Are you overpaying for your car insurance? Here’s what is typical for California drivers

Car insurance rates have been on the rise. But do you actually pay more for your car insurance because you live in California? Let’s break it down.

What’s happening to car insurance rates?

Auto insurance costs have increased 17.8% over the last year, according to the July Consumer Price Index.

Almost a third of U.S. auto insurance customers said their insurer raised rates over the last year, according to a study from J.D. Power, a global consumer insights and analytics company. At the same time, auto insurers lost an average of 12 cents for every dollar they collected in premiums in 2022.

That was the “worst performance in more than 20 years,” according to the study, in its 24th year.

“Overall customer satisfaction with auto insurers has plummeted this year, as insurers and drivers come face to face with the realities of the economy,” said Mark Garrett, director of insurance intelligence at J.D. Power, in a June news release.

Why is car insurance so expensive?

Rising repair costs and the return to pre-pandemic driving routines have driven up the cost of car insurance, Yahoo Finance reported.

Inflation, supply chain disruption and new car technology (including advanced features such as backup cameras or anti-lock brakes) led to the rising repair costs.Returning to pre-pandemic routines has resulted in more accidents, litigation and medical costs.

Plus, cars — used and new — are more expensive. The average price tag for a used vehicle was $29,472, according to an August report from Edmunds, a company that provides guides for car shopping. That was down 4.6% from last year, but was still a 46% increase from 2018’s $20,153.

Another reason for the high prices: climate change. Insurers will generally raise rates if they expect more claims in the future, NerdWallet reported, and areas affected by wildfires or floods become more expensive to insure.

Twenty-three weather and climate disaster-related events have cost the country more than $1 billion this year, according to the National Oceanic and Atmospheric Administration. California’s winter storms in the beginning of the year killed at least 20 people and cost the state an estimated at least $1 billion.

How much do you pay in California?

There’s a range of answers for the average cost of car insurance in California.

USAToday’s BluePrint estimated an average of $2,476, or $205 a month, for a California driver with a clean record. The national average is $2,150 annually, or $179 a month.

If you’re considered a high-risk driver, you could pay 70% more than others, or an average of $4,213 annually — about $351 monthly.

NerdWallet calculated the average car insurance for a 35-year-old “good” California driver at $1,659 annually, less than the nationwide average of $2,148.

And found the national average annual cost for car insurance was $1,682 in 2022, with California falling fifth on the list with an average of $2,115 behind Florida ($2,560), Louisiana ($2,546), Delaware ($2,137) and Michigan ($2,133).

These factors could affect your premium:

  • Type of coverage (including the deductible and limits you choose)

  • Type of car

  • Your driving habits/history

  • Your age

  • Your location in the state (Drivers in more densely populated areas tend to pay more, according to Bankrate.)

What factors don’t count in California?

  • Gender

  • Credit score

What can you do to save?

Though car insurance costs are high, you can always shop around if you don’t like your current policy by getting quotes for policies from different companies. Make sure you understand your coverage needs.

You can also look for discounts you could qualify for, such as:

  • Bundling home and auto

  • Multiple vehicle

  • Paying premium up front

  • Taking a defensive driving course

  • Good driver discount

  • Good student discount

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