A Guide to Auto Insurance in California (CA)

In the state of California, you must purchase California Auto Insurance in order to own and operate a motor vehicle, which in turn indicates that you have taken financial responsibility for your actions and vehicle. The Compulsory Financial Responsibility Law in California dictates that all residents must show responsibility for their actions.

Insurance companies in the state are bound by the Californian law to provide electronic information about private-use vehicles to the DMV. This monitoring system ensures that all vehicles have automobile insurance coverage.

Let's begin this comprehensive guide to California Auto Insurance by taking a look at the states minimum requirements when it comes to auto insurance in California.


California Auto Insurance –  The State Minimum Auto Insurance Requirements


First of all let’s take a look at the California State Minimums for auto insurance.

  • $15,000 bodily injury per person
  • $30,000 worth of cover per accident
  • $5,000 worth of property damage cover

The liability limits for California auto insurance is 15/30/5, which breaks down into $15,000 for the death or injury of one person in one accident or $30,000 for all injuries or deaths of all people in the accident. The $5,000 covers the property damage as a result of an accident.

Since California is not considered a tort state, someone must always be deemed at fault when an accident happens. This determines which auto insurance company is responsible for the financial penalties of an accident.

However, if you cross state lines with your vehicle and their limits are higher; your insurance automatically adjusts for their minimum limits. For example, if someone from California is in New York, which requires 25/50/10, your insurance policy in California will automatically adjust to ensure all bases are covered if you get in an accident.

California law does not require individuals to purchase underinsured or uninsured motorist coverage, which pays for the costs of an accident if you get into a collision with someone who has no insurance or if their policy limits are exceeded. However, It is highly recommended that you purchase a minimum of $50,000, but higher limits protect you more. As a result, you will incur a higher premium on your insurance policy, but will have more comprehensive California auto insurance as a result.

Registrations can be suspended if you do not carry the minimum coverage on your automobile policy. The DMV first gets notified that your policy was cancelled if a new policy does not get created within 45 days. The registration can also be suspended if false information is given when attempting to register a vehicle about the insurance coverage. You may also receive a citation for not carrying insurance and will be personally responsible for any damages incurred in an accident.


California Auto Insurance Quotes – The Legal Framework

California has recently put into place a number of legal safeguards to try to help California residents to get the best possible deals on their auto insurance in California, and make sure that they don’t overpay for their cover.

Principal among these is the Assembly Bill which became effective on January 1st 2005 which put into effect three statutory ways that auto insurance companies in California now have to help out consumers.

These are:

1/ They have to maintain a toll free number where California consumers can call them without charge.

2/ They have to maintain a web site where consumers can get a cost estimate of how much a California auto insurance policy could cost them  (this has to include showing the lowest priced policy for which the customer is eligible)

And:

3/ This information has to be made publically available on the California Department of Insurance Website. (Currently you can find this list of websites and California Auto Insurance Companies contact details here on the California Department of Insurance’s website. Or by calling the Department directly on this number (800) 927-4357)


These measures are not the be-all, end-all, for making sure that people get the best possible California Auto Insurance Quotes, but they are at least a good step in the right direction, and acknowledge the role that the internet can play in helping to safeguard consumers by providing them with greater amounts of information.


California Auto Insurance Complaints


One interesting area that you don’t often hear auto insurance companies in California talk about are the amounts of complaints that they receive from consumers, and how many of these end up being found to be justified by the California Department of Insurance (most don't in practice).

So, to balance the picture a little, let’s take a look at some of those complaint statistics for auto insurance policies in California, so you can get a feel for the better companies BEFORE taking out an auto insurance policy with them.

The California Department of Insurance ranks the 50 largest auto insurance companies in California who are licensed to sell auto insurance in the state every year, and the 2010 study (which shows the stats from 2009 – see here) showed that of the top 50 auto insurance companies in California, these were the ten that had the BEST records in terms of claims adjudicated to be justified (i.e the lowest number).


