People are questioning why their car insurance rates are on the rise in California. Men and women with spotless driving records are seeing their rates go up in the double digits. Increases for some people are around 30 percent, and they aren’t alone. It’s frustrating for those who have no accidents or tickets on their records because they feel as if they are being penalized for good behavior. Why are car insurance rates rising in California? What is behind these increases?
Inflation Is Part of the Problem
The American Property Casualty Insurance Association reports these increases are the result of inflation. Used car prices have gone up, so it costs more to replace a vehicle or repair it. In fact, car repairs cost 20 percent more today than they did just a short time ago. Everything the insurer might be asked to pay for has gone up in price. As a result, car insurance premiums are on the rise. For information on these rising costs, see more at IISinsuarnce.com.
Drivers Have Doubts
Consumer Watchdog, an advocacy group, doesn’t feel inflation is completely to blame for the premium increases. This group believes the fault lies with the insurance companies. They want to increase their profits, and raising premiums is one way to do so. These companies, according to the group, also limit the claims they pay while asking the insurance commissioner to allow for rate increases. Consumers are seeing the results of the rate increase in their bills.
No Increase in Two Years
According to Credit Karma, California has not had a car insurance premium rate increase since 2020. During the global pandemic, fewer drivers were on the road. This led the California Insurance Commissioner to require insurance companies to refund a portion of the premiums their customers paid. The Commissioner’s office reports not all insurers complied with the order. Of those that did, some did not refund the required amount to drivers. However, the insurance industry also saw a high number of fatalities during the pandemic, which hurt its bottom line.
The Industry’s Bottom Line
High fatalities during the pandemic are only one thing that has hurt car insurance providers. The industry is facing its highest loss ratio in 30 years. The Department of Insurance reports the current loss ratio is 81 percent, which is the highest the industry has seen in three decades. According to this agency, insurers want the loss ratio to be at 70 percent or below.
Exiting the State
Insurance companies must ask the state to approve premium increases. While the state has done so, leading to the increase customers are now seeing, it may not be enough. Many companies are pulling back on their presence within the state. Geico is a good example. The insurance giant no longer has physical sales offices in California. If a person wishes to purchase their car insurance through Geico, it must be done online.
Geico is not alone in taking this step. Liberty Mutual has also cut back on its marketing efforts within the state. Sadly, others may soon follow suit and drivers will find they have limited choices when it comes to their insurance carrier.
California isn’t the only state where drivers are seeing premium increases. In fact, the majority of drivers in America will see car insurance premiums rise this year. Always shop around for better deals on car insurance. Men and women who do might find they save a significant amount by taking this simple step.
