Even with minimum coverage, you can expect to pay more for auto insurance rates and annual premiums based on the number of uninsured motorists in California.
In general, car insurance rates are higher in densely populated areas, where vandalism, theft, and damages are more likely. As a state, California ranks 11th in density, with 241 people per square mile.5 The state’s major cities are even more densely populated: Los Angeles, for example, has 7,828 people per square mile at a city level,6 making premiums even higher for those living in city ZIP codes.
High Cost of Living
California is fourth in the nation for the cost of living after Hawaii, D.C., and New York.
Healthcare in California specifically contributes to the high costs of auto insurance. In California, healthcare is 10 percent more expensive than in the rest of the U.S.7 Similar to high auto repair costs, high healthcare costs could affect premiums on bodily injury liability limits, a state requirement.
Although the state’s minimum wage of $13 an hour is higher than the federal minimum wage of $7.25 an hour, it’s insufficient for the cost of living. In fact, a minimum wage annual income only covers:
- 87 percent of the cost of living for an adult with one income
- 64 percent of the cost of living for two adults with two incomes and a family of four
- 41 percent of the cost of living for an adult with one income and a family of four
Those with lower incomes may actually pay more for auto insurance than those with higher incomes. If that’s the case for you, read our list of the best low-income auto insurance.