Car insurance rates are on the rise, with California being one of the states experiencing some of the fastest spikes in half a century. According to a report by Insurify, auto insurance rates in California are projected to soar by 54% in 2024, making it one of three states expected to see rate hikes of more than 50%. As of June, the average annual cost for full coverage in California was $2,417, up 45% from the previous year.
One of the factors contributing to the increase in premiums is the rise in auto thefts. The National Insurance Crime Bureau reported that California accounted for the highest number of vehicle thefts nationwide last year. This increase in thefts has led to higher insurance costs for consumers.
Additionally, insurance regulations in California, designed to protect consumers, have had unintended consequences. During the COVID-19 shutdowns, states like California put a freeze on rate increases. However, once these restrictions were lifted, many people saw drastic rate hikes in 2023. Some insurance companies are still playing catch up in California, while others have pulled out of certain markets entirely, leading to further adjustments in the industry.
Another factor affecting premiums is Senate Bill 1107, which will increase minimum auto coverage requirements in the state. This legislation will double, and in some cases triple, the liability limits on policies. While this will provide higher protection limits for drivers, it will also increase the financial burden on insurers, leading to higher rates to match the new requirements.
Climate risk and severe weather events are also contributing to the rise in insurance rates. Growing damages from weather events, which comprehensive car insurance often covers, are changing how insurers set rates. Additionally, the rise in vehicle maintenance and repair costs due to high-tech driver assistance features in newer vehicles is also impacting premiums.
While California, Minnesota, and Missouri are expected to see the largest increases in auto insurance rates in 2024, California’s projected annual cost of $2,417 for full coverage is still higher than the other two states. Insurify noted that California’s consumer protection laws keep insurance costs down for policyholders, but it can be challenging for insurers to operate profitably in the state. Some insurance companies have even closed offices or halted operations in California due to these challenges.
If more companies leave the state, it may prompt the California Department of Insurance to approve additional rate increases in an effort to keep insurers operating in California. As insurance rates continue to rise, it is essential for consumers to shop around and compare quotes to ensure they are getting the best coverage at the most competitive price.
