Rising premiums may lead to more uninsured drivers, further increasing costs
By Barbara Burke
Many readers have likely noticed a significant increase in their car insurance premiums in the last year. According to finance company Bankrate, when compared to last year, Los Angeles area drivers are paying 26 percent more for premiums.
On Aug. 15, Insurify, a leading insurance tracking company, released a study projecting that auto insurance rates in California will increase yet more, up as much as 54 percent compared to what they were just last year. The study states that the average annual cost for full coverage on a car was $1,666 in June 2023, compared to $2,417 in June 2024, and will increase to a projected $2,681 for December 2024. Nationwide, premiums have increased by an average of 28 percent, rendering California one of the most expensive states for car insurance, partly because the state imposed a freeze on insurance rates during the COVID lockdown, leading to insurers incurring record underwriting losses estimated at $33.1 billion in 2022. Only drivers in two states will face higher premium increases. In Minnesota, premiums will increase by 61 percent and Missouri drivers will face a 55 percent premium increase, according to Insurify’s projections.
Insurify’s study analyzed two-year median costs for drivers between 20 and 70 with clean driving records on policies with comprehensive and collision coverage with deductibles of $1,000.
“Some insurers are requesting double-digit rate hikes [from regulators] while they struggle to return to profitability, while others are exiting the state entirely.” The report stated.
Insurify also attributes the high premium increases to a combination of inflation, traffic volume, increased accidents and crimes, and also to an unprecedented climate catastrophe that drives weather-related claims in states that historically haven’t experienced much of that type of damage. Insurify emphasized that insurers have experienced an increase inlosses caused by the rising costs of repairing vehicles or replacing them.
Bart Baker, a longtime insurance broker and Farmers Insurance representative, opined about the projected premium increases.
“Both home and auto insurance have increased a lot.” Baker said. “I believe it will continue. The increases are due to the cost of repairs which has increased with inflation and to attorneys litigating.”
With increased insurance premiums, more drivers will possibly become uninsured, which may also increase premiums, industry commentators have noted.
“We can bring down car insurance rates by increasing the deductible,” Baker noted, adding, “It’s wise for drivers to check how many miles they’re being rated for — if it’s more than you expect to drive in the next 12 months, have it reduced.”
