With the changes in policies from California insurance companies, many drivers have found their car insurance policies now require renewal every six months. As the mid-year approaches, some drivers who received renewal notices were surprised to discover that their premiums had almost doubled.
Ms. Liu, a driver in San Gabriel City, mentioned, “When I renewed my policy at the end of November last year, the premium had already increased. However, upon updating my policy for the latter half of the year, the premium had more than doubled. Even though I have comprehensive coverage, it’s just too expensive, considering I have had no accidents and maintained a good driving record.”
Mr. Li, another driver, also shared, “I’ve always had partial coverage for half a year, costing me a little over $500. But the latest renewal for the latter half of the year now amounts to almost $900. My agent even checked for me and said this was already the cheapest option available.”
Eric, a seasoned Chinese insurance broker in Los Angeles, explained that the car insurance premiums in California have been steadily rising in recent years. However, over the past two to three months, he has received numerous complaints from clients about sudden premium spikes. He noted that these increases were mostly due to adjustments in the minimum liability coverage.
“Since January of this year, California has experienced significant changes in premiums, but many customers only renewed their policies for the latter half of the year in May or June, hence the recent realization,” he clarified.
Starting from January 1, 2025, the SB1107 bill signed by Governor Newsom at the end of 2022 officially came into effect in California. This law aims to raise the minimum liability coverage for auto insurance policies by at least double.
Prior to this, the minimum liability coverage for each vehicle in California was: $15,000 per passenger/$30,000 per accident. However, as of January this year, the minimum coverage has been increased to at least $30,000 per passenger/$60,000 per accident, and the minimum property damage liability coverage has been raised from $5,000 to $15,000.
Many insurance companies automatically raise the minimum liability coverage for policyholders upon renewal, resulting in an increase in premiums for the drivers.
Eric stated that the insurance industry in California is facing unprecedented challenges, with many companies exiting the market or imposing stricter conditions, making it significantly more difficult to obtain coverage.
“Of course, individuals can continue to seek out cheaper and more suitable insurance options, but before finding one, it’s best not to cancel existing policies and certainly not delay payments. It is advisable to follow the requirements as stated in the renewal notices; otherwise, there could be many complications in reinstating coverage later on, wasting a significant amount of time,” he advised.
Analysts believe that while the implementation of the new law may indeed lead to higher premiums for California residents, from another perspective, the higher liability coverage can help prevent drivers from falling into debt after accidents.
Despite the increasing difficulty in obtaining coverage and rising premiums, many insurance companies still offer various discount options.
Good Driver Discount: Drivers who have maintained a good driving record for several years, especially those with no major traffic violations leading to bodily injury or death, or accidents involving property damage, or points deducted, often receive discounts from many insurance companies.
Good Student Discount: Some insurance companies provide discounts for full-time students with excellent grades.
Affinity Group or Membership Discounts: Certain insurance companies offer discounts to specific groups or members such as the American Automobile Association (AAA), Costco members, Sam’s Club members, certified educators, financial professionals, healthcare professionals, law enforcement officers, firefighters, pilots, scientists, and more.
Multi-Policy Discount: Bundling multiple car or home insurance policies together often results in receiving discounts.
Anti-Theft Device Discount: Insurance companies offer discounts if a vehicle is equipped with approved anti-theft devices.
Mileage Discount: Drivers who drive less or have lower mileage usage also qualify for discounts.
These are just a few examples, and the specific discount offerings vary depending on the insurance company and individual circumstances. Policyholders can contact their insurance companies or respective brokers for consultation.
(The content of this article is for general informational purposes only, without any endorsement intent. Epoch Times does not provide investment, tax, legal, financial planning, real estate planning, or other personal finance advice.) ◇