Auto insurance costs are adding to affordability pressures across California, even as rents in the Los Angeles metro area fall to a four-year low and homeownership remains out of reach for many residents.
The state’s top 10 insurers received approval to raise rates by an average of 6% in 2025, following a 15.4% increase in 2024 and a 13% jump in 2023.
Premiums have climbed sharply over the past two years, according to Standard & Poor’s Capital IQ and Los Angeles Times.
Collectively, carriers representing about 85% of California auto policies have raised rates by more than one-third since 2023.
A driver who paid the state’s average premium of $1,087 in 2022 could now be paying hundreds of dollars more – particularly if they have recent accidents or traffic violations.
What’s driving the increases
Several structural factors are reshaping auto loss costs:
- Higher vehicle and parts prices: Inflation and supply chain pressures, including tariffs, have pushed up the cost of new vehicles and replacement parts.
- Heavier vehicles: SUVs with all-wheel drive (now about 60% of new vehicle sales) add weight, increasing crash force. Electric vehicles are also heavier due to battery packs.
- More severe collisions: Higher highway speeds during and after the pandemic have contributed to more serious crashes.
The average collision repair cost reached $4,774 last year, compared with $3,225 in 2019. According to Insurance Institute for Highway Safety, greater vehicle mass and speed are materially increasing repair severity.
Why California is still below the national average
Despite the recent surge, California premiums remain below the U.S. average, largely due to Proposition 103.
The voter-approved measure grants the elected insurance commissioner authority to reject or reduce rate filings and allows consumer groups to challenge proposed increases.
A 2019 study by the Consumer Federation of America found that from 1989 to 2015, California auto insurance rates rose 12.5%, compared with a national average increase of 61.1%.
Recent data from Auto Insurance Report showed Californians spent an average of $1,223 on car insurance in 2023 – roughly $60 below the national average.
There are also signs of stabilization.
- Geico has held rates steady this year, and State Farm Mutual Automobile Insurance Company, the state’s largest auto insurer, has filed for a 6.2% rate decrease in California.
- State Farm also announced a $5 bn nationwide return to policyholders, citing improved underwriting results, including fewer accidents and moderating repair costs.
According to Beinsure analysts, if frequency and repair severity continue easing, rate momentum could moderate into 2026 – though volatility tied to inflation and vehicle technology remains a key risk factor for carriers operating in the state.
