Why Are Car Insurance Rates Rising for Californians?
Mar 1, 2023
For California drivers, there are a number of factors which commonly contribute to increasing car insurance rates. Some of the more well-known causes of increased auto insurance premiums include:
- Spike in all types of motor vehicle accidents: California has seen an increase in the number of car and motor vehicle accidents as well as civil claims in recent years. This could be due to a variety of reasons, such as more people on the roads post-pandemic, distracted driving, and increased traffic congestion in and around Los Angeles.
- Spike in motor vehicle collision claims: As more motor vehicle accidents occur on California’s often dangerous roads and highways, an increasing number of claims are being filed with car insurance companies.
- Rising costs of vehicle repairs: The cost of vehicle repairs has been steadily increasing in recent years. This is partly due to the expanding complexity of modern vehicles (and their designs), which often require more expensive parts and specialized repairs.
- Increased medical costs: If you are involved in a car accident, you should definitely seek medical treatment. But the cost of medical care has been rising in California, which means that insurance companies have to pay more to cover medical expenses for their policyholders.
- Climate-related events: California is prone to natural disasters, such as wildfires, earthquakes, and mudslides. These events can cause significant damage to vehicles and property – and the end result is higher insurance claims and rates.
- Insurance fraud: Insurance fraud is a widespread problem in California, and it can lead to higher policies and rates for everyone. Fraudulent claims drive up costs for insurance companies, and these massive corporations pass those costs onto their customers.
Any singular factor listed above (or even a combination of factors) can contribute to an increase in the cost of insuring cars, trucks, and motorcycles operated by California residents. However, one new circumstance involving a rate hike approval by the state government could cause California car owners to experience what the Los Angeles Times called “a nasty surprise when they open their car insurance bills this year.”
Furthermore, as many drivers are likely oblivious to this new tactic which was taken by the California Insurance Commissioner, the increased auto insurance premiums could be a source of anger and frustration for many local residents.
Why is California Increasing Car Insurance Rates On Everyone?
Rising insurance rates affecting drivers in California represent a common headache experienced every so often by virtually anyone with an insurable motor vehicle – whether it be a car, truck, motorcycle, moped, or even a scooter.
But with these 2023 California car insurance rate increases, the hikes were actually approved by state government officials.
“California Insurance Commissioner Ricardo Lara approved some big rate hikes in the last six months, ending a long COVID break after insurance companies complained that they were losing money and cutting back in the nation’s largest vehicle market. Higher rates for Geico, Mercury, and others are just now showing up in insurance renewal letters that customers receive,” the Los Angeles Times said.
In September 2022, the Associated Press (AP) reported that California’s “inaction” was a threat to auto policies – at least, that’s what the insurance companies wanted everyone to believe.
“Top U.S. insurance companies and associations say California is risking a crisis in the nation’s largest automobile insurance market by refusing to approve any rate increases for more than two years, since the start of the coronavirus pandemic,” the AP reported.
According to the auto insurance companies, as of September 2022 they were:
- Already cutting back on expenses and charges
- Unable to continue operating at a loss
- During that operating at a loss period, the auto insurance companies said Commissioner Lara was delaying rate cases filed by companies representing three-quarters of the California market.
Since the commotion from the insurance companies, Lara has approved a number of considerable rate hikes over the course of the past six months. All of those insurance rate hikes, according to the Los Angeles Times, will have significant impacts on the pocketbooks of everyday California drivers.
And, as the Los Angeles Times reported, consumer advocates note that more increases are in the pipeline. Additionally, those increases will affect residents of the Golden State “even as some insurers have yet to refund customers for premium overcharges during the early months of the pandemic when people were driving less and getting into fewer accidents.”
“These insurance companies still owe consumers from the COVID era,” Jamie Court, president of non-profit Consumer Watchdog, told the Times. Court’s Santa Monica nonprofit sponsored Proposition 103 – the 1988 voter initiative which limited how much insurers can charge for auto, home, and casualty insurance.
“The commissioner should not be granting rate hikes when he still hasn’t been able to compel them to give rebates for the times when we weren’t driving,” Court told the Los Angeles Times.
For an in-depth summary of the Top 10 Factors That Can Affect Your Car Insurance Rates, please click here.
How Much Do Californians Pay for Auto Insurance Premiums?
