/ Articles / By

California Car Insurance Requirements

Understanding mandatory coverage for Golden State drivers

California Car Insurance Requirements

If you drive a vehicle in California, you need to familiarize yourself with the various California car insurance requirements. The state has complex regulations regarding minimum coverage amounts, policy options, discounts, and laws. Here we provide a comprehensive overview of everything you need to know about getting car insurance coverage in California as well as tips on saving money.  

woman driving a car with all the California Car Insurance Requirements

We’ll cover the minimum coverage requirements in California and how state laws impact rates and policies. Whether you’re a new driver, switching policies, or want to make sure you have adequate protection, this guide will help you navigate the complex world of California car insurance requirements.

a girl driving a car with the minimum required coverage in california

Minimum Required Coverage in California

Under California law, all drivers must carry the following minimum auto insurance coverage:

  • Bodily Injury Liability: $15,000 per person/$30,000 per accident. This coverage helps pay for injuries you cause to others in an at-fault accident.
  • Property Damage Liability: $5,000 per accident. This covers damage you cause to other vehicles or property.
  • Uninsured and Underinsured Motorist Bodily Injury: $15,000 per person/$30,000 per accident. This protects you if you’re hit by a driver with no or insufficient insurance.

How California State Laws Affect Insurance Rates & Policies

California has complex auto insurance laws and regulations that influence costs, policy options, and claims processes compared to other states. Here are some key laws to be aware of:

  1. California is an at-fault state, meaning the driver responsible for an accident must cover the resulting expenses.
  2. The state does not allow insurers to consider gender, marital status, homeownership, credit score, profession, or education level when underwriting policies.
  3. Insurers can use other factors like driving record, annual mileage, and ZIP code. However, ZIP code can’t be the only or primary factor.
  4. California has a “Prop 103” regulation that requires insurers to justify or get approval for rate increases. This limits how much premiums can fluctuate.
  5. Motorists who are uninsured for lapses shorter than 90 days get placed in the California Assigned Risk Plan. This makes coverage mandatory but often at a higher cost.
  6. The Golden State has “good driver” discounts for motorists with few to no infractions. Discounts range from 20-30%.
a guy seating in his office reading on his laptop How California State Laws Affect Insurance Rates & Policies

These laws, among others, impact how insurers price policies and what they can base premiums on. The regulations tend to keep rates relatively steady compared to other states. However, California’s high population density and accident rates do push costs higher than the national average.

Major Auto Insurers in California

California has a competitive and varied car insurance market with over 100 active providers. The top 10 insurers write over 50% of the state’s auto policies. Here are some of the major providers in California and their market share:

a rustic wall full of signs with the name of the major auto insurers in California
  • State Farm: 16.06% market share
  • Farmers Insurance: 10.14%
  • Progressive: 9.31%
  • AAA Southern California: 5.57%
  • Liberty Mutual: 4.70%
  • GEICO: 4.43%
  • Mercury Insurance: 4.37%
  • Alliance United Insurance: 3.37%
  • CSAA Insurance Group: 3.34%
  • AAA – Automobile Club of Southern California: 2.69%

The top five insurers control over 45% of the California market. While State Farm and Farmers lead in market share, companies like Progressive and GEICO have gained market share in recent years based on competitive pricing.

Regional insurers like AAA Southern California, Mercury Insurance, and the Automobile Club of Southern California also have strong footholds in the state.

How to Shop for the Best California Car Insurance Rates

Car insurance premiums can vary dramatically between different insurers based on their risk models, pricing algorithms, and more. Drivers in California should be sure to compare rates from at least 5-10 companies when shopping for a policy or renewing coverage.

Here are some tips for finding the best deal on car insurance:

  1. Compare quotes from large national insurers alongside major regional players. Local insurers may offer better rates in some areas.
  2. Get quotes from insurers known for discounts like GEICO, Progressive, and State Farm.
  3. Comparison shop using aggregator sites like Insurance.com, TheZebra.com, and Gabi.com. But also get quotes directly from insurer websites.
  4. Review sample rate calculations from insurers carefully. The cheapest headline rate may not be the best overall value.
  5. Adjust coverage limits and deductibles to see the impact on premiums. Sometimes you can reduce costs significantly with just small coverage tweaks.
  6. Ask about all available discounts you qualify for. Don’t leave savings on the table.
  7. Consider usage-based “pay-as-you-drive” programs like Progressive’s Snapshot and State Farm’s Drive Safe & Save.

