Why are car insurances 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.
Rather, there are several key reasons. California's state insurance regulations, inflation, increased wildfires and heightened reinsurance costs have all contributed to the current California home insurance crisis.
State Farm announced last year it would stop accepting new home insurance applications in California due to "historic" increases in construction costs and inflation. The company then raised rates a whopping 20 percent for existing customers, according to the San Francisco Chronicle.
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.
[This report has been corrected with regard to the timing of Allstate's decision to pull back from offering insurance in California, which occurred in November 2022, not earlier in 2023.]
Geico, Progressive, USAA, State Farm and Allstate are the best car insurance companies in California based on cost, reputation and coverage options.
The insurer plans to send non-renewal notices to 72,000 home and apartment policyholders starting this July. State Farm plans to stop renewing home and apartment insurance policies in California beginning July 3.
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.
Who still insures cars in California?
| Insurance company | Bankrate Score | Average full coverage rate |
|---|---|---|
| Progressive | 4.4 Rating: 4.4 stars out of 5 | $2,199 |
| Geico | 4.4 Rating: 4.4 stars out of 5 | $2,206 |
| State Farm | 4.3 Rating: 4.3 stars out of 5 | $2,932 |
| Mercury | 3.8 Rating: 3.8 stars out of 5 | $2,050 |
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.
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.
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.
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.
GEICO is an indirect, wholly owned subsidiary of Berkshire Hathaway, Inc.
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.
In addition to State Farm, Allstate and The Hartford, smaller carriers including Merastar Insurance Co., Unitrin Auto and Home Insurance Co., Unitrin Direct Property and Casualty Co., and Kemper Independence Insurance Co. have announced that they will not be renewing homeowners' policies in California in 2024.
As of October 1st of this year, Liberty Mutual will no longer be offering business owners' policies in California.
WASHINGTON, D.C. (NewsNation) — Days after a major insurance provider announced it was pulling out of Florida due to environmental risks, State Farm Insurance announced Thursday it is recommitting itself to the residents of the state, NewsNation has learned.
What are the best car insurance companies in California?
- Best car insurance in California overall: Travelers.
- Best California auto insurance for your budget: Auto Club of SoCal.
- Best car insurance in California for customer complaints: Amica.
- Best California car insurance for ease of use: State Farm.
The top 10 cheapest car insurance companies are Nationwide, Geico, State Farm, Travelers, Progressive, AAA, Allstate, Chubb, Farmers and USAA.
- Chula Vista: $1,299 per year.
- Salinas: $1,308 per year.
- Santa Rosa: $1,362 per year.
- Bakersfield: $1,391 per year.
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.
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.