The Ten California Auto Insurance Companies with the Lowest Complaint Ratio’s


1/ Wawanesa General Insurance Co.
2/ Allied Property & Casualty Insurance Co.
3/ California Casualty Indemnity Exchange
4/ Explorer Insurance Co.
5/ Wawanesa Mutual Insurance Co. Branch
6/ GEICO Indemnity Co.
7/ USAA Casualty Insurance Co.
8/ Mercury Insurance Co.
9/ California State Auto Assn. Inter Insurance
10/ Inter-Insurance Exchange of the Automobile Club
To balance the picture up, here are:


The Ten California Auto Insurance Companies with the Highest Complaint Ratio’s


1/ Hartford Casualty Insurance Co.
2/ Nationwide Insurance Co. of America
3/ Hartford Underwriters Insurance Co.
4/ Permanent General Assurance Corp.
5/ Victoria Fire & Casualty Co.
6/ Loya Casualty Insurance Co.
7/ Esurance Property & Casualty Insurance Co.
8/ Metropolitan Drt. Property & Casualty Insurance Co.
9/ Western United Insurance Co.
10/ SAFECO Insurance Co. of America


The California Automobile Premium Survey


Unsurprisingly,  Auto Insurance Companies in California (and everywhere else for that matter) like to emphasise why they are better than the competition. But this is clearly coming from a fairly one-sided perspective, and so it is useful as a California consumer to also see things from the more straight-forward and impartial point of view of the California Department of Insurance.

One great thing about legal requirements is that the auto insurance companies are literally forced by statute to reveal the cold, hard facts about how much their policies cost, without all the extra glossy brochure stuff to confuse you.

In California these facts take the form of the annual California Automobile Premium Survey, which is where the insurance commissioner in California sets down a comparison of insurance rates which can help consumers by acting like a barometer of auto rates between companies in California.

You can find the whole survey here.

http://interactive.web.insurance.ca.gov/survey/survey?type=autoSurvey&event=autoStart

The nice thing is that it splits rates down by specific county, gender, the amount of years you have had a driving licence, annual mileage and your driving record, and then specifies exactly how much different companies would have quoted for popular vehicle types. (Honda Accord seems to be a good choice if you want to compare rates for various different scenarios, as it features more commonly then most other vehicle types).

Clearly this isn’t designed to give you California Auto Insurance Quotes, because these are simply comparative rates, and only for a smattering of makes of car, not the full range. But nevertheless, it can act as a terrific gauge for the average California resident who is looking for car insurance to get a feel for how much different companies might charge.

 

How Your Age And The Company You Choose Can Affect How Much Your California Auto Insurance Quotes Will Be…

If we take a look at just one county in California (for purposes of demonstration) then it is easy to see how the number of years that you have been driving can have big effects on the cost of your auto insurance.

This also serves to illustrate just what a wide gap there can be between the highest and lowest costs for auto insurance California wide, especially if you consider that this is highlighting just one county in California!

For the sake of this example let’s take a look at the figures for Los Angeles Long Beach.

In Los Angeles Long Beach someone who drives 7,600 to 10,000 miles per year, has had no accidents or violations and who drives a Honda Accord can expect quotes to vary as follows based on how long they have had a licence.

(Figures for 5 big California Auto Insurance Companies from 2011 California Automobile Insurance Survey based on standard cover. Note these five were chosen at random so you can get a feel for the spread. The survey actually shows data from over 30 different CA Auto Insurance Companies. So I have also shown the highest and lowest premium amounts, so you can see what a wide spread there really is when it comes to getting auto insurance quotes in California)

Remember, the ONLY factors that are changing here are how long the driver has held their driving licence, and the sex of the driver. All of the other factors are the same.

However, remember price is not always indicative of quality, or just as importantly the terms on which the insurance will be paid out. And remember this is just providing comparison for one type of car!  So don’t take these figures as recommendations. Merely as extra interesting information to add into the mix when seeking out a variety of California Auto Insurance Quotes and trying to decide between them :-)

i.e The common factors in these rates are a driver who is:


1/From Los Angeles – Long Beach
2/ Who drives 7,600 to 10,000 miles a year.
3/ Drives a Honda Accord
4/ Has had no accidents or violations in the last 3 years.

