Auto Insurance Companies Are Refusing To Cover Drivers In California

Insurance rates have been on the rise across the country thanks to most prominently natural disasters, inflation and reckless drivers. Of course insurance companies don’t really want to cover anyone, especially anyone residing in the state of California, as Oakland’s Fox 2 reports. And it’s becoming a problem.

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Industry experts say insurance companies are losing money on coverage. Not just some money, a lot. So, in order to try and control the hemorrhaging of funds (and unfortunately for consumers) companies are pulling back coverage or outright refusing to cover California residents, as one expert explained to Fox 2.

“A lot of companies are running a more than 100% loss ratio,” explained president of Oakland-based Barbary Insurance Brokerage Jerry Becerra. “So that’s unsustainable over the long-run.”

Becerra said there were many factors to contribute including, the number of accidents being up, as well as a rise in the costs associated with collision repairs.”There was a dip in driving during the pandemic, but that’s rebounded,” said Becerra, so the incidents of crashes have also rebounded. “The cost of repairing vehicles is higher than it used to be due to inflation, type of vehicles, supply chain issues, a lot of things may be driving that,” Becerra explained.

He also pointed to increased events of natural disasters, noting property damage from extreme weather events often included damage to vehicles.

To counter such large losses, insurance companies have wanted to increase rates. But that’s not something easily done in California; rate increases have to be reviewed and approved by the state’s insurance commissioner, something that the insurance companies are not so happy about. They want a faster turnaround time for rate increase reviews. The American Agents Alliance, a group representing independent insurance agents, appears to be using insurance companies’ refusals to cover drivers as a need for the rate increase reviews to be done in a more timely manner.

I can say from experience, as a Californian, that shopping for quotes and even getting insurance is mighty difficult. Every single major insurance company declined coverage either because of the fact that I was a Hyundai owner — completely ignoring the fact that Hyundai rolled out a fix for the engine immobilizer, making the cars harder to steal — or just straight out said they don’t do business in California. When I did eventually find a company that would cover me, they limited my policy to state minimums and told me I had to wait 30 days before increasing to full coverage for reasons I’m not quite sure of.

Regardless, people are calling on state regulators to do something as some experts are saying things are going to get worse for drivers and the insurance industry in California. When you throw in the fact that state laws require insurance coverage as well as insurance coverage for vehicle registration, with no one willing to cover drivers, things are just moments away from taking a turn for the worse.