State Farm was approved to raise auto insurance rates in California by an average of 17.7% starting at the end of January, according to the San Francisco Chronicle. 

About 4 million customers will be impacted by the rate increase approved by the California Department of Insurance, the article says. 

The insurance company, and the largest insurer in the state, increased rates by 21% in February. 

“The company told regulators that the 21% rate hike was not enough to cover increased costs caused by lingering supply chain issues from the COVID-19 pandemic and labor shortages, which it says have driven up the cost of auto repairs and car values,” the newspaper says. 

Other insurance companies including GEICO, Nationwide, and AAA have filed for large rate increases, according to the newspaper. 

The Los Angeles Times reports that Allstate received a rate increase of 30% on average in February after temporarily pausing the sell of new auto insurance in the state late last year. 

Allstate CEO and President Tom Wilson threatened to drop insurance customers in California, New York, and New Jersey in November 2023 if he didn’t receive a double-digit rate increase in all three states. 

Days after making the statement, Allstate announced that the states would approve the requested increases. 

According to a Bankrate report, the cost of full coverage car insurance increased by 26% nationwide this year. 

It says the average annual car insurance coverage rose to $2,543, a $529 increase over last year. In the past three years, the annual cost of full coverage increased by 52% from $1,674. 

The report also claims households spent 3.41% of their income on full coverage insurance during 2024. 

The U.S. property and casualty industry has reported a $4.1 billion net underwriting gain for the first nine months of 2024, according to an AM Best report. 

AM Best calls the gain a “significant improvement” from the $32.1 billion loss recorded during the same period last year. 

Images

Photo courtesy of youngvet/iStock