Car Insurance Rates in California Dropped, but We Still Pay More than Other States

Written in Partnership with Amir Bakian

Car insurance is just part of being a driver — not only is it legally required, but driving without insurance represents a huge financial risk at best. But with the cost of living being the way it is, it’s natural to try to get the lowest insurance rate you can.

So that would make it a good thing that car insurance rates are decreasing nationwide, right? Not necessarily. According to Ross Martin of The Zebra, car insurance rates decreased by $62 per year from 2019 to 2021. Despite that drop, Californians still pay 18% more than the national average.

Why are Californians paying more for car insurance despite a nationwide drop in price, and what can be done about it?

How Much Car Insurance Costs in California

Right now, the average cost of car insurance in California is about $1810 per year, which is 18% more than the national average. Those premiums can vary wildly by provider, too — for example, the average yearly rate from Geico in California is $1435, where Allstate clocks in at $2167.

Insurance premiums are impacted by where you live, and plenty of things are more expensive in California than elsewhere — but it’s not just location that determines how high your premiums will be. Things like your age, your credit rating, driving history, marital status, even the age and type of the car you drive all affect your insurance premiums.

The Reasons Car Insurance Is Higher in California

So why is California car insurance so much higher than elsewhere in the country? A number of reasons:

  • Auto repair costs. As cars grow more sophisticated, parts and labor prices go up. Today’s cars cost significantly more to repair than they used to, and California has some of the highest car repair costs anywhere in the country. Once again, this gets factored into insurance premiums, and it’s neither the policyholder’s fault, nor is there much you can do about it.
  • Heavy traffic. In Los Angeles alone, the traffic is so dense and risky that it’s practically legendary. Any area with a large population is going to have heavier traffic, and there are plenty of cities in California that qualify. More cars on the road means more drivers, which means more chance for human error, and a higher risk of insurance claims.
  • Health care costs. Health care costs in the United States are out of control, and traffic accidents often involve one or more injuries requiring medical attention. Those costs get passed on to policyholders in the form of higher premiums, and California is one of the more expensive states in the US when it comes to healthcare costs.
  • Severe weather. Weather is always a major factor in determining insurance premiums, as damage caused by weather can result in a claim just as much as a traffic accident. Fires, floods, drought, earthquakes, and other weather phenomena can damage or even completely total cars. California is prone to several of these potential disasters, and premiums reflect that.
  • Uninsured drivers. A concerning 17% of California drivers don’t have sufficient (or any) coverage when it comes to their vehicle. Unfortunately for us all, that added risk gets factored into premiums, as insurance companies could end up paying out more when an uninsured driver gets in an accident.

Finally, we come back to where you live. Even within a state, your premiums can vary, as some cities in California have higher premiums than others. For example, according to the Zebra, San Diego has some of the cheapest rates in the state — $1844 yearly, close to the natural average — whereas in Los Angeles, the average premium is $2688.

There is one piece of good news particular to California — while it’s long been standard in the insurance industry for gender to factor into insurance premiums (women pay more than men in several states), California has recently banned that practice, removing gender as a factor in determining premiums.

What You Can Do to Lower Your Car Insurance Rate

While many of these factors are entirely out of your control, there are a few steps you can take to help keep your premiums low:

  • Maintain a clean driving record, free of accidents or violations.
  • Consider taking a driver safety course.
  • Install a security system on your car to deter thieves.
  • Bundle your car and homeowners insurance together.
  • If you don’t drive much, switch to a pay-as-you-drive policy to bring those premiums down.
  • If you can pay more out of pocket in case of an accident, consider raising your deductible, which will lower your monthly premiums.

Where to find the best cheap car insurance in California

Finally, it’s never a bad idea to either try negotiating a better deal with your insurance provider, or look around for cheap California car insurance elsewhere. You can easily compare quotes and policies online to get the best value available at a price you can afford.

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