Why are auto insurance companies pulling out of California?
The conditions in the state have led the insurers to believe that California drivers are too expensive to insure. Auto accidents increased 25% between 2020 and 2021, where at the time, premiums increased only 4.5%. The insurers were paying more in claims than they were making in premiums.
Due to climate change and wildfire risk, many insurance carriers are either leaving California or no longer offering to write new policies.
Overall in California, the average annual car insurance premium went up about 18% from 2023 to 2024, according to Bankrate.com. Zemansky was unsure whether rate increases similar to Allstate could become the norm for car owners. He said that similar to the homeowners market, the number of options is shrinking.
The companies have cited high inflation, catastrophe exposure, reinsurance costs and the limitation of decades-old insurance regulations as reasons for scaling back policies in the state. State Farm reported a net loss of $6.3 billion in 2023 compared to a net loss of $6.7 billion in 2022.
subsidiaries — Merastar Insurance, Unitrin Auto and Home Insurance, Unitrin Direct Property and Casualty, as well as Kemper Independence Insurance — will no longer renew preferred home and auto insurance policies in California, a state that has suffered a number of wildfires, floods and other extreme weather events in ...
State Farm General has also decided to exit the commercial apartment policy sector, affecting an additional 42,000 policies. These measures, slated to begin on July 3, 2024, for the former group and August 20, 2024, for the latter, account for a little more than 2% of the company's total policy count in California.
The Chronicle reports that insurance industry magazines linked Geico's decision to close California sales offices to its failure to raise insurance prices in compliance with Sacramento regulations and other market forces.
California Car Insurance Companies
Based on our research, Geico offers the best car insurance in California. Progressive, USAA, State Farm and Allstate are also reliable options for most drivers. *Our research team considers nationwide factors when rating providers.
Geico, USAA, Mercury Insurance, Progressive and CSAA are the five cheapest car insurance companies in California, according to our research. The average cost of full-coverage car insurance in California is $193 per month or $2,313 per year.
Geico closed its sales offices in California as of August 2022 and is also no longer selling insurance over the phone to California customers. Geico is still offering car insurance to California residents online, and Geico says that the closing of their California locations will have no effect on existing policies.
Is Allstate canceling policies in California?
Allstate announced in November 2022 that it would “pause new homeowners, condo and commercial insurance policies in California to protect current customers,” the Associated Press reported in June.
To clarify, State Farm, Allstate Farmers USAA, Travelers, Nationwide and Chubb are still active in California, they have just either limited or stopped writing new home insurance policies. Current home insurance policies with these providers are still being honored.
The decision is the latest blow to California property owners, as insurance companies continue to raise rates for customers or discontinue coverage. In 2022, insurance giant AllState paused its sales of new home insurance policies in California due to wildfires and higher costs of doing business in the state.
State Farm is the largest auto insurer in California as well as the largest property and casualty insurer in the United States overall, providing more than 87 million insurance policies.
State Farm is the best car insurance company in California for ease of use. State Farm customers can manage their policy and submit claims online, and the mobile app has excellent user ratings for both iOS and Android devices. You can learn about more features in our State Farm auto insurance review.
- Chula Vista: $1,299 per year.
- Salinas: $1,308 per year.
- Santa Rosa: $1,362 per year.
- Bakersfield: $1,391 per year.
Since May, several large and small property insurance providers, including Allstate, State Farm, Farmers and USAA, have decided to limit business or leave California altogether.
Insurance products in California are offered through AAA Northern California Insurance Agency, License #0175868, in Montana by AAA Montana, Inc., License #9756, in Nevada by AAA Nevada and in Utah by AAA Utah.
In 2019, State Farm was among the hundreds of companies and industry associations to sign an amicus brief supporting LGBTQ equality in the workplace before three cases involving LGBTQ discrimination were reviewed by the Supreme Court.
GEICO is an indirect, wholly owned subsidiary of Berkshire Hathaway, Inc.
Is GEICO in trouble financially?
Geico, viewed as the crown jewel of Berkshire's insurance empire, has found itself in a bit of a trouble recently after losing market share to its best competitor, Progressive, in 2022 with a widening gap in underwriting margins and growth, according to an analysis from UBS.
Impact of Climate Change on Insurance Costs
Climate change plays a far larger role in the cost of auto premiums than most consumers believe. That's because the effects of this change have been felt throughout California, and they effectively put vehicles in the state at enhanced risk.
State Farm, American Family, Geico and Progressive are the cheapest car insurance companies for most drivers. USAA has even cheaper rates, but only military members, veterans or their families can qualify. *USAA is only available to military members, veterans and some of their family members.
| Insurance company | Bankrate Score | Average min coverage rate |
|---|---|---|
| Progressive | 4.4 Rating: 4.4 stars out of 5 | $544 |
| Geico | 4.4 Rating: 4.4 stars out of 5 | $430 |
| State Farm | 4.3 Rating: 4.3 stars out of 5 | $594 |
| Mercury | 3.8 Rating: 3.8 stars out of 5 | $527 |
USAA, Nationwide, Travelers, Erie, Geico and Progressive are the cheapest car insurance companies nationwide, according to our analysis.
