Why Is Car Insurance So Expensive in California?

California has notoriously high car insurance rates, making it important for drivers in the Golden State to shop around and find the best price. Learn more about the factors that contribute to high premiums in the state and ways to lower your costs.

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As of 2021, drivers in California pay an average annual rate of $1,429 for auto insurance, making it one of the most expensive states to insure a vehicle. The state’s combination of densely-populated urban centers, high healthcare costs, pricey auto repairs and severe weather and natural disaster risks all contribute to California’s higher-than-average insurance premiums. Fortunately, shopping around can help counter the high cost of coverage.

Key Takeaways

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California residents pay about $1,429 per year for car insurance on average, making it one of the most expensive states for car insurance.

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The state’s natural disasters, theft/vandalism rates and dense population contribute to these higher insurance costs.

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California drivers can take several steps to lower their premiums, like comparing quotes from several providers and searching for discounts.

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Why California Car Insurance Prices Are So High

If you're wondering why the cost of auto insurance in California is so high, several factors influence rates set by insurance companies. Although car insurance rates are increasing across the board, California still has some of the most expensive premiums in the nation, likely because of its dense population centers, high healthcare costs, costly auto repairs and severe weather risks.

Heavily-Trafficked Roads

Nearly 40 million people call California home, and many of these individuals live in densely-packed cities such as Los Angeles, San Francisco and San Diego. California has a less robust public transportation system than other states with large populations, so most residents drive cars. More drivers on the road mean more traffic and more accidents. Auto insurers in California charge more expensive premiums to account for the higher risks of driving in the state.

High Healthcare Costs

It’s no secret that healthcare is expensive in the United States. Data from the California Health Care Foundation predicts that average health spending in the country will grow by 5.4% per year between 2019 to 2028, outpacing the economy's projected growth of 4.3% each year.

California is no exception to these high costs: In fact, another study conducted by the California Health Care Foundation ranked California as the 16th most expensive state in the country for healthcare. When motorists and passengers are injured in a car wreck, insurers pay their medical bills. Since insurers pay more for injury-related claims in California, they have to charge higher premiums to cover these costs.

Expensive Auto Repairs

In their annual ranking, CarMD found that California drivers can expect to pay the highest car repair costs in the country. As of 2020, bringing your car to a repair shop to address a check engine light costs an average of $410.73 in the state.

Since insurers know they’ll pay out more money for auto repair claims in the state, they factor this into insurance rates to help recoup the costs of ensuring Californian drivers.

Severe Weather Risks

California is subject to wildfires, droughts, floods and earthquakes, the effects of which can sometimes be catastrophic. Many of these events can damage a car to the point that providers declare it a total loss. Paying out these claims isn’t cheap, so auto insurers charge higher premiums in the state to offset the cost.

Higher Risk of Theft or Vandalism

Rates of theft and vandalism tend to be higher in densely-populated urban areas, of which California has many. Whether your car is stolen, totaled or parked on a busy road where it's vulnerable to damage, insurers must consider these factors and increase insurance rates accordingly.

Uninsured Drivers

Approximately 17% of California drivers don’t have the state minimum amount of auto coverage required. Because of this, auto insurers must consider the added costs if one of their drivers gets into a wreck with someone who doesn't have insurance, which could raise the overall cost of premiums.

If you’re concerned about getting in an accident with an uninsured driver, MoneyGeek recommends purchasing uninsured motorist insurance. While not required in the state of California, this additional coverage can protect you financially after a crash with a driver who doesn’t have insurance.

The Rate of Uninsured Motorists in Each State

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  • State
    Uninsured Driver Rate
  • Alaska
    16%
  • Alabama
    20%
  • Arkansas
    19%
  • Arizona
    12%
  • California
    17%
  • Colorado
    16%
  • Connecticut
    6%
  • District of Columbia
    19%
  • Delaware
    9%
  • Florida
    20%
  • Georgia
    12%
  • Hawaii
    9%
  • Iowa
    11%
  • Idaho
    13%
  • Illinois
    12%
  • Indiana
    16%
  • Kansas
    11%
  • Kentucky
    14%
  • Louisiana
    12%
  • Massachusetts
    4%
  • Maryland
    14%
  • Maine
    5%
  • Michigan
    26%
  • Minnesota
    10%
  • Missouri
    16%
  • Mississippi
    29%
  • Montana
    9%
  • North Carolina
    7%
  • North Dakota
    13%
  • Nebraska
    9%
  • New Hampshire
    6%
  • New Jersey
    3%
  • New Mexico
    22%
  • Nevada
    10%
  • New York
    4%
  • Ohio
    13%
  • Oklahoma
    13%
  • Oregon
    11%
  • Pennsylvania
    6%
  • Rhode Island
    17%
  • South Carolina
    11%
  • South Dakota
    7%
  • Tennessee
    24%
  • Texas
    8%
  • Utah
    7%
  • Virginia
    11%
  • Vermont
    9%
  • Washington
    22%
  • Wisconsin
    13%
  • West Virginia
    9%
  • Wyoming
    6%

Car Insurance Rate Increases in California

As of 2021, California drivers paid on average $1,429 per year for auto insurance or $119.08 per month. Between 2015 and 2021, annual rates increased by $119. Currently, California is the 40th most affordable state for car insurance.

Although population density has slightly decreased in the state in recent years, an uptick in natural disasters and weather-related events means that rates will likely continue to increase in the coming years.

How to Save on Car Insurance in California

Despite car insurance averages in California being higher than in many other parts of the country, there are ways to reduce your costs. Whether that means taking advantage of all discounts or regularly getting quotes from different insurers, these steps can help you save on your policy.

1

Shop around for the best rates.

Every insurer calculates rates a little differently, so the most affordable company varies from person to person. Be sure to compare quotes from several providers to find the best, cheapest policy for you.

2

Bundle your coverage.

Buying home insurance, renters insurance or coverage for several vehicles from the same provider can be a great way to score savings.

3

Ask about discounts.

Providers offer many discounts to help you save on your policy, like safe driving, good student and anti-theft device discounts.

4

Use a car insurance comparison tool to compare rates.

Rather than calling multiple insurers, we recommend finding an online insurance comparison tool to look at rates from several companies and find the cheapest one for you.

5

Consider raising your deductible.

Doing so means you'll have to pay more out of pocket after an accident, but it also means significantly lower premiums.

6

Opt for pay-as-you-drive coverage.

If you don't put many miles on your car, consider a pay-as-you-drive policy that calculates your rate based on how often you drive.

About the Author


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Mark Fitzpatrick is a senior content manager with MoneyGeek specializing in insurance. Mark has years of experience analyzing the insurance market and creating original research and content. He graduated from Boston College with a Bachelor of Arts and Johns Hopkins University with a Master of Arts.


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