California drivers routinely pay the highest gas prices in America. Now, they have another expense to worry about. Car insurance is growing more expensive and harder to get in the Golden State.
The San Francisco Chronicle reports that California insurance agents “say they are struggling to find quotes for clients who would have easily gotten insurance just a year ago, as inflation and other factors take a toll.”
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Mike D’Arelli is the executive director of the American Agents Alliance in Sacramento, a nationwide trade group representing insurance agents. He told the Chronicle that Travelers and Safeco (a subsidiary of Liberty Mutual) have stopped writing insurance policies through members in California in recent months.
Companies Say They Haven’t Left the State
A Safeco spokesperson “did not answer whether the company is slowing business in California” but told the Chronicle the company still offers auto insurance in the state. A Travelers spokesperson said, “The number of agents affected by the temporary action taken on new business is significantly less than 1,000.” That, however, does suggest there is a temporary action of some sort.
Some Cars Are Much Harder to Insure
Owners of some cars have it worse than others. Orange County insurance broker Jerry Conrey told the Chronicle, “If you happen to drive a Tesla, or you happen to drive a Kia … you’ve just had your likelihood of being able to find insurance become four times harder than it was a year ago.”
Kia vehicles have been subject to a nationwide rash of thefts triggered by online videos exposing a security flaw in some older models. Tesla models, meanwhile, have proven difficult to insure because even light damage can necessitate an expensive battery replacement.
State Law Requires Approval for Rate Hikes
CBS News reports, “Major auto insurers are pulling back in the California marketplace because they are saying our drivers are just too expensive to insure.” Auto insurance companies told CBS, “auto accidents are up,” and some companies say they “are paying out more than they are taking in.”
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A 1988 law, Proposition 103, requires insurers to get permission from the state’s insurance commissioner to approve any rate increases. In January, CBS reported that some insurers hadn’t “seen a rate increase approved by the insurance commissioner in over three years.”
State Officials Say There’s No Government Holdup
California Insurance Commissioner Ricardo Lara disputes that, telling the Chronicle his office “received only six rate increase requests from companies representing less than 1% of the private passenger auto insurance market from the start of the pandemic to November 2021.” He says the office has seen an increase in filings since June 2022 and began approving appropriate increases in October.
Instead, Lara blames “global inflation and supply chain issues, which made it harder to get car parts,” the Chronicle reports.
In the meantime, CBS News reports, “Agents say they are having to go with smaller, lesser-known carriers if clients need insurance quickly.”