The factors that vary are:

1/ Gender - Male or Female
2/ The length of time that the person has held a driving licence (Shown in years)


Now, let's take a look at some comparative statistics...

3 – 5 Years - MALE

21st Century Insurance -  $3274
Geico - $3452
Hartford - $4184
State Farm - $5200
Liberty Mutual - $3354
Highest – Unigard - $7411
Lowest- Wawanesa - $1436

3 – 5 Years - FEMALE

21st Century Insurance -  $3098
Geico - $3312
Hartford - $3932
State Farm - $3742
Liberty Mutual - $3009
Highest – Unigard - $6598
Lowest – Wawanesa - $1436

6 – 8 Years – MALE

21st Century Insurance -  $2636
Geico - $2850
Hartford - $3212
State Farm - $3358
Liberty Mutual - $3354
Highest – Unigard - $5565
Lowest – Wawanesa - $1300

6 – 8 Years – FEMALE

21st Century Insurance -  $2536
Geico - $2656
Hartford - $3076
State Farm - $2820
Liberty Mutual - $3009
Highest – Unigard - $4868
Lowest – Wawanesa - $1300

9 - 15 Years – MALE

21st Century Insurance -  $2108
Geico - $2339
Hartford - $2219
State Farm - $2085
Liberty Mutual - $2383
Highest – Unigard - $4789
Lowest – USAA - $1167

9 - 15 Years – FEMALE

21st Century Insurance -  $1944
Geico - $2245
Hartford - $2202
State Farm - $1949
Liberty Mutual - $2283
Highest – Unigard - $4397
Lowest – Wawanesa - $1197

16 – 40 Years - MALE

21st Century Insurance -  $1670
Geico - $2171
Hartford - $2130
State Farm - $1910
Liberty Mutual - $1715
Highest – Unigard - $3774
Lowest – USAA - $1036

16 – 40 Years - FEMALE

21st Century Insurance -  $1592
Geico - $2171
Hartford - $2118
State Farm - $1910
Liberty Mutual - $1715
Highest – Unigard - $3620
Lowest – USAA - $1036



What conclusions can be drawn from this?


The first conclusion to drawer is that the rates for auto insurance quotes can vary quite dramatically in California, and so it is certainly worth shopping around.

Certain companies consistently appear at the top end cost wise (Unigard) and at the low end (Wawanesa), but you shouldn’t automatically assume to avoid one and choose the other!

The reality is that price is only one element in your decision (albeit an important one), because whilst a company can easily take in money by having the lowest rates, that doesn’t mean that they pay out quite as freely when their customers need to make a claim!

In fact, it is often the more generous payout clauses that can account for big price differences, and so you may decide that a more expensive quote is actually offering better value.

So don't race over and buy a policy just based on price. You really do need to read the terms and conditions of a number of different quotes.

Boring, no doubt. But neccessary!

You can bet that on the lower cost quotes that some corners will inevitably have been cut on what circumstances the auto insurance will pay out, and so you don't want to find yourself only being covered for crashes involving six cars, made between 1.30am and 2.30am on a friday!

Get a variety of quotes so you can be sure of what you are buying and can compare intelligently between policies.

The best way to decide is to get a variety of different California Auto Insurance Quotes and compare not only the prices, but also the terms and conditions.

Bear in mind that the charts from the California Department of Insurance are a useful starting point, but they don’t cover many common vehicles, and your requirements will almost certainly vary from the basic ones they survey.

So be sure to shop around, get numerous different quotes and see what is on offer before your final purchase.

The good news if you are female is that your policy is going to almost certainly cost less on a company by company basis.

Less experienced drivers will almost certainly pay more for their cover, with typical prices being twice as much for a driver who has only had an unblemished driving licence for 3 – 5 years as opposed to a driver who has driven for more than 16 years.

So 17 year old drivers in California should unfortunately prepare themselves to having to pay considerably more for their cover

On balance this is perhaps not unreasonable, as a good driving track record is very important for the auto insurance companies, but it is something to bear in mind when shopping around.

