Why are auto insurance rates increasing in California

Why are auto insurance rates increasing in California

June 21, 2023

There are a number of reasons why auto insurance rates are increasing in California. Some of the most common reasons include:

  • Most Auto insurance Companies have not seeing increases in rates for 4-5 years, going back to 2018.
  • California has the most heavily regulated auto insurance rating systems in the country which means it’s very hard for companies to get rate increases or changes in their policies. Changes in state laws and regulations can impact auto insurance rates. For example, reforms or amendments to insurance laws or mandates can lead to higher costs for insurers, which may be passed on to policyholders
  • This year we’re seeing an increase in rates for every auto insurance company along with a tightening in underwriting for people with bad driving records, poor payment histories or higher valued cars.
  • Inflation: The cost of everything is going up, including the cost of car insurance, there are several factors as to why.
  • More expensive cars: The average car on the road in California is more expensive than in many other states. This means that the cost of repairs and claims is also higher.
  • More accidents: California has a higher number of accidents than many other states. This is due to a number of factors, including traffic congestion, bad weather, and a large number of uninsured drivers.
  • More claims: The number of claims filed with insurance companies is increasing. This is due to a number of factors, including the aging population, the rising cost of medical care, and the increasing number of distracted drivers.
  • Medical Costs: Medical expenses related to injuries resulting from car accidents can be substantial. If medical costs rise, insurance companies may adjust their rates accordingly to cover these expenses. California has a legal system that allows for higher compensation amounts in personal injury lawsuits. This can lead to larger settlements and judgments, which in turn can drive up insurance rates as insurers need to account for these potential expenses.

As a result of these factors, auto insurance rates in California are some of the highest in the country. If you are a driver in California, you can expect to pay more for car insurance than drivers in other states.

I know you’ve all heard this before, but this is a reality in today’s insurance market. In working with dozens of insurance companies we’re seeing the effects of the economic and legal impacts causing rates and coverage to change in the California insurance market.

If you have questions or need a review of your coverage at Gary Warner Insurance Agency we’re here to help.