The craze for cars in California is as strong as ever, and insurance rates are rising accordingly.
Analyzing the Data The average annual cost of full coverage in California was $2,417 as of June, up from $1,666 a year earlier, according to a survey by insurance comparison website Insurify.
The report found that premiums are projected to continue rising, with premiums expected to reach an estimated $2,681 for full coverage by the end of the year.
According to Insurify, full coverage policies include comprehensive and collision coverage as well as liability coverage.
“The increase that has occurred is primarily due to people driving more, which has resulted in an increase in the frequency of claims and inflationary pressures related to vehicle prices and repairs,” said Gabriel Sanchez, a spokesman for the state Insurance Department.
While many insurance companies have Rate increase applied for and approved Despite the department’s guidance, others — frustrated by the state’s rules — have either limited the number of new policies in California or stopped offering them altogether.
The cost of auto claims in the United States has soared since the start of the COVID-19 pandemic, according to the Insurance Information Institute.
But the pandemic isn’t the only thing to blame. InsuranceQuotes.com analyst Michael Giusti said other factors include changes in driving habits, past supply chain problems and the way cars are manufactured.
Giusti said that after stay-at-home orders were lifted during the pandemic, people took to the roads in large numbers — and are driving more now than they ever have before.
The cars people are driving are also a factor in rising coverage costs, he said. Newer cars are more expensive, which means they cost more to insure.
The technical bells and whistles stuffed into new cars can drive up the cost of a potential claim. For example, Giusti said if he had hit a pole with his first car — a 1977 Dodge Aspen — the pole would have caused more damage than a steel bumper.
“Today, if I hit it from behind, not only would my plastic bumper break, but the sensor would also be destroyed,” he said.
In the claim, he must report bumper replacement, rewiring and recalibration of sensors, and buffing the area. What was once a simple fender bender has “turned into a major claim,” he said.
Another factor that drives up insurance rates is the cost of medical bills in the event of an accident. The US Bureau of Labor Statistics reported that hospital service costs rose 6.7% nationally between January 2023 and January 2024.
But despite the adverse circumstances, there are still ways to save money on your premiums while still traveling through the concrete jungle as safely as possible:
shop around
Whether you have an insurance provider or not, Giusti said you should always try different insurance providers. It’s a no-brainer to stick with one insurance provider just because you’ve been a customer for a long time — it doesn’t guarantee any savings.
“I’m not saying you should leave the company without thinking, but you have to make sure you’re getting a competitive rate,” he said.
However, the sticker price only goes so far. The Insurance Information Institute also recommends that you ask your friends and relatives for their recommendations.
Maximize your credit
After making a few calls to agents or company representatives, you may find that one insurer will offer you a significantly different price than another based on your credit score.
That’s why it’s important to maintain your credit score by paying your bills on time, not taking on more debt than you need and keeping your credit balances as low as possible, according to the Insurance Information Institute.
Rethinking coverage
Giusti said the age of your car also determines what type of policy you’ll be offered and how much it will cost.
If your car is at least 10 years old, he recommends considering whether you need a collision policy or a comprehensive policy.
“If your car is paid off and you don’t need as much, reducing your coverage is a good way to save some money, especially if the car is slowly losing value,” Giusti said.
Decreasing the deductible amount
The institute recommends asking for a higher deductible before your insurance policy kicks in. By requesting a higher deductible — the amount you must pay before your policy starts paying for covered expenses — you can substantially reduce your costs. For example, raising your deductible from $200 to $500 can reduce your collision and comprehensive coverage costs by 15% to 30%. Moving to a $1,000 deductible could save you 40% or more.
Bundling auto insurance with other policies, including homeowners insurance, can also lower your premium costs.
Inquire about discounts
You can also ask your insurance provider for a discount, Giusti said.
The institute has provided a list of some common discounts, though their availability depends on the insurer and where you live:
- Anti-theft devices
- Auto and homeowners coverage with the same company
- college students away from home
- defensive driving course
- drivers ed courses
- Good credit record
- Low annual mileage
- Long Term Customers
- more than one car
- No accidents in three years
- No traffic violations in three years
- Student drivers with good grades
