California’s car insurance premiums are rising too: Which Bay Area cities pay more?

Over the past year, Oakland grocery store manager Ananda Neil has received updates on his auto insurance policy with mounting dread. When his six-month, per-mile policy for his 2022 Hyundai Santa Fe renewed in October 2023, it edged up from $77.19 to $83.39 a month and 15.5 to 16.7 cents a mile. But in April, it leaped to $167.75 a month and 37 cents a mile.

And when it renewed again in October? $266.93 a month and almost 60 cents a mile.

“The few insurance companies willing to write a policy were just as much if not more, so I kept my policy with Lemonade,” said Neil, who, despite driving less to reduce cost, said his monthly bill “more than doubled in the last seven months” from about $250 to $550, topping his monthly $453.52 lease payment for the vehicle.

While there’s been much attention to rapidly rising insurance costs and policy non-renewals for California homeowners, the state also has seen increasing rates for auto coverage. Auto insurance rates across the U.S. and in California began rising last year, and though they leveled off nationally this summer, they’ve continued to climb in California, according to the latest Insurify analysis.

In January 2021, the U.S. and California average annual auto insurance premium was about $1,500. But by November this year, the national average for a full-coverage policy reached $2,315 while California’s jumped to $2,536, according to the latest Bankrate analysis of average rates provided by insurance data firm Quadrant Information Services. California requires motorists to at least carry liability insurance for damage they might cause to others, and for that, the state’s average cost of $670 is slightly below the national average of $678.

But that, too, is about to change next year. Beginning in January, California will double minimum coverage requirements for bodily injury or death and triple it for property damage coverage under Senate Bill 1107. Approved in 2022, it marks the first increase in California’s minimum liability limits in more than 56 years. Consumer Attorneys of California, the bill sponsor, said the outdated coverage requirement left California among “the bottom three states with the lowest levels of protection in the nation.” The Department of Insurance said about one in four policyholders would see significant increases.

“The lower limits were really just so low that they weren’t covering the cost,” Balber said. “At $15,000, that is less than the cost of any new car out there. There is no car that’s that cheap anymore.”

Balber noted that California has a low-cost auto insurance plan with lower limits for Californians with limited income. Enrollment in that policy is at an all-time high, with about 45,000 people across the state.

But the American Property Casualty Insurance Association, which represents the property insurance industry, opposed the bill, which it estimated will raise annual premiums by $80 to $400, depending on the insurer and customer profile, for minimum-limit policies. Denni Ritter, APCIA’s western region vice president, said those policies are the choice of one in four California policyholders, typically those who struggle to afford coverage.

“While the goal is to ensure adequate coverage for accident victims, this change will increase costs for policyholders,” Ritter said. “We knew that this was going to add a cost to a segment of the population that could least afford it.”

Rates vary from region to region, but factors brokers say are contributing to the rising premiums include increasing crime and wildfire and weather risk. Florida, New York, Louisiana, Missouri and Nevada have the highest annual rates nationally, while Idaho, Vermont, Ohio, Maine and Hawaii have the lowest rates.

In the Bay Area, Oakland ($3,205) and Emeryville ($3,200) top the list of annual premium prices, followed closely by San Francisco ($3,197).

“Rates are going up almost exponentially compared to what they were going up before,” said Brian Sullivan, a managing member of Oakland-based Avail Insurance Solutions since 2010, who blamed higher premiums in Oakland on the city’s crime and accident rates. “The auto insurance market in the Bay Area is horrible, and it’s totally chaotic. There’s a lot of challenges to get home insurance, but it’s almost equally as challenging to get auto insurance.”

Oakland had the highest crime rate among the Bay Area’s three big cities and among the highest in the region last year, up 65 percent since 2020 to mark the highest overall rate for the city in the past two decades, according to the Oakland Police Department’s figures. The motor vehicle theft rate in the city doubled in 2023.

Wealthier Bay Area communities and others with lower crime rates have lower insurance premiums, including Menlo Park ($2,415), Morgan Hill ($2,412) Los Altos and Cupertino (both under $2,400 annually), with the Sea Ranch resort community in Sonoma County boasting the lowest rate ($2,337).

Shannon Martin, a Bankrate insurance expert, explained that insurance rates vary by ZIP code and are influenced by factors including population density and the prevalence of luxury vehicles.

“Drivers living in locations with high traffic density, such as Oakland and San Francisco, often face elevated premiums compared to those in rural areas,” Martin said, adding that other rating factors impacting Bay Area drivers include vandalism rates, the high volume of luxury vehicles, and the cost of labor for vehicle repairs.

As with home insurance, industry representatives and experts point to California’s heavy insurance regulations as a factor in the sudden rise in rates. The state requires extensive review of large premium increases and places other limits on factors insurers may use to set their prices.

“California’s insurance market is heavily regulated, prohibiting the use of gender and credit scores in rating,” Martin said. “Instead, they’re required to offer good drivers a 20% discount on their car insurance, and that’s not something most other states require of their carriers.”

Ritter said the state Department of Insurance put a lid on rate hikes during the COVID-19 pandemic, causing a backlog and delayed approvals that exacerbated the financial strain on insurers and led to significant rate increases. Rising repair costs, medical expenses, and delayed rate adjustments have already contributed to higher premiums across the board.

“I think it’s really important to have that kind of understanding as to why you’re seeing the large rate increases that you’re seeing now,” Ritter said. “Unfortunately, all policyholders in California are likely to see large increases to their auto insurance because of all the inflationary issues.”

The fixes the California Department of Insurance is in the process of implementing for home insurance aren’t expected to bring relief for auto coverage prices, department officials said.

Consumers like Neil, who’s considering an electric bicycle or renting a car because of the soaring insurance costs of owning one, feel let down — by insurers, state regulators and local officials he feels are to blame for letting crime fester in his city.

“Everyone’s upset about the city of Oakland for not letting the police do their job,” Neil said. “We’re just tired of hearing excuses from the government, and we’re tired of hearing excuses from the high-profiting insurance companies, and we’re just really disappointed.”