You’re required to have car insurance in California, but you don’t have to pay through the nose for it.
As a driver in California, you have a huge number of options for car insurance, especially as it is required by law to have it. However, shopping for California car insurance can be a daunting task.
To help you find the best insurance for your car, we’ll take a look at the state requirements for California car insurance and talk about the most affordable providers.
Whenever you shop for car insurance, we recommend getting quotes from multiple providers so you can compare coverage and rates. In addition to the insurance company you choose, factors such as your age, vehicle make and model, and driving history can affect your premium, so what’s best for your neighbor might not be best for you.
You can either use our tool below or call (855) 518-0148 to start comparing personalized car insurance quotes.
In this article:
- California Car Insurance State Requirements
- What If You Don’t Have Car Insurance?
- The California Automobile Assigned Risk Plan
- Most Popular California Car Insurance Companies
- Why Are California Auto Insurance Prices Expensive?
- Who Has The Cheapest Car Insurance In California?
- Get Cheap Auto Insurance In California With Geico
- Try Esurance If You Have An Accident On Record
California Car Insurance State Requirements
All states either require a level of car insurance or proof that you can handle the financial responsibility that comes after causing an accident. These insurance requirements are called Automobile Financial Responsibility Laws. If car insurance didn’t exist, drivers would be throwing lawsuits at one another and drowning in debt. Even today, one bad accident can disrupt a person’s financial stability if they don’t have enough insurance coverage.
Each state has its own laws for car insurance, and only two let you go without it – Virginia and New Hampshire. However, these states still encourage you to purchase auto insurance. If you can’t provide financial responsibility yourself after an accident, you could have your license and registration revoked.
California sets limits for two types of insurance: bodily injury liability (BI) and property damage liability (PD). The majority of states also set requirements for these kinds of insurance, though there is a wide range of coverage minimums across the board. In California, those minimums are 15/30/5. But what does that mean? Let’s break it down:
- $15,000 Bodily Injury: This is the minimum coverage requirement for bodily injury liability per person in California. The word “liability” designates that this coverage is for other people in accidents that you cause, not for yourself. It will go towards covering the other party’s medical costs.
- $30,000 Bodily Injury: This is the minimum requirement for bodily injury per accident. Let’s say you bump into a car that has three passengers. It was a hard bump, so each person claims $15,000. With $30,000, your plan will not cover the total medical cost ($45,000), and it will get used up in the order that injury claims are filed.
- $5,000 Property Damage Liability: This minimum coverage is used to pay for repairs on the other party’s vehicle. This liability coverage is per accident, so you can imagine that $5,000 would be used up quickly in a multi-car accident.
Benefits of Higher Coverage
Let’s look at the outcomes of only going with the minimum property damage requirement in California. It’s no secret that Californian highways host lots of expensive cars. You might not drive a Ferrari, but the risk of damaging an expensive car in an accident is higher in this state than in others. Do you want to take a chance and only hold $5,000 in property liability? If you crash into a Porsche while cruising around San Diego, the other driver can sue you for damages once that $5,000 is maxed out. Believe us, it will go fast.
Only two other states have a $5,000 property damage requirement, and almost half require $25,000 in coverage. California’s bodily injury requirements are also on the low end: 34 states require $25,000/$50,000 coverage, and Maine’s requirements are double that.
If you just carry the minimum limits, you can find cheap car insurance in California. However, that might not be enough to cover you in the event of a catastrophe. For example, what if someone you hit is seriously injured and requires surgery and recovery care? In California, drivers who aren’t at fault in an accident can sue the at-fault party up to two years later for injury claims or three years for property damage. If you lose a lawsuit like that, you’re required to cover all current and future medical expenses related to the accident.
What If You Don’t Have Car Insurance?
To make a long story short, you don’t want to go without auto insurance in California. In addition to paying the ticket from the police officer, you can be fined by the state for not having car insurance. The first time, the fine can be $100 or higher. Fines for subsequent offenses can cost anywhere from $1,000 to $2,500. You might as well buy a policy instead.
You Pay More For Lower Coverage
Now, this might sound like an oxymoron, but hear us out. Let’s say you found an insurance plan that covers the minimum limits in California for $80. That $80 per month is giving you 15/30/5 in coverage. Now, a good high-coverage option is 100/300/100. A plan like that offers great protection. Looking at the bodily injury per accident category – the middle number – your coverage grew from $30,000 to $300,000.
Guess what? A monthly policy for 10 times the coverage is not going to cost 10 times the price. It will cost more, of course, but you might find that some insurance companies reward drivers who choose higher coverage amounts by not charging them very much more. Maybe it costs $160, or maybe $200, but you are paying a lot less per dollar of coverage compared to the minimum plan.
The California Automobile Assigned Risk Plan
The California Automobile Assigned Risk Plan (CAARP) is a state program that requires most insurers in California to cover a share of drivers in an assigned risk pool. You can’t apply for a CAARP plan unless you haven’t been able to find car insurance on your own. That might be because insurance companies refuse your poor driving history, the plans they offer are prohibitively expensive, or you are eligible by income.
If you are eligible by income, you can get a cheaper CAARP plan through California’s Low-Cost Auto Insurance Program (CLCA). If you qualify, you could get plans that come with a lower coverage minimum of 10/20/3.
