A recent report from Insurify states that auto insurance policies in California are expected to increase by 54 percent compared to the previous year, highlighting a significant rise in insurance costs for drivers in the state.
The expected increases would come after insurance companies have limited their offerings in California in recent years.
The big picture: Factors contributing to the substantial price hike in auto insurance policies include increased cost of claims, changing driving patterns, and other market influences that are putting upward pressure on premiums.
- Insurify found that the average annual cost for full coverage on a car in California was $1,666 in June 2023. That increased to $2,417 in June 2024 and is expected to rise to $2,681 in December.
- The current year-over-year increase stands at 45 percent, which is expected to hit 54 percent by the end of the year.
Zoom out: Nationwide, premiums have only risen by 28 percent on average, further highlighting California’s significant increase in insurance costs.
- Insurify’s report attributes California’s premium rises to the end of frozen insurance rates during the COVID-19 lockdown, and insurance companies adjusting rates to return to profitability.
- Insurers are facing financial strains from inflationary pressures, increased costs of vehicle repairs and new cars, climate-related claims and legislative changes in various states.
Go deeper: Some insurers in California are requesting double-digit premium hikes to improve profitability, while others are withdrawing from the state altogether.
- The rising insurance rates could lead to more uninsured drivers, escalating costs and creating a cycle of higher premiums, accidents, and financial burdens for Californian drivers.
