I thought it must be a mistake. There was no way the auto insurance premium on my 2015 Toyota Corolla was about to jump 30% after a year without a single accident or speeding ticket. But that’s exactly what my renewal documents said when I opened them in December.
Of course, I bemoaned the coming expense at the water cooler, only to learn that my colleague's policy on his Subaru Crosstrek was cranking up 50%.
Something was going on.
Armed with my cellphone and the go-ahead from my editor to investigate on company time, I set out to fix my insurance woes, confident that I’d find a cheaper option within an hour.
It took a series of dropped calls, apologetic agents and disappointing celebrity endorsements before I realized how wrong I was to have expected a speedy solution. And my research uncovered why people across California are about to face the same frustrating situation.
Dialing for Dollars
An initial internet search brought me to the California Department of Insurance’s automobile premium comparison tool. It generated a list of dozens of insurance companies, and I started calling the companies that seemed to advertise the cheapest options.
My new policy from Amica Mutual would cost $994 for six months. The sample rates displayed from other companies on the list appeared temptingly low by comparison, with the best ones offering six-month policies for as cheap as $405. I hadn’t heard of most of the companies but figured for a bargain like that, they would be worth a shot.
When I called the phone number for State National Insurance, which the list forecast would be my most affordable bet, Tesla Insurance picked up. After about 10 minutes on hold listening to a looped recording of instructions on how to download the Tesla app, I decided that, as a Corolla owner, this was probably not going to be a good fit. (I emailed Tesla Insurance asking if it covers Toyota Corollas and was told that representatives could not answer the question via email.)
The next company on the list directed me to call a local agent, so I chose Fidelity Insurance Services Inc. in Berkeley. This time, I got through to a person. Speaking over the babble of a busy office, Patsy Renteria told me that her independent insurance agency, which works with a number of companies, was no longer taking on stand-alone auto insurance policies in California. That’s because the larger companies the agency works with have all put strict restrictions on which auto insurance policies they’re willing to write, and some have pulled out of the state altogether.
Auto insurers in California are legally required to sell insurance to anyone who qualifies as a good driver, though there have been widespread reports of companies shirking that rule.
I could potentially get auto insurance through her company if I were packaging it with homeowner’s insurance, Renteria explained, but I don’t own my home. Packaging my auto insurance with renter’s insurance, she said, wouldn’t do the trick.
I hung up without even getting a quote.
Prices Climbing Across the Industry
State Farm, California’s largest private insurer, made waves earlier this month as news broke that it was raising its auto insurance rates by 21% in February. But State Farm is just one of more than 100 insurance companies that secured permission from the California Department of Insurance in 2023 to increase personal auto insurance rates. Other big names like Allstate and Farmers locked in 30% rate increases, while Geico got the green light for a 65% bump to its motorcycle premiums. Regulators told the Amica Mutual Insurance Company, which covers my Toyota Corolla, that it could raise its premiums by an average of 27%.
California’s insurance companies are playing catchup on auto insurance rates that have been artificially suppressed for years, according to Janet Ruiz, a spokesperson for the Insurance Information Institute, an industry trade group. Regulations requiring state approval for increases are keeping the rates too low, she said.
Covid-era inflation has jacked up the cost of repairing a vehicle, putting additional stress on insurers’ margins, Ruiz said.
In 2022, some of California’s largest auto insurance companies paid more for their claims and operating expenses than they took in in premiums, according to Ruiz. Some turned to layoffs to cut down on expenses.
“We can’t continue to lose money,” Ruiz said.
On the other side of the issue is Carmen Balber, executive director of Consumer Watchdog, whose organization’s founder drafted the 1988 measure Proposition 103, which regulates the insurance industry. While there has been inflation in recent years, Balber says there are other factors at play.
“The industry is taking advantage of the moment where we see real cost increases to grab as much as they can,” Balber said.
Can I Just Get a Quote?
After hitting a brick wall with a local broker, I decided to go for a big name. I called The General Car Insurance, whose animated mascot stands side-by-side with Shaquille O’Neal in colorful commercials. After (a recording of) the big man himself welcomed me to The General, a less-recognizable recorded voice let me know that The General wasn’t offering insurance in my area. After finally being informed that nobody was available to take my call, I was abruptly hung up on.
Metromile, the company that insures the colleague I commiserated with over rising insurance rates, also said it wasn’t offering policies in my ZIP code.
Next, I tried American National, and the website referred me to its Bay Area agent, Karan Park. After a quick chat, Park, who works with multiple companies, sent me a list of documents she’d need before sending back a quote. They included a copy of my vehicle registration, a photo of my driver’s license, proof of residency from a utility bill and pictures of my vehicle from all four sides.
I was surprised. In December, California Insurance Commissioner Ricardo Lara put out a bulletin in response to widespread allegations that insurers were dodging their legal obligation to offer and sell insurance to everyone with good driving records. The bulletin said that requiring the exact documents Park asked for wasn’t allowed because they amounted to unreasonable application requirements.
I called Park back. She explained that she didn’t used to need all this documentation before giving out a quote. But in August 2023, American National began trying to limit its clientele, she said. For example, the company wanted to avoid insuring inexperienced drivers and drivers from other states.
She hadn’t heard about the December bulletin barring onerous paperwork, though.
American National adjusted its application requirements to comply with the December state bulletin, according to company spokesperson Scott Campbell. The firm does not require California applicants to provide copies of utility bills, vehicle registrations, photos of driver’s licenses or photos of their vehicles to receive an auto insurance quote, he said.
In a reaction to the doom-and-gloom financial forecasts of the past year, insurance companies have made it harder and harder to get a quote, even though they’re supposed to give one to every good driver, Balber said.
Insurance companies invest the funds from premiums in the stock market and other assets. Many people expected a recession in 2023, which would have made it harder to profit from investments. So the insurance companies wanted to play it safe by limiting their customers to the people who were the least likely to need a payout on a claim, according to Balber. Everyone else got locked out.
Finally a Quote, Maybe
Geico was the first company to actually offer me a quote.
After filling out Geico’s online questionnaire, the offer was actually about half of what I’m set to start paying when my plan renews with Amica. But the company will have to complete a 15-day underwriting review before it can confirm the plan, the online system said.
That’s where I stand today. I’m waiting to hear back from Geico, feeling worried that the tentative offer from the website is too good to be true, which has happened to other Californians in recent months as they try to close the deal on bargains.
Or I can stick with Amica.
I’m not sure what I’ll decide. If the Geico offer comes through, maybe I’ll join Team Gecko.
Either way, given the recent volatility in the insurance market, I can’t shake the feeling that I may very well find myself doing this same search a year from now.