California Auto Insurance Rates Are Skyrocketing. Here’s How to Keep Yours Down

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Several auto insurers in California have recently hiked rates. Here’s what drivers need to know about how to keep their premiums down. 

Despite being one of the most expensive states to live in, California auto insurance rates are actually pretty affordable. Right now, drivers pay a few hundred dollars less than the national average, but that could be changing soon.

California Insurance Commissioner Ricardo Lara has approved auto insurance rate hikes for the top six carriers in the state over the last few months. This is expected to cost drivers billions of dollars. Here’s what Californians need to know, along with some tips for keeping their rates low.

These six California auto insurers are raising rates

The following six auto insurers have gotten approval from the State of California to raise policyholders’ premiums in 2023, according to Consumer Watchdog:

State Farm ($71 average increase per policyholder)Auto Club of Southern California ($140 average increase per policyholder)Mercury Insurance ($80 average increase per vehicle)Farmers ($98 average increase per policyholder)GEICO ($125 average increase per policyholder)Allstate ($167 average increase per policyholder)

Most of these rate hikes have already gone into effect, with the exception of the first two. The Auto Club increase is slated to take effect on April 15, 2023 while the State Farm rate hike goes into effect a month later on May 15, 2023.

Many, including Consumer Watchdog, feel the rate hikes are unjustified. But unfortunately, there isn’t a lot that the average driver can do to change the insurance commissioner’s mind. Instead, it’s best to focus on the factors a policyholder can control.

Three tips for keeping California car insurance rates down

Here are a few things California drivers can try to lower their auto insurance premiums or at least keep them close to the same as what they’re used to.

1. Shop around

Each insurer weighs an applicant’s risk a little differently, which is why companies give different rates to the same driver. Unfortunately, these risk algorithms are proprietary, so the only way to know which one is most favorable to a specific driver is to get quotes and compare them.

It’s best to get rates from a handful of car insurance companies before choosing one. Drivers shouldn’t rule out the companies on the list above just because they’ve raised rates recently. They may still offer affordable policies, especially to those who qualify for some of their discounts. But it doesn’t hurt to explore some insurers who aren’t on that list as well.

2. Claim all possible discounts

Most of the time, insurers apply car insurance discounts to a qualifying driver’s premiums automatically. But there are a few discounts drivers need to opt into. This is usually the case for driver monitoring programs that track behavior behind the wheel.

Not everyone is comfortable enrolling in one of these programs. But those who are could shave quite a bit off their premiums by doing so. Most insurers give an upfront discount just for enrolling with the possibility of additional discounts based on driving behavior.

3. Choose a higher deductible

Raising a car insurance deductible typically reduces premiums. The downside to this is that it leads to higher out-of-pocket costs in the event of an accident. But this may not be an issue for drivers who save up for their deductible in an emergency fund.

Insurers usually give drivers some advanced warning of what their next policy premium will be, so you should have some time to take the above steps if you’re not happy with your current provider without worrying about a lapse in coverage. Finding a new insurer can be a pain, but it’s worth it if it saves you tens or even hundreds of dollars annually.

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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Kailey Hagen has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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