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California Car Insurance Rates on the Rise




You're probably a safe driver. You've had very few accidents - maybe none at all - and yet your monthly car insurance payments have gone up.

You're not alone.

In fact, auto insurance rates for California drivers have risen steadily every year since 2011. The most recent assessment suggests that average insurance rates have gone from $1,190 annually in 2011 to $1,713 in 2017 for an increase of 43.9% over seven years¹.

Currently, the average driver in California pays $1,962 annually in car insurance. That may seem like a lot, but California drivers aren't the only ones to see changes in their monthly premiums. For example, drivers in Georgia pay an average annual amount of $2,201 for their car insurance. For the curious, you can find a complete list of average auto insurance rates by state here.

So, Why Are My Car Insurance Rates Going Up?

The following are the top four factors driving up California car insurance premiums:
1. Technology Distractions
The rise of the smartphone poses an ever-present distraction to both teen and adult drivers. In a 2016 survey by the California Office of Traffic Safety, 54% of California drivers said they had been hit or nearly hit by someone who was talking or texting on their cell phone. Nationally, Distraction.gov reports that 3,477 people were killed and 391,000 were injured in motor vehicle crashes involving distracted drivers in 2015.

While there have been efforts to reduce the threat of distractions while driving, this trend continues and increases accidents on the road.

2. It's More Expensive to Fix Today's Cars
New technology continues to make its way into our cars, which can increase overall repair costs. Backup sensors, rearview cameras, and similar gadgets are becoming more common and are not cheap to fix or replace. In 2016, CarMD reported that U.S. repairs costs rose by 2.7% as a result of rising costs of labor and replacement parts.

3. More Cars on The Road
In 2016, California had 14.7 million registered vehicles, the highest in the nation. More cars on the road produces a higher amount of accidents. In California, the number of car accidents has increased by 4% since 2014.

4. Storms & Bad Weather
You can't control the weather, and neither can insurers. According to NOAA data, weather disasters like floods, hurricanes, hail storms, and tornados cause major property damage every year, which includes car damage. Between 2010 and 2013, the average property damage caused by weather events was estimated to be $9.5 billion per year. Because damage like this is covered by comprehensive car insurance, insurers are often footing the bill when more extreme weather hits.


While these are the strongest factors that have contributed to increased rates across the state, it's difficult to point to any one factor as the cause


The bottom line is, rates are increasing because insurance companies are losing money. According to estimates from A.M. Best, U.S. insurers have lost $36 billion over the past two years on all property/casualty policies.

  • It's not about one company. The whole industry is raising their rates to react to market forces. The truth is, there are more than a few reasons why it's becoming more expensive to insure drivers across the nation.

  • It's not about making a profit. With insurers losing money over the growing costs of car insurance payouts, a rate increase enables the insurance company to continue to operate - where they don't pay out more than they take in.


What Can the Average Driver Do?

While state-wide car insurance rate increases are hard to avoid, there are a few steps every driver can take to help reduce your overall cost.

  • Check with your provider about discounts. Many car insurance companies offer a variety of discounts and ways to save. Discounts may include multicar discounts, senior discounts, and reductions for being a safe driver. For example, 21st Century Insurance Company offers safe driver discounts that increase the longer you go without an accident.


  • Stay focused on the road. Technology plays a big part in our lives, but it can become a dangerous distraction - especially when on the road. Be sure to stow your phone away when you drive, along with avoiding common distractions to decrease your chances of an accident.

If you're a safe driver and have several discounts applied, you may already be getting the best price on insurance for your current coverage options. Ultimately, rate increases allow insurance companies to continue to do what they do best - provide coverage to help protect drivers and their families on the road and at home.



References:

1. https://www.thezebra.com/california-car-insurance/
2. https://www.valuepenguin.com/average-cost-of-insurance
3. https://www.statista.com/statistics/196010/total-number-of-registered-automobiles-in-the-us-by-state/
4. http://www.autonews.com/article/20170425/RETAIL05/170429908/u.s.-vehicle-repair-costs-rose-2.7-percent-in-2016-after-holding-flat
5. https://www.iii.org/article/nine-ways-to-lower-your-auto-insurance-costs



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