Taking the time to shop around and compare myriad options is the best way to save on California auto insurance. Rates for the same driver can swing by $100 or more per month between insurers.

Getting Discounts on California Car Insurance

Drivers in California have access to a range of standard auto insurance discounts that can help reduce premium costs. Asking insurers about every potential discount is an important part of getting the lowest possible rate.

A small car on a desk beside insurance documents and coins symbolizes seeking auto insurance discounts

Some of the common car insurance discounts in California include:

  1. Good driver discount – Up to 30% off for drivers with no accidents, violations, or claims on record. Often available for 3-5 years of clean driving.
  2. Defensive driver discount – Can save up to 15% for completing an approved safe driving course every few years.
  3. Low mileage discount – Up to 20% off for driving fewer than 7,500-10,000 miles per year.
  4. Multi-policy discount – 5-15% off for bundling auto with home or renters insurance.
  5. Multi-car discount – Up to 25% off for insuring more than one vehicle on the same policy.
  6. Good student discount – Up to 15% off for full-time students under 25 with a B average or higher.
  7. Anti-theft device discount – Up to 25% off for having anti-theft and recovery systems installed.
  8. Hybrid/electric vehicle discount – Up to 10% off for insuring a hybrid or electric car.

The easiest way to save is to ask about every discount an insurer offers and see which ones you can get stacked onto your policy. Taking advantage of multiple discounts can lead to significant savings in California.

Insurance Considerations for Electric Vehicles

Electric vehicles (EVs) make up over 5% of registered vehicles in California, the highest percentage of any state. But insuring an EV comes with some unique considerations.

Here are key factors for California drivers to know when getting insurance for an electric car:

  1. Insurance rates are generally lower for EVs compared to gas-powered models. Insurers consider them lower risk given safety features and eco-conscious drivers.
  2. EV rates vary based on make/model. Teslas often cost more to insure due to high repair costs for damage.
  3. Comprehensive coverage is critical since EV batteries are very expensive to replace. A battery claim can total an EV.
  4. Home insurance may need added liability coverage if charging an EV at home. Discuss options with your insurer.
  5. Ask about EV discounts. Some insurers offer 5-10% off for electrics and hybrids.
  6. Consider mileage-based insurance for infrequent drivers. Since EVs use less gas, mileage matters more than time driving.

Drivers should inform insurers if they plan to buy an EV and discuss proper coverage. Rates will still rise after an at-fault accident or citation in an electric vehicle.

The Future of Car Insurance in California

Several major trends and innovations will shape the trajectory of car insurance in California over the next decade:

the future of car insurance in california
  1. Rates will keep increasing, but Prop 103 will limit drastic spikes. Average premiums are already nearly $400 higher than the national benchmark.
  2. New auto technologies like collision avoidance systems, camera-based tools, and autonomous tech will impact risk and pricing models.
  3. Telematics and pay-as-you-drive insurance will gain adoption, allowing highly customized policies based on real driving data.
  4. On-demand and peer-to-peer insurance models will provide more options for part-time drivers.
  5. Accelerated adoption of electric vehicles will motivate insurers to introduce more EV-specific discounts and coverage options.
  6. Self-driving cars have the potential to disrupt the entire auto insurance sector long-term, but when or how that plays out in California remains uncertain.
  7. Demographic shifts, climate change, urban density, traffic congestion, and accident rates will drive regional risk and pricing differences within the state.

While the future is unclear, insurers will have to adapt pricing and policies to California’s complex insurance regulations, evolving vehicles, and population changes. This will provide drivers with more options but likely lead to rising overall costs.

Navigating in a Heavily Regulated Market

Buying car insurance in California involves navigating a heavily regulated market with unique options, laws, discounts, and rates. While premiums are higher than national averages, drivers can still find affordable coverage by shopping around, comparing quotes, adjusting deductibles, and maximizing discounts.

Understanding California auto insurance requirements like state laws, electric vehicle considerations, and market trends allows you to make informed insurance decisions. Now that you are aware of the laws and requirements for drivers in California you’re ready to compare quotes. To start, enter your zip code and fill out a free online application in about five minutes. Save more money today on the California car insurance coverage you need. 

Picture of Author: David Haan

Author: David Haan

David Haan is a professional writer who has a passion for writing about financial topics: including investing, insurance, and entrepreneurship. David has a way of simplifying complex financial topics to make it easy for anyone to understand. During his free time, he likes to play volleyball, surf, and listen to jazz music.