Car Insurance Rates Surge by 15% in First Half of the Year
California drivers face significant increases in car insurance premiums, as rates have surged 15% in the first half of 2024 alone. This rise is part of a broader trend across the state and the nation, with California expected to see a total increase of 22% by the end of the year, according to data from Insurify.
The steep rise in premiums follows a 24% increase in 2023, driven by insurers’ alleged underwriting losses of $33.1 billion in 2022. While losses decreased to $17 billion in 2023, the financial strain was still enough to trigger significant rate hikes in 2024.
The combination of inflation, rising vehicle repair costs, and severe weather-related claims has placed unprecedented pressure on insurers, forcing them to raise premiums. In states like California, where insurance rates were frozen during the COVID-19 pandemic, insurers are now scrambling to catch up, with some requesting double-digit rate increases and others exiting the state entirely.
“During COVID-19 shutdowns, states like California put a freeze on rate increases,” said Mallory Mooney, a licensed insurance agent and director of sales and service at Insurify. “That’s why so many people saw drastic rate hikes in 2023 after those restrictions were lifted. Insurers are still playing catch-up, and it’s too little too late for a lot of them.”
California’s insurance regulations, which emphasize consumer protections, require insurers to seek approval from the Department of Insurance (DOI) before implementing rate hikes. California drivers have experienced a 45% year-over-year increase in full-coverage rates despite these protections.
Adding to the financial burden, California is set to raise its minimum car insurance requirements on January 1, 2025, under Senate Bill 1107. The new law, signed by Governor Gavin Newsom, will double and, in some cases, triple the liability limits for auto insurance policies. While the higher limits will offer greater protection for drivers, they are also expected to increase premiums further.
Several insurers have scaled back their operations in the state. GEICO has closed all its California offices, State Farm has stopped quoting via phone, and Progressive has halted advertising in the state. With more insurers potentially leaving the market, the DOI may approve additional rate increases to retain companies.
With California’s average annual full-coverage premium exceeding $2,400, drivers are facing the highest insurance costs in recent memory, and the trend shows no signs of slowing down.