But don’t despair if you are a man! Careful shopping around can still save you considerable sums of money on your policy as evidenced by the considerable disparities between the prices of different policies.



The Top Ten California Car Insurance Companies By Market Share


It is also useful to know who the largest auto insurance companies in California are so that you can also get quotes form them before settling on a policy.

Here are the Top 10 California Car Insurance Companies based on market share in 2010 (this is for private passenger auto liability cover), and is based on figures from the California Department of Insurance.

The first figure is the amount of auto premiums written (in dollars) in 2010, and the second figure is the market share of that company in California.

1/ State Farm Mutual Insurance Company – 1,408,501,967 – 12.95%
2/ Interins Exch of the Automobile Club – 886,559,867 – 8.15%
3/ All State Ind Co. – 754,578,884 – 6.94%
4/ Mid Century Insurance Company – 706,401,506 – 6.49%
5/ AAA Northern CA NV & UT Ins Exch – 705,039,043 – 6.48%
6/ Mercury Insurance Company – 683,477,113 – 6.28%
7/ 21st Century Insurance Company – 383,702,957 – 3.53%
8/ Farmers Insurance Exch. – 289,447,880 – 2.66%
9/ Infinity Insurance Company – 286,583,977 – 2.63%
10/ Progressive Choice Insurance Company – 266,631,743 – 2.45%

It is interesting to reflect that the top 28 auto insurance companies in California all have written premiums of over $100 million each! And that the first 92 of the top car insurance companies in California have written more than five million dollars in California auto insurance premiums each.

Despite the top ten car insurance companies is Califorinia writing billions worth of premiums, this is still a very competitive market, and shopping around for affordable auto insurance in California still pays big dividends in terms of the savings that you can make.

This really is an enormous market, and cumulatively over $10 billion worth of auto insurance premiums were written in 2010 in California.


California  Auto Insurance – Other California Resources


California Department of Insurance


The California Department of Insurance deals with all the legislative, consumer and agent issues regarding auto insurance California wide. It is a repository of lots of useful information for California consumers who are looking to buy auto insurance in California, and is well worth a visit.
You can find out more about their car insurance resources here:

http://www.insurance.ca.gov/0100-consumers/0060-information-guides/0010-automobile/


California Low Cost Automobile Insurance Program


The California Low Cost Auto Insurance Program is designed to provide affordable California auto insurance for residents of California who otherwise wouldn’t be able to get covered.

The amounts of cover in practice are very low, and so this probably isn’t a good option unless you are on a very low income, or cannot get cover anywhere else.

http://www.insurance.ca.gov/0100-consumers/0060-information-guides/0010-automobile/lca/index.cfm


Association of California Insurance Companies


This is a trade organisation who act on behalf of insurance companies in California. Their website provides an interesting insight into some of the legal areas and legislation that California auto insurance companies are increasingly seeking from the state legislature.

http://www.acicnet.org

California Department of Motor Vehicles (DMV)

You will typically have questions about registering your vehicle and other matters relating to your car, and for that you should take a look at the California DMV website.

http://dmv.ca.gov


California Life Insurance

This is an article about life insurance in California, which also serves to highlight the enormous  nature of the insurance sector in California as a whole, as well as giving some additional background about California. If you are also considering getting life insurance in California at any time, then you should be sure to read this.

California Life Insurance


Other factors to bear in mind with California Auto Insurance Cover…

Insurance companies are allowed to take your personal credit history into account when determining what your premium will be and the options that will be available to you in a policy. If you rent a car in the state of California, you must also have insurance coverage on it in case an accident occurs.

You must carry your proof of insurance with you at all times and California law dictates you must show it when asked by a law enforcement officer, when renewing your vehicle registration or when your vehicle is directly involved in a traffic collision. If you would like to opt out of California auto insurance, you must prove that you have financial responsibility in other ways. You can give a cash deposit of $35,000 to the DMV; have a self-insurance certificate from the DMV or a surety bond for $35,000 from a company that has license to do business in the state.

But in reality you should simply get some comprehensive California Car Insurance Quotes right now so that you don't have to give the matter any-more thought, and can get properly covered...


 

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