SACRAMENTO, Calif. —
If you noticed a big jump in your car insurance rates recently, you are not alone.
According to the latest Consumer Price Index data, compiled by the U.S. Bureau of Labor Statistics, motor vehicle insurance rates nationwide went up by 22.6% between April 2023 and April 2024. That percentage accounts for the U.S. city average.
McClatchy Insurance Agency insurance advisor Harold Newbill said the rate increases in California vary depending on the insurance company and many other factors.
“If they’re a safe driver in California, you might be 15, 20, maybe even 30%,” Newbill said.
So, what is causing the increases?
Newbill said there are several reasons why car insurance costs are going up. One reason is increased costs in other sectors.
“The cost to repair vehicles, you know if you think of labor, parts, the cost of fuel to deliver those parts to places, all of those have experienced a lot of increase in the last couple years,” Newbill said.
Another reason is that more accidents on California roadways lead to higher premiums and more health care costs.
“When someone’s injured in a car accident, the cost of that four or five years ago, you’ve seen pretty significant increases in that, and the amount of time that they’re injured to receive medical care, so those costs are also something insurance companies experience. And I would say litigation. People, when they get hurt, that’s pretty severe the cost of health care, the cost of litigation in California,” Newbill said.
Newbill said that during the pandemic, many insurers put a pause on increases because people were driving less. But now, due to the losses they incurred, they are not taking new clients and in some cases, dropping clients. Newbill also said some insurers have taken more drastic measures.
“Others have taken the choice of leaving the state entirely or canceling those policies, so that leaves a lot of people searching for insurance in a market where there’s a lot less options,” Newbill said.
Late last year, the California Department of Insurance issued a bulletin responding to consumer complaints about the challenges of obtaining a policy. It reminds insurers that they are required by state law to seek approval before increasing rates. The bulletin reads in part:
The California Department of Insurance and state lawmakers are working to address high insurance costs and access to auto insurance.
“The hope is that we can find a more balanced method of rates climbing, more connected to a slower increase, than large increases people are seeing,” Newbill said.
Meanwhile, Newbill said there are ways drivers can try to save money on their car insurance costs. He said people can take safe driver courses and buy a vehicle that is easier to insure.
There is also an option for low-income Californians, through California’s Low Cost Auto Insurance program. To qualify, drivers must meet the income eligibility requirements, have a valid California driver’s license, own a vehicle valued at $25,000 and have a good driving record.
“For anyone who is having a hard time finding auto insurance or found their premium has increased, we encourage them to shop around,” Department of Insurance spokesperson Gabriel Sanchez said.
The state has an insurance comparison tool online here. People who have questions about their insurance policy or who are having a difficult time finding insurance can call the department at 800-927-4357 to speak to an expert or use an online chat tool here.
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