Auto Insurance Companies Just Don't Want To Cover California Drivers

Insurance companies and California haven’t been getting along. First, companies like Progressive, Allstate and State Farm began declining home insurance in the state due to worries of natural disasters like wildfires. Now as the San Francisco Chronicle reports car insurance companies are declining coverage for drivers across the state. Mike D’Arelli, executive director of American Agents Alliance, noticed things starting to change at the end of 2022.

The pullback started about six months ago, and it now has reached a point where no insurers will write auto insurance in California through his association anymore, D’Arelli said.

Safeco stopped writing auto insurance through D’Arelli’s association this month, while Travelers suspended D’Arelli’s group and 1,000 others about six months ago, he said.

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It’s not just Travelers and Safeco either. LA-based insurance agent Laine Caspi noticed companies like Mercury and Progressive making weird insurance moves too, like not taking on as many new policies and in the instances that they do, coverage doesn’t start immediately. Some drivers are finding themselves in “review periods” that last up to a month before the actual coverage kicks in. And that even goes for drivers with clean records.

“I had a client who I tried to quote the other day, super clean, one not-at-fault accident 2½ years ago, and they declined the business. If it’s not squeaky clean, it’s very tough to push through,” Caspi said.

Agents have also noticed insurance companies are pushing customers to pay their premiums in full instead of broken up in monthly or quarterly installments — with no grace period if those payments are missed. Drivers of vehicles that they think are higher risk are out of luck too. Interested in Teslas, Kias, motorcycles, or something else pricey? Good luck, as “you’ve just had your likelihood of being able to find insurance become four times harder than it was a year ago,” one broker said.

As with everything these days it all comes back to money. Some think what’s going is on is a political ploy by insurance companies mad over California’s Proposition 103, which requires any rate increases to be approved and reviewed by the state’s insurance commissioner. Rates didn’t increase during the pandemic when there were less people on the roads because of stay-at-home orders. But over $1 billion in rate hikes have been approved this year alone, and yet, it’s not enough since insurance companies are willing to make California drivers suffer because they want even more money.

Consumer advocate Harvey Rosenfield calls it a crisis. “The crisis that they’re instigating, the insurrection in the insurance marketplace where they don’t like Prop. 103, they’re willing to violate the law to create a shortage in the marketplace. Obviously, the insurrection is spreading to the auto insurance marketplace.”