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Auto insurance costs more everywhere, but the problem is especially bad in California

STEVE INSKEEP, HOST:

Many drivers in California are having trouble getting car insurance - takes longer, costs more. Insurance rates are up everywhere, and California has its own special problems, which Levi Sumagaysay has been investigating. She's with the nonprofit news outlet CalMatters. Welcome.

LEVI SUMAGAYSAY: Hi, Steve.

INSKEEP: What's going wrong?

SUMAGAYSAY: Well, first, California drivers have told me that they're having to wait weeks to get insurance for their cars, especially if they're newer drivers. They're experiencing long waits to get insurance. And when they finally do get coverage, they're seeing higher rates than they expected. Allstate recently increased rates by 30%. State farm is raising rates by 21%. The average rate increase in the state from last year to this year so far is 18%.

INSKEEP: Wow. That seems like a lot at a time when inflation overall is supposed to be slowing down. Why now?

SUMAGAYSAY: Well, during the beginning of the coronavirus pandemic, the state approved fewer rate increases because fewer people were on the roads. Now, insurers say they're trying to catch up. They say there are more accidents, and when they have to pay out insurance claims, the payouts cost more. They say that's because of higher labor costs, that cars are just more expensive these days because of inflation and lingering supply issues. And insurers are also saying it's particularly hard in California for them because it has a lot of regulations that they've long complained about.

INSKEEP: OK. Does California have more regulations than other places?

SUMAGAYSAY: Yeah. So California has Prop 103. It's a consumer protection law that goes back to the 1980s. It requires insurers to justify why they're asking for rate increases before the state approves them. Insurance companies, they hate this, you know? Some have become reluctant to do business in California, which has prompted the state to raise rates after all.

INSKEEP: OK. Has the state been bullied, then, into accepting higher rates?

SUMAGAYSAY: California's insurance commissioner warned insurers late last year that he had received complaints from consumers and lawmakers, and the companies were being accused of instituting these waiting periods, long questionnaires and other practices that the commissioner called, quote, "passive aggressive tactics" that was slowing down people's access to insurance. He threatened to take action against companies that kept those practices up. So, yeah, the insurance department is starting to approve these rates. And as they approve more rate increases, people might start to have an easier time getting insurance, but the costs to them aren't going anywhere but up.

INSKEEP: Is this pricing people out of owning cars in a world where most people seem to need one?

SUMAGAYSAY: Well, some of the people I spoke with were fairly young or getting insurance on their own for the first time, and they were really surprised by how hard it was to get insurance or how high their premiums are. If you're young, if you're facing a 30 or 50% increase, that can be tough on people, especially low-income earners, and especially in a state where the cost of living is already really high. Some Californians say, you know, this is a perfect reason to use mass transit instead. But, you know, it just depends on where they live in California.

INSKEEP: Doesn't go everywhere. That's Levi Sumagaysay from CalMatters. Thanks for the update.

SUMAGAYSAY: Thank you, Steve.

(SOUNDBITE OF A.C.'S "MULTIPLY") Transcript provided by NPR, Copyright NPR.

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