Escalating costs, partially attributed to abuses within the legal system, have led some drivers to abandon their insurance coverage in California, potentially raising costs for all consumers.
ValuePenguin, a subsidiary of LendingTree, has revealed that California ranks higher than 41 other states in terms of uninsured drivers, with 16.6% of motorists operating without insurance coverage.
Nationally, despite laws requiring car insurance, 13% of drivers nationwide are uninsured. California has one of the highest percentages of uninsured drivers in the country at 16.6%, an increase of 1.6% over the last decade.
New Jersey boasts the lowest percentage of uninsured drivers at just 3.1%.
The Los Angeles Times reported in December that some California drivers intending to renew their insurance policies dropped them due to higher premium increases, now unaffordable. Also, several major insurance providers have capped the number of new policies they will underwrite for Californians, resulting in fewer options for residents. Other drivers have lost their insurance coverage over minor infringements such as missing a single payment.
An analyisis of American Property Casualty Insurance Association (APCIA) data by the law firm Franklin & Prokopik says inflation in insurance claims has outpaced general inflation.
A factor the firm cited: an increase in the cost of personal injury claim settlements.
The report stated: "Almost any measure [shows] litigation-involved recoveries are now increasing at previously unseen rates."
Examples include higher average verdicts, higher median verdicts for single fatalities and exceptionally high jury awards or 'nuclear verdicts'.
"As individual verdicts reach new heights, they establish new precedents–thus creating a positive feedback loop influencing future judgments for liability cases, fueling lawsuit inflation across all lines of business," the report said.
These higher costs come amidst a period of increased inflation forcing many families to choose to go without insurance. According to Independent Agent Magazine, costs of uninsured drivers are often added into the premiums for insurance holders which further increases costs.
ValuePenguin was established in 2013 by three former financial analysts, as per the company's website. The platform allows users to compare financial products such as insurance policies and credit cards, thereby enabling data-driven decisions. In 2019, digital comparison tool provider LendingTree acquired ValuePenguin.