As Car Insurance Prices Soar, Some Drivers Struggle to Get Any Coverage at All
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Drivers across the country are dealing with auto insurers jacking up their premiums, but in California in particular they're facing a different problem: Insurance companies are reportedly making it harder for consumers to get new policies at all.
For insurers nationally, providing auto policies has become much more expensive recently because the cost of car repairs has soared and collision numbers are elevated. As a result, car insurance rates have risen faster than most other expenses in the past year.
In California, premiums are going up just like they are everywhere else, but insurance companies say state regulators aren’t adequately approving car insurance rate increases to match the rise in costs. Some insurers say they have actually been losing money overall on auto policies.
“They are losing money on every piece of business, and ‘when you're in a hole, stop digging’ is their approach to the marketplace in California right now,” says Mike D’Arelli, executive director of American Agents Alliance, a California-based trade association that represents independent agents.
In some cases, auto insurers are apparently strategizing ways to avoid offering new (money-losing) policies or deciding to leave the California marketplace entirely, similarly to how certain homeowners insurance providers have been abandoning states due to the high risk of wildfires or other natural disasters. As a result, car owners in California who’ve never had trouble getting auto insurance before tell Money they’re struggling to secure coverage now.
How California auto insurers are limiting new policies
Insurers in California are required to offer auto coverage to good drivers under consumer protection rules, but there are still mechanisms for limiting exposure.
