Why is it so difficult to get car insurance in California right now?
California regulates insurance companies and their rate increases, so a number of insurance companies have simply pulled out of the state. It's one reason it's getting harder to find a policy.
As if high gas prices weren't making life miserable enough, California drivers are being buffeted by higher auto insurance premiums — if they can find coverage at all. Frustrated by state regulations, a number of insurers have limited the new policies their agents can sell in 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.
"Insurance companies need to remain profitable enough to comply with state law and to pay out the claims of their existing customers, but this has proven to be increasingly difficult in recent years due to wildfire losses and other factors," said Angele Doakes, senior manager of property and casualty insurance strategy ...
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. The ranking order of providers in this table is specific to car insurance in California.
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.
- Chula Vista: $1,299 per year.
- Salinas: $1,308 per year.
- Santa Rosa: $1,362 per year.
- Bakersfield: $1,391 per year.
In 2023, major players like Geico, Progressive, and Farmers have scaled back or ceased operations in California and Florida's auto insurance markets due to rising costs. AmGUARD Insurance and Falls Lake Insurance are discontinuing their homeowners' insurance programs in the state.
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.
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.
What happened to Geico insurance in California?
Geico has closed all of its California offices and Progressive stopped advertising in the state.
The companies are blaming wildfires, inflation that raised reconstruction costs, higher prices for reinsurance they buy to boost their balance sheets and protect themselves from catastrophes, as well as outdated state regulations — claims disputed by some consumer advocates.
State Farm, which stopped issuing new homeowner policies in the state last year, will no longer renew thousands of existing policies starting in July.
In other words, nearly 62% of motorists in the district are actually insured by another firm. In California, the state's largest auto insurance company, State Farm, has the smallest market share compared to any top insurer in other states, holding only 12.06% of the market in the Golden State.
The top 10 cheapest car insurance companies are Nationwide, Geico, State Farm, Travelers, Progressive, AAA, Allstate, Chubb, Farmers and USAA.
The cheapest annual rates among companies in our analysis are offered by USAA, Erie, Auto-Owners, and Nationwide. These insurers have competitive sample premiums in multiple driver categories, including some categories that are typically costly to insure.
Travelers scored as the best car insurance company in California overall, according to NerdWallet's 2024 analysis. Drew Gula is a NerdWallet authority on auto insurance. He previously worked as the senior content editor at Soundstripe and as the senior writer in Liberty University's marketing department.
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.
California drivers must at least meet the liability auto insurance coverage requirements of 15/30/5 to drive legally. You can be fined up to $500 out of pocket if you are convicted of driving without insurance in California, depending on whether it's your first or subsequent offense.
| Driving Record | Annual Premium | Monthly Premium |
|---|---|---|
| Clean | $1,343 | $112 |
| Ticket | $1,944 | $162 |
| At-Fault Accident | $2,205 | $184 |
| DUI | $3,375 | $281 |
Why is auto insurance so expensive in California?
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.
| Company | Forbes Advisor Rating | Our expert take |
|---|---|---|
| Nationwide | 5.0 | Best overall |
| USAA | 4.8 | Best for military members and veterans |
| Travelers | 4.7 | Great for drivers with speeding tickets |
| Erie | 4.6 | Best for drivers who caused an accident |
| 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 |
The average cost of car insurance in California is $2,663 per year for full coverage and $647 per year for minimum coverage.
GEICO is an indirect, wholly owned subsidiary of Berkshire Hathaway, Inc.
