SACRAMENTOhighwaycasinonodepositbonus100, United States, Aug. 16 (Xinhua) -- Car insurance rates in California are projected to increase by 54 percent this year compared to 2023, with the average annual cost rising to 2,681 U.S. dollars, said a recent report from Insurify, an insurance shopping and comparison technology platform.
The Golden State, known for its consumer-friendly insurance regulations, experienced a 45-percent increase in full-coverage rates from June 2023 and June 2024.
This mirrors a national trend of rising car insurance costs, with the report predicting a 22-percent increase in the national average by the end of 2024.
This surge follows a period of rate freezes during the COVID-19 pandemic, leaving insurers now adjusting prices. "That's why so many people saw drastic rate hikes in 2023 after those restrictions were lifted," explained Mallory Mooney, director of sales and service at Insurify, in the report. "Insurers are still playing catch-up."
Worse still, California Senate Bill 1107, effective January 2025, will double or triple auto insurance liability limits.
Climate change is also influencing rate hikes, with more frequent severe weather events impacting pricing, noted Betsy Stella, Insurify's vice president of carrier management and operations.
Vehicle technology advancements were another factor contributing to higher repair costs and insurance rates. The latest Bureau of Labor Statistics Consumer Price Index showed that vehicle maintenance and repair costs have surged by nearly 38 percent over the past five years.
Electric vehicles add to the challenge, costing 46.9 percent more to repair and taking 5.8 days longer to complete, according to CCC Intelligent Solutions data.
Some major insurers have scaled back their operations in California, with Geico closing all its offices in the state, State Farm halting phone quotes, and Progressive ceasing advertising efforts.
As more insurers leave the state, the California Department of Insurance may approve additional rate increases to keep companies in the market, the report said.■