As various local media outlets have reported, Californians pay significantly more for car insurance when compared to the rest of the country:
- Californians are paying an average of $2,291 in car insurance premiums in 2023.
- That figure is up $101 from 2022 averages, according to a Bankrate analysis.
- Bankrate’s analysis discovered that car insurance premiums are rising nationwide as people drive more miles, drive less safely, and wreck increasingly expensive cars.
Additionally, Consumer Watchdog confirmed the following statistics related to the increase in car insurance premiums for California drivers:
- Rate increase approvals began gathering “steam” in December and January.
- The car insurance rate increases have been granted to insurers representing more than 20% of the market.
- Geico, Mercury, and Allstate received approval for 6.9% increases.
- Some smaller insurers/carriers were granted larger hikes on consumers.
- An additional 97 premium rate increases have been requested by various car insurance companies.
- Those rate increase requests – which will impact your financial well-being – reportedly range from 4.5% hikes at the bottom all the way up to the top at nearly 20% increases.
- The most common request made by insurance carriers is 6.9% “because anything larger than that can trigger a public hearing.”
- Some of the biggest names on the pending list include:
- State Farm
- The American Automobile Association (AAA)
- Geico, California’s second-largest auto insurer (behind State Farm), secured a 6.9% rate increase in December 2022.
- That increase will mean a premium boost averaging $125 a year for the company’s 2.1 million policyholders.
According to Consumer Watchdog attorney Daniel L. Sternberg, some Golden State drivers will be hit harder than others.
” …particularly those insured by companies that are using a driver’s job and educational background in determining that person’s rate,” Sternberg told the Los Angeles Times.
In recent years, Consumer Watchdog has challenged rate increase filings by:
The challenges issued by Consumer Watchdog were reportedly due to the companies intentionally charging higher base rates for lower-income workers than for professionals with college degrees.
Californians are still waiting for about $3.5 billion of the $5.5 billion that Consumer Watchdog estimates policyholders are owed for pandemic-era overcharges, the Los Angeles Times reported.
“Insurers in September said California’s auto insurance market was on the brink of a crisis because they were paying out more in claims than they were collecting through premiums in 2022. Geico last year closed California sales storefronts in favor of online sales, and others have talked about slowing growth in the state,” the Times said.
How to Recover Financial Compensation After a Car Accident Injury
After being injured in a car accident, you could be left with mounting medical bills, pain and suffering, lost wages, and more. If the car crash occurred through no fault of your own, those losses should not be your responsibility. Rather, the at-fault driver who hit you and caused the crash – whether due to negligence or simple human error – should be on the hook for any losses you suffered through your injuries.
By filing a personal injury claim with a Dordulian Law Group (DLG), you will have a team of dedicated car accident attorneys fighting for justice and maximum financial compensation on your behalf. In fact, you can pursue financial compensation for all applicable economic and non-economic losses suffered as a result of a car accident.
Don’t accept a quick settlement from the insurance company without first completing a free consultation with one of DLG’s proven and experienced car accident lawyers. Contact us today at 866-GO-SEE-SAM for a fee and confidential consultation where you may discuss your car accident case freely and ask any questions you might have regarding the litigation/cash settlement process.
DLG was founded by Sam Dordulian, a skilled and proven trial lawyer who previously served as Deputy District Attorney for Los Angeles County. In that role, Dordulian garnered over 100 jury trial victories – a rare feat, particularly among personal injury lawyers. Dordulian and his unparalleled team of California car accident attorneys give your case the advantage needed to secure the justice and maximum damages award it deserves. Contact DLG’s Los Angeles car accident and personal injury attorneys today at 866-GO-SEE-SAM.
We’ll listen to the facts of your case, launch a thorough investigation into what transpired, get you acclimated with all the DLG team members who will serve as your legal support network, and develop a winning strategy based on our decades of experience and past success – including securing more than $100,000,000.00 in settlements and verdicts for injured clients like you.
Ready to file a claim and pursue justice through a financial damages award? Our expert attorneys are available online or by phone now.
With DLG, you never have to worry about being left with anything less than a maximum financial damages award following your car accident injury. Our No Win/No Fee Guarantee means you don’t pay a penny out-of-pocket until after we’ve successfully secured a maximum financial damages award for your car accident case. If we don’t win, you don’t pay – it’s just that simple.