Published: January 11, 2022Last updated: October 19, 2022

Why Is Car Insurance in California So Expensive?

If you’ve just moved from another state and your premiums increased, we’ll explain why.

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California is a state known for its beautiful beaches, sprawling cities, and national parks. However, it’s also one of the most expensive states when it comes to things like housing, utilities, healthcare, and, unfortunately, auto insurance. In this article, we’ll detail why California is one of the most expensive states for car insurance, and what you can do to make these high rates as low as possible.

Why Is Car Insurance in California So Expensive?

Many factors contribute to the high cost of auto insurance in California, from the high cost of living to population density. Here are the factors that affect the cost of car insurance in California:

Why Is Car Insurance in California So Expensive

More Driving

California has the most licensed drivers in the U.S. by a wide margin, with over 27 million total.1 The high number of drivers on the roads means more traffic, especially in densely populated areas.

Urban area 2019 average annual number of highway traffic delays per auto commuter (in hours) 2020 average annual number of highway traffic delays per auto commuter (in hours)
Bakersfield 26 11
Fresno 40 29
Oxnard-Ventura 34 18


The average annual number of hours of highway traffic delays per auto commuter decreased from 2019 to 2020 because of the COVID-19 pandemic.

In 2019, the average Fresno auto commuter spent 40 hours a year in high traffic delays.2 More traffic means more accidents, which could increase the cost of auto insurance premiums.

Expensive Auto Repairs

On top of the large number of cars on the streets, California has one of the highest car repair costs in the U.S. along with Georgia, Virginia, New Jersey, and Washington, D.C. In 2019, the total average cost of car repairs in California was $414.24, with an average labor cost of $147.38 and an average parts cost of $266.86.3

This means that not only will premiums be higher, as insurance providers take these higher rates into account, but also that you may have to pay more out of pocket for repairs that are above your liability limit.

Uninsured Drivers

While uninsured motorist coverage isn’t required in California, many people add on this supplemental coverage, as about 17 percent of California drivers are uninsured. As of 2019, this makes California 10th in the nation for percentage of uninsured drivers.4 If you get into an accident with someone who has no insurance and you don’t have uninsured motorist coverage, you will have to pay for any repairs out of pocket.

Light BulbFYI

In the U.S., 13 percent of licensed drivers are uninsured, compared with 17 percent in California — a difference of over 30 percent.

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.

Population Density

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.

Category California U.S. Percentage difference
Index 138.9 100 39%
Grocery 111.9 100 12%
Housing 196.3 100 96%
Utilities 127.8 100 28%
Transportation 136.6 100 37%
Health 110.4 100 10%
Misc. 111.6 100 12%

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.

Minimum Wage

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.


If you have a low credit score, that could also increase your car insurance premium.

State Requirements

California actually ranks below the national averages for property damages liability per accident and bodily injury liability per person.

Auto insurance minimum requirements Property damage liability limit per accident Bodily injury liability limit per person Bodily injury liability limit for everyone involved in an accident
California $5,000 $15,000 $30,000
U.S. average $18,000 $25,000 $18,000
Percentage difference -72% -40% 67%

However, when it comes to bodily injury liability for everyone involved in an accident, the limit is $30,000, which is 67 percent higher than the national average of $18,000.8 Learn more about the minimum car insurance in California.

How to Get Cheap Car Insurance in California

How to Get Cheap Car Insurance in California

Getting cheap car insurance in California works the same way as it does everywhere else in the U.S. Here’s how to get the cheapest car insurance in California:

  • Bundle your auto insurance coverage with a homeowners insurance policy.
  • Drop supplemental coverages, such as rental car reimbursement.
  • Increase the size of your deductible.

Take advantage of auto insurance discounts from your provider, which could include incentives for safe driving courses, good grades (for students), homeownership, annual policies, and the like.


Combined, these factors explain why auto insurance in California is so high, but if you want to learn more, read about whether you have to have insurance to register a car in California, or the fines for texting and driving in California. California may be an expensive state to live in, but if you sign up for a policy with the above information in mind, you can keep your premiums affordable.


  1. Highway Statistics 2019. U.S. Department of Transportation. (2019).

  2. 2021 Urban Mobility Report. Texam A&M Transportation Institute. (2021).

  3. 2020 State Repair Cost Rankings. CarMD. (2020 July).

  4. One in Eight Drivers Uninsured. The Institutes. (2021, Mar 21).

  5. Population and Housing Unit Estimates. United States Census Bureau. (2022).

  6. Is Los Angeles more crowded than New York? University of California, Los Angeles. (2014, May).

  7. Cost of Living Data Series. Missouri Economic Research and Information Center. (2022).

  8. INSURANCE REQUIREMENTS. California Department of Motor Vehicles. (2022).