Everything You Need To Know About SB 1087 and How It Affects Your Auto Insurance



This July, your car insurance liability minimums will go up, whether you like it or not. The legislature passed, and the governor signed into law SB 1087 to help protect drivers in Arizona in 2019. It mandates liability insurance minimums, and all Arizona drivers have to comply.

Here’s what this means for you and your car insurance, and why these increases are ultimately a good thing.

How Does SB 1087 Impact My Car Insurance?

SB 1087 is a law that increases the minimum limit Arizona drivers must carry for auto insurance liability. Effective July 1st, 2020, it raises the current minimums from $15,000/$30,000/$10,000 to $25,000/$50,000/$15,000. These three numbers represent different amounts your insurer would payout in case of an accident.

The first number, now $25,000, is the maximum amount your insurer would payout for each person injured in an accident where you were at fault. The second number caps that amount paid out per accident at $50,000, regardless of the number of people involved. These two numbers both address the people in an accident, the last covers property damage.

If you slammed your car into a business’ front window, the last number pays for the repair. The minimum limit will now be $15,000, and it would go to the person whose property you damaged.

What is Liability Insurance?

Liability insurance that you carry protects other drivers and property owners from you. It kicks in when you’re liable – or at fault – for an accident. If someone hits you, it’s their liability insurance that reimburses your damages.

The problem with low limits is that they’re often insufficient to fully cover damages at today’s rates. According to the Auto Alliance, on average Arizona drivers pay $33,402 for a new car and buy close to 400,000 new cars a year. If you’d just bought your car, the old liability insurance minimum of $30,000 might not have covered its replacement cost if someone totaled it in an accident. And there wouldn’t have been much left over for a tow, medical bills, or ambulance ride.

A $50,000 minimum for an accident’s total payout does more to protect all drivers on the road. Yes, you’ll probably pay more for your insurance, but you’ll receive the benefit of higher minimum coverage limits if you’re in an accident where you’re not at fault. But, will your auto insurance premiums go up?

Will My Auto Insurance Premiums Go Up?

Most consumers prefer to keep their auto insurance premiums low, if possible. They hope to never use the insurance but need it just in case. While some have found ways to save on coverage during the COVID-19 pandemic, eventually their premiums will rise again.

Anytime you increase an insurer’s liability – or the amount they’d have to pay out – your premiums increase. That is because they now have more risk.

For example, let’s say you have a higher deductible of $2,000 instead of $500. Since you would be responsible for more of the costs of an accident, you’ll pay lower premiums. The insurer knows they’d have to pay out less overall in case of an accident.

If all you do is raise your minimum liability coverage to comply with SB 1087’s requirements, your premiums will rise. But if you also increase your deductible or out-of-pocket costs in an at-fault accident, you could offset this increase. To find the right balance for your lifestyle and budget, speak with an auto insurance broker.

Ultimately, SB 1087 makes everyone on Arizona’s roads safer. There’s less chance you’d have to pay for repairs if someone ran a red light and T-boned your new car. If you hit someone, they’re more protected. It’s a win-win for everyone.

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Now It’s Your Turn

I hope You Understanding Everything You Need To Know About SB 1087 and How It Affects Your Auto Insurance

And now I’d like to turn it over to you:
Did you learn something new from this guide?

Or maybe you have a question.

Either way, leave a comment below right now.

Insurance Professionals of Arizona
IPA Team

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