Why Are California Car Insurance Rates Increasing?

California Car Insurance Rates Are On the Rise

car insurance in california

Car insurance premiums are based on insurance risk and do not typically increase without reason. Your actions, as a policyholder, can also affect your premiums. Most factors that increase auto insurance rates are manageable; however, some factors that are out of your control may cause your rate to increase or decrease. If you are wondering, ” Why did my car insurance rate increase?” you may have encountered one or more of the factors below.


Factors That Can Increase Your Auto Insurance Rate

Some factors that can increase your car insurance rate can include:

  • State requirements make certain auto insurance coverage mandatory.
  • The car’s make and model affect rates.
  • The policyholder committed a traffic violation. 
  • The policyholder was at fault in an auto accident. In certain states, even in accidents where the policyholder was not at fault, their insurance rate can increase. However, in California, your insurance rate should not go up when you are not at fault for an accident. 
  • When policyholders increase their mileage significantly, their auto insurance rates may increase.
  • An address change can impact your auto insurance policy. Coverage rates are partially based on the area’s auto accident claim history. So, if the area you move to has more crime, break-ins, and accidents, your rate will likely increase and vice versa.
  • Age can also have an impact on your policy. For example, young drivers typically pay higher car insurance rates. Once a driver reaches the age of 25, their insurance costs may drop by 33%. However, drivers over 60 will likely see their auto insurance costs rise.
  • A history of lapses in coverage can cause your rate to increase.


How California Auto Insurance Premiums Are Rising

In states including California, policyholders may see their insurance premiums rise this year, even when nothing has changed. California Insurance Commissioner, Ricardo Lara, delayed insurance rate increases for more than 2 years, due to the COVID-19 pandemic. As a result, insurance companies argued that they were losing money because California had gone 2 years without rate increases. Additionally, the insurers state they were spending more on auto insurance claims than they were collecting through premiums in 2022.

Notably, California is one of the most expensive states in the county for auto insurance in part due to the number of cars in California and high-density populations. California has the most automobile registrations in the United States at about 14.3 million vehicles. 

Inflation and Higher Auto Repair Costs

Auto insurance premiums are being driven up by several pandemic-related trends. Inflation and higher auto repair costs seem to have the most significant impact. As the cost of goods and services increases, so does the cost of protecting people on the roads. Consequently, because more people are back on the roads, there has been an increase in auto accident claims.

In the last 6 months, Ricardo Lara has already approved some insurance rate hikes. Big auto insurance companies such as Geico, Allstate, State Farm, and Mercury were granted approvals for 6.9% rate increases. This is the most common rate increase request because anything above that percentage can trigger a public hearing. 

Consequently, many drivers in California will see their auto insurance premiums increase this year. An analysis by Bankrate indicates that California motorists are spending an average of $2,291 in auto insurance premiums, which is $101 higher than in 2022.


How to Save On Your Insurance Premium

cheapest car insurance company

One of the biggest factors that can have an impact on your car insurance rate is your driving record. When a motorist is flagged as a high-risk driver, they will likely have a higher insurance rate than standard drivers. After a single at-fault accident, the average full-coverage car insurance rate in California increases from $1,498 per year to $3,798. Some actions you can take to save on your premium include the following:

  • In the event of a car accident, you can pay a higher deductible. If you pay a higher deductible, you will pay lower premiums.
  • Maintain a good driving record to help keep car insurance costs low.
  • Shop around for the best car insurance companies and compare their car insurance rates.
  • Participate in a safe driving program.
  • Take a defensive driving course.


What Are the Cheapest Car Insurance Policies in California?

high risk drivers pay higher car insurance rates

The cheapest car insurance type is typically minimum coverage car insurance, also known as liability insurance. The minimum auto insurance requirements in California are as followed:

  • $15,000 bodily injury liability insurance per person
  • $30,000 bodily injury liability insurance per accident
  • $5,000 property damage liability per accident


What Is the Difference Between Full Coverage Auto Insurance and Liability Only Coverage?

When it comes to auto insurance, there are two primary types of coverage: full coverage and liability-only coverage. Liability-only insurance typically only covers damages you are legally responsible for causing to others.

Full coverage auto insurance generally includes both liability coverage and coverage for damage to your own vehicle. Full coverage car insurance can include collision coverage, which pays for damages to your car caused by collisions with other vehicles or objects. It can also include comprehensive coverage, which pays for damages caused by non-collision events like theft, vandalism, or weather-related incidents.

While full coverage may provide more comprehensive protection, it usually comes with higher premiums than liability-only insurance. Cheap car insurance may seem ideal, but it may be best to have auto insurance that also covers damage to your vehicle.


What Should I Do if I Am Involved in an Auto Accident?

comprehensive and collision insurance

If you are involved in a traffic accident, it’s vital to seek medical attention immediately and to make sure you get a police report. Take photos and videos of the accident scene and exchange insurance and contact information with the other parties involved. Promptly notify your insurance company about the accident and report it to the California DMV. An SR 1 form must be sent to the DMV within 10 days if someone is injured or killed in the accident, or if the property damage is over $1,000. 

Be cautious of the information you provide the insurance company and avoid giving details regarding the accident and your injuries. Consult with a California auto accident lawyer who will advocate for your rights and help you obtain a fair settlement for your losses.


We Are an Award-Winning Personal Injury Law Firm in California

Insurance premiums rising in California will likely have an impact on your auto insurance bill. To save on your car insurance premium and maintain a good driving record, there are actions you can take. If you are a new driver, it’s important to practice safe driving and plan your route ahead of time.

If you were injured in a California auto accident caused by someone else’s negligence, it is crucial to consult with an experienced personal injury attorney. At The Law Offices of Daniel Kim, we specialize in auto accident cases and can help you recover full and fair compensation. Call us now to schedule a no-risk, free consultation.