Why Is Car Insurance So Expensive in California? (2025)

The average cost of full-coverage car insurance in California jumped from $1,738 in December 2023 to $2,681 in December 2024, according to Insurify data. This represents a 54% increase in car insurance rates in just one year. If you’re wondering why car insurance is so expensive in California, several reasons are behind the price hikes, including statewide regulations and environmental factors.

Here’s what to know about recent increases and how to reduce the cost of your coverage.

How California car insurance rates have increased

California drivers have seen massive insurance rate hikes since the COVID-19 pandemic, according to Insurify data. Issues like wildfires and severe natural events have contributed to higher costs. This graph illustrates how prices have changed recently.

Factors in California causing higher car insurance rates

During the COVID-19 pandemic, California froze insurance rates, meaning car insurance companies couldn’t increase prices for policyholders. While this provided temporary relief to California drivers, the freeze had some unexpected consequences when restrictions were lifted.1

In an effort to recoup revenue, many insurance companies hiked prices, and drivers bore the burden, causing car insurance rates to skyrocket in 2022 and 2023.

Here are a few other reasons why California’s average rates are often higher than the rest of the country.

Higher-tech vehicles

Other factors apart from insurance freezes also contributed to post-pandemic increases, including the popularity of high-tech cars that are more expensive to repair. As vehicle technology becomes more advanced, the cost to repair these vehicles tends to increase.

For example, many cars are now equipped with sensors in their rear bumpers and side-view mirrors. If someone rear-ends your vehicle or you get side-swiped and your side-view mirror is ripped off your car, you aren’t just paying to fix your bumper or mirror. You need to pay for new sensors, too, increasing your car repair costs and any insurance payouts you might receive after filing a claim.

Policy changes

Unfortunately, consumers can’t expect much relief in 2025, as minimum car insurance requirements have increased after the 2022 passage of S.B. 1107.2 One provision of this bill requires higher minimum coverage amounts for drivers.

As a result, on Jan. 1, 2025, minimum bodily injury liability coverage in California increased from $15,000 per person to $30,000 and from $30,000 per accident to $60,000. Plus, the minimum amount for property damage liability coverage tripled from $5,000 to $15,000 per accident.3

This legislation aims to provide more protection for California drivers if they’re involved in a crash, which can be beneficial. Unfortunately, it also increases car insurance costs since higher coverage amounts generally equate to higher rates.

Environmental challenges

Wildfires are an unfortunate fact of life in California, and they happen every year. More than 8,000 wildfires happened in California in 2024, damaging over 1 million acres of land, according to CalFire. NASA data also indicates that wildfires in the western part of the U.S. have increased in frequency and intensity over several decades, resulting in more widespread damage.4

The increased frequency and intensity of wildfires translate to added risk for both home insurance and car insurance companies, which in turn leads to higher insurance rates for California residents.

Factors that affect your car insurance premium

Beyond factors specific to the state of California, demographic factors, including your age, location, and driving record, can affect your car insurance premiums. Here’s what to know about some of the most important rating factors.

Age

Drivers ages 25 and younger typically have hefty car insurance premiums, with teenage drivers paying the highest rates. Teens have nearly four times as many crashes as drivers older than 20, based on total miles driven, according to the Insurance Institute for Highway Safety (IIHS).5 This higher risk of crashes translates to more risk for insurance companies, which means more expensive premiums for young drivers.

The table below shows how car insurance prices vary across a few different age groups.

Location

Where you live also affects how much you pay for car insurance. For example, someone who lives in an area of California that’s more prone to wildfires may pay more for comprehensive coverage. You could also pay more if you live in a highly populated city with lots of drivers and increased accident rates.

For instance, rates in Los Angeles are $161 per month for liability insurance and $335 for full coverage. Premiums in the less densely populated city of Bakersfield average just $83 and $202 per month, respectively.

Driving record

If you have recent incidents on your driving record, your car insurance will probably cost more. That’s because past incidents like at-fault accidents, speeding tickets, and DUI charges mean more risk for insurance companies. Your insurer might deem you a high-risk driver due to your driving record, which means higher premiums.

Make and model of your car

In general, high-cost, newer-model luxury vehicles are more expensive to insure than older, more affordable cars. Luxury cars tend to cost more to repair, so insurance companies may pass this cost on to consumers in the form of higher premiums.

For example, insuring a brand-new Audi will likely cost more than insuring a Subaru Outback. The Subaru Outback — along with the Subaru Forester and the Honda Odyssey — is one of the cheapest cars to insure.

Teslas were among the most popular cars in California in 2023, followed by the Toyota RAV4, the Toyota Camry, and the Honda Civic.6 Teslas tend to be expensive to repair, which means they’re also more expensive to insure.

How to lower your car insurance rate in California

California car insurance might be expensive due to several factors outside your control, but you can control a few things to help you get lower rates. Here are some tips to reduce your monthly car insurance premiums.

Why car insurance is so expensive in California FAQs