Car insurance premiums rise by 15% in the first half of the year
Drivers in California can expect significant increases in car insurance premiums. In the first half of 2024 alone, premiums have risen by 15%. This increase is part of a broader trend across the state and the country. According to data from Insurify, California is expected to see an overall increase of 22% by the end of the year.
The sharp increase in premiums follows a 24% increase in 2023, driven by insurers’ alleged underwriting losses of $33.1 billion in 2022. While losses declined to $17 billion in 2023, the financial burden was still enough to trigger significant premium increases in 2024.
The combination of inflation, rising vehicle repair costs and weather-related claims has put insurers under unprecedented pressure, forcing them to raise their premiums. In states like California, where insurance rates were frozen during the COVID-19 pandemic, insurers are now trying to catch up. Some are demanding double-digit rate increases, others are pulling out of the state altogether.
“During the COVID-19 lockdowns, states like California froze rate increases,” said Mallory Mooney, licensed insurance agent and director of sales and service at Insurify. “That’s why so many people faced drastic rate increases in 2023 after those restrictions were lifted. Insurers are still playing catch-up, and for many of them, it’s too little, too late.”
California insurance regulations, which emphasize consumer protection, require insurers to obtain approval from the Department of Insurance (DOI) before implementing rate increases. Despite these protections, California motorists have seen a 45% increase in comprehensive insurance rates over the previous year.
Adding to the financial burden, California will increase its minimum auto insurance requirements on January 1, 2025, as part of Senate Bill 1107. The new law, signed by Governor Gavin Newsom, will double and in some cases triple the liability limits on auto insurance policies. While the higher limits offer drivers better protection, they are also expected to further increase premiums.
Several insurers have scaled back their operations in the state. GEICO has closed all of its offices in California, State Farm has stopped offering phone quotes and Progressive has stopped advertising in the state. With more insurers potentially leaving the market, the Department of the Interior may approve further rate increases to keep the companies in business.
In California, the average annual premium for comprehensive insurance is over $2,400, meaning drivers are facing the highest insurance costs in recent history, and this trend shows no sign of abating.