Drivers in the assigned risk pool are, well, riskier for insurance companies to cover. The CAARP agreement provides insurance opportunities for these drivers when they can’t find insurance on the open market. Each insurance company that participates is required to cover a share of drivers proportional to its size. For example, Geico has about 6 percent of the market share in California, so it probably insures about 6 percent of the drivers in the assigned risk pool.
Most Popular California Car Insurance Companies
While there were 229 California car insurance companies in 2018, the top 25 companies had almost 80 percent of the market share according to data by the National Association of Insurance Commissioners (NAIC).
Here are the top 10 California car insurance companies:
- State Farm Auto Insurance: Best for Students and Teens
- Farmers Auto Insurance: Best for Seniors
- Geico Auto Insurance: Best for Students and Military
- Liberty Mutual Auto Insurance: Best for Military and Teens
- Allstate Auto Insurance (includes Esurance Auto Insurance)
- AAA Car Insurance (Auto Club Enterprises Insurance Group): Best for Students and Teens
- Mercury Insurance Car Insurance: Best Value
- AAA (CSAA Insurance Group): Best for Students and Teens
- Travelers Auto Insurance: Best for Teens
- Chubb Auto Insurance
You can use this tool below or call (855) 518-0148 to compare the prices of California's most popular insurance companies:
Why Are California Auto Insurance Prices Expensive?
Compared to the national average, California auto insurance prices are about 20 to 25 percent higher. Estimates on the average price vary, but most put it in the $1,700–$1,850 range. That has to do with things like population density and how far people drive per year.
California has about 26.7 million drivers, according to Statista.com, which is a humongous number. With that many people on the road around urban areas, the chances of having an accident are higher. That’s part of the reason why insurance in California can be more expensive than in other states. Plus, you can expect to pay more in congested areas like the Bay Area and Los Angeles.
Also, Californians drive a lot. In 2017, drivers in the state put 343.8 million miles on their cars, according to the Federal Highway Administration. When dividing that number by the number of drivers, we can see that Californian drivers drove about 12,780 miles each that year. According to Energy.gov, the average mileage driven of household vehicles across the United States in 2017 was 10,200. From this data, we can see that California drivers put a few more miles on their cars than the national average.
Driving tired, speeding, and not knowing the right-of-way rules are common accident causes. Sudden breakdowns, while less common, can leave you stranded on the highway and in danger of causing an accident. If you’re thinking about changing insurance, it also might be a good idea to consider if you should get an extended warranty to make sure you’re covered for repair costs, since auto insurance won’t cover breakdowns.
Who Has The Cheapest Car Insurance In California?
Now, we don’t recommend that you get the least coverage possible, but we do understand that sometimes you just want enough to get by. As you probably already know, your age, neighborhood, driving history, and more can all drastically affect your price. For example, The Zebra’s State Of Auto Insurance report shows that teen drivers pay around $5,000 per year on average, while people in their 40s pay about $1,400.
Geico claims that people can save 15 percent or more by switching, but is it true? Well, a recent study outlined in Forbes suggests that it is. In each state that the study analyzed, Geico’s prices were up to 20 percent cheaper than the state average – and that includes California.
Get Cheap Auto Insurance In California With Geico
Depending on your driving record, you can find insanely low rates with Geico auto insurance in the Golden State. This deal is made even sweeter by the high ratings that Geico gets across different areas. In our own research, we identified Geico as the best car insurance company that is available to everyone. (USAA has some undeniable strengths but is only available to military members and their families.)
In J.D. Power’s 2019 Auto Claims Satisfaction Study, Geico came in fourth place out of 24 insurance companies. The study looked at how people experienced Geico’s claims process, and many people had a smooth and easy experience.
Also, the company has an A+ rating on the Better Business Bureau (BBB), and an A++ rating from A.M. Best. The A.M. Best rating is the highest given to any insurance company, and it means that Geico can easily handle the financial responsibility of insuring so many people nationwide. According to NAIC, Geico is the second largest auto insurer in the U.S. and wrote over $33 billion in auto premiums in 2018 according to the National Association of Insurance Commissioners.
Geico also offers a number of car insurance discounts for things like:
- Being a good driver
- Having airbags
- Completing a defensive driving course
- Being a federal employee
You can get multi-policy discounts when you bundle auto with another plan like renters insurance, too. All of these qualities led us to choose Geico as the best car insurance in California. We also think it’s a great option even if you want more coverage than just the bare minimum.
Try Esurance If You Have An Accident On Record
If you can’t find quotes low enough through Geico, we’d recommend that you check out Esurance auto insurance. The company is an Allstate subsidiary, but many people in California can get cheaper auto insurance rates through Esurance than Allstate. That’s because in California, Geico and Allstate both tend to raise rates because of an accident more than Esurance does.
Esurance also performed very well on J.D. Power’s 2019 Insurance Shopping Study – which looks at the customer experience of shopping for a quote. Esurance came in fifth place on that study, out of 20 total companies. Since it’s backed by Allstate, the company’s financials are also very strong. However, as an internet-only company, it offers a little less in terms of extra coverage options.
Use the tool below to collect and compare quotes from providers available in your state. You can also get free quotes seven days a week by calling our team at (855) 518-0148.
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