, your business may be exposed unless you carry supplemental coverage.
Why This Matters to San Diego Business Owners
If your business operates in San Diego, these new liability limits carry real consequences for your operations, costs and legal obligations.
Higher Premiums Are Likely
Raising liability minimums increases the amount insurers must cover in serious accidents. As a result, many businesses will see premium increases at renewal, especially if their current policies are still based on the older limits.
That makes this the perfect time to review your policy and compare quotes to avoid overpaying.
Vendors, Landlords and Clients May Raise Their Requirements
Many commercial leases, contracts and vendor agreements already require proof of minimum insurance. As the legal minimums go up, so do expectations and some third parties may require even higher-than-minimum coverage for you to keep doing business with them.
Underinsuring Can Leave You Personally Liable
If your policy doesn’t reflect the new legal minimums, and your business is involved in an accident, you could be:
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- Denied a claim
- Held personally responsible for damages beyond the outdated policy
- At risk of non-renewal by your insurer
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This is especially critical for sole proprietors, who don’t have the legal protections of an LLC or corporation.
How to Comply With the New Law
If you haven’t updated your commercial auto policy since 2024, now is the time to take action. The new limits are already in effect and being unaware doesn’t protect you from liability.
Step 1: Review Your Current Auto Policy
Look at the liability limits listed on your declarations page. If they still reflect the old minimums ($15,000 / $30,000 / $5,000), your policy is out of compliance.
Step 2: Contact a Licensed Insurance Agent
An experienced agent can:
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- Review your current coverage
- Explain how the changes affect your business
- Recommend adjustments or bundling opportunities to reduce premium increases
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At H&M Insurance, we work with multiple carriers and can compare updated quotes to find the best fit for your needs and budget.
Step 3: Consider Bundling or Increasing Coverage
This may be the right time to:
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- Add umbrella insurance for higher protection
- Combine coverage through a Business Owner’s Policy (BOP)
- Review hired and non-owned auto coverage (HNOA) if employees use personal vehicles for work
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If you’re unsure how the change affects your current policy, H&M Insurance can help. We’ll review your coverage and walk you through the best next steps — fast. Call (619) 296-0005 or request a free quote today.
FAQ
Will my insurance company automatically update my policy to meet the new minimums?
Not necessarily. Some insurers may auto-adjust your limits at renewal, but many won’t unless you specifically request it. You’re responsible for ensuring your policy meets California’s legal minimums — not your carrier.
Can I still choose higher limits than what California requires?
Yes. In fact, many contracts require limits far above the state minimum. If your business has exposure to larger risks (such as injury to multiple parties), it’s smart to carry higher liability or consider commercial umbrella insurance to boost protection.
Does this change affect fleet insurance policies too?
Yes. No matter if you operate two vehicles or 200, the new minimums apply to each individual vehicle on your policy. Your entire fleet must meet or exceed the new standards to stay compliant.
How does this affect businesses that use rideshare, delivery apps or subcontractors?
If you’re contracting with drivers who use personal vehicles for your business (like food delivery or on-site service), you may still be liable in an accident. Consider adding hired and non-owned auto (HNOA) coverage to your policy to help close that gap.
What proof do I need to show I’m compliant?
A current Certificate of Insurance (COI) showing updated liability limits is typically accepted by landlords, vendors and clients. Ask your agent for an updated COI after your policy is adjusted.
What if I have an older vehicle — does the new law still apply?
Yes. The updated liability limits apply regardless of vehicle age. Whether your commercial vehicle is brand new or 20 years old, it must carry the new minimum coverage if it’s registered and operated in California.
Do the new limits apply to vehicles titled in a personal name but used for business?
Yes. If a vehicle is used regularly for business purposes even if it’s titled under your personal name you may still need commercial auto insurance that meets the new limits. Personal auto policies often exclude business use and may deny claims.
Disclaimer
This article is for informational purposes only and does not constitute legal, insurance or financial advice. Insurance requirements and coverage details may vary depending on your business structure, industry and policy. Always consult a licensed insurance agent or legal advisor to ensure your commercial auto policy meets current California law.
