California’s auto insurance premiums are projected to spike yet again in 2025, only building on staggering increases of 48% last year, according to a new report.
In January, Insurify predicted car insurance costs will rise to $2,732 by the end of 2025 in California, an increase of 6% compared to what customers paid in 2024.
Last year, however, Insurify reported the cost of auto insurance in the Golden State surged by 48%, climbing from $1,666 in 2023 to $2,575 by December 2024.
Nationally, rates increased 15% throughout the U.S. in 2024, according to Insurify.
A variety of factors, including rising vehicle thefts, higher repair costs due to advanced car safety features, and legislative changes like Senate Bill 1107—which raises minimum coverage requirements - have reportedly driven the disparity in insurance rate increases in California vs most of the rest of the U.S.
“California insurance costs are through the roof. Instead of working together with the government to allow more providers and thus lower rates, the state works against them,” chef and television personality Andrew Gruel said on X.
Experts also point to growing litigation as a key contributor to the mounting costs.
Insurers argue that California’s regulatory environment, combined with escalating litigation costs, is making it harder to operate profitably, leaving consumers to foot the bill.
While some blame the financial strain caused by consumer protection laws and climate risks, others say abusive legal practices are pushing up costs.
According to the American Tort Reform Association’s (ATRA) annual Judicial Hellholes report, California’s courts have become a testing ground for aggressive legal strategies aimed at expanding liability, particularly through Proposition 65 lawsuits and the Private Attorneys General Act (PAGA).
“The list of issues with the state’s civil justice system is endless. Rather than address the abuses and improve the litigation climate, state leaders seem to embrace the Judicial Hellholes® moniker,” ATRA said in its Judicial Hellholes report.
ATRA claims these lawsuits burden businesses with costly settlements, which in turn drive up consumer prices.
In addition to these concerns, California’s legal system has been embroiled in high-profile litigation. Alameda County District Attorney Pamela Price recently filed a lawsuit against auto insurers USAA and Progressive, as well as two major valuation software providers, accusing them of intentionally undervaluing totaled vehicles and underpaying policyholders.
The suit alleges that the companies used altered software to misrepresent the actual cash value of vehicles, resulting in “lowball” settlements for California drivers. Price seeks restitution for consumers, along with penalties and injunctions against the companies.
As insurance companies grapple with rising claims costs and regulatory pressures, some have begun pulling out of the state altogether, further exacerbating the problem.