Insurance rates in California continue to rise, reflecting the state’s enduring obsession with cars.
According to data analyzed by Insurify, the average annual cost of full coverage in California has increased to $2,417 as of June, compared to $1,666 the previous year.
According to the report, premiums are expected to keep increasing and reach an estimated $2,681 for full coverage by the end of the year.
Insurify states that full-coverage policies consist of comprehensive and collision coverage, along with liability coverage.
“The increases that have occurred have been largely driven by a continuation of people driving more, resulting in an increasing frequency of claims and inflationary pressures related to vehicle prices and repairs,” said Gabriel Sanchez, spokesperson for the state Department of Insurance.
Some insurers have successfully obtained rate increases from the department, while others have chosen to restrict the availability of new policies in California or cease offering them entirely due to frustrations with state regulations.
Auto claims have seen a significant increase throughout the United States since the onset of the COVID-19 pandemic, as reported by the Insurance Information Institute.
However, the pandemic is not the only factor responsible. According to Michael Giusti, an analyst at InsuranceQuotes.com, there are several other factors that contribute to these changes, such as shifts in driving habits, previous supply chain challenges, and advancements in car manufacturing techniques.
Since the lifting of pandemic-era stay-at-home orders, there has been a significant increase in the number of people hitting the road and driving more frequently than before.
The type of cars people drive also contributes to the rise in insurance costs. According to him, insuring new cars can be more costly due to their higher prices.
Newer cars often come with advanced technological features, which can increase the cost of potential claims. As an illustration, Giusti mentioned that if he accidentally hit a pole with his first car, a 1977 Dodge Aspen, the pole would have suffered more damage than the car’s sturdy steel bumper.
“If I accidentally hit it, not only will it damage my plastic bumper, but it will also disable the sensor,” he explained.
According to the claim, he would need to document the replacement of the bumper, rewiring and recalibration of the sensor, and buffing of the affected area. According to him, what might have initially seemed like a minor car accident has now escalated into a significant insurance claim.
Additionally, the expense of medical bills following an accident contributes to the overall increase in insurance rates. The U.S. Bureau of Labor Statistics reported that there was a 6.7% increase in hospital service costs nationwide from January 2023 to January 2024.
However, even with the challenges, there are still ways to cut costs on your premium while ensuring your safety in the urban environment:
Explore Different Options
According to Giusti, it is always advisable to compare different insurance providers, regardless of whether you already have one or not. Gone are the days when loyalty to an insurance provider automatically meant savings.
“It’s important to ensure that you’re getting the best rate, but I’m not suggesting making hasty decisions,” he advised.
However, the sticker price is not the only factor to consider. It is also recommended by the Insurance Information Institute to seek recommendations from friends and relatives.
Optimize your Credit
Upon contacting various agents or company representatives, you may discover that different insurers will provide you with significantly varied prices based on your credit score.
It is crucial to keep your credit score in good shape by paying your bills promptly, avoiding unnecessary credit, and keeping your credit balances low, as advised by the Insurance Information Institute.
Rethinking our Approach
According to Giusti, the age of your car plays a significant role in the type of policy you receive and the associated costs.
If you own a vehicle that has been on the road for a decade or more, it would be wise to consider whether a collision policy or a comprehensive policy is necessary.
“Adjusting your coverage when your car is fully paid and you no longer require as much can be a smart strategy to cut costs, particularly if the car’s value is gradually decreasing,” Giusti suggested.
Understanding Deductibles
The institute suggests requesting higher deductibles before your insurance policy takes effect. By opting for a higher deductible, you have the opportunity to significantly reduce your expenses. As an illustration, opting for a higher deductible, such as $500 instead of $200, may lead to a decrease in the cost of your collision and comprehensive coverage by 15% to 30%. Switching to a $1,000 deductible could potentially result in savings of 40% or more.
Combining your auto insurance with other policies, such as homeowners insurance, could potentially lower the amount you pay for premiums.
Reference:: The Los Angeles Times