Feb 28, 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:
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.
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:
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.
As various local media outlets have reported, Californians pay significantly more for car insurance when compared to the rest of the country:
Additionally, Consumer Watchdog confirmed the following statistics related to the increase in car insurance premiums for California drivers:
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.
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