California is one of the most affordable states for car insurance, but there is still the question of which auto insurance company is right for you. With some careful shopping, you can save yourself a pretty penny in no time.
When shopping for your policy, remember that little factors affect the way your quote is calculated. Everything from your ZIP code to your age and credit score can significantly impact the quote you receive, making it paramount that you explore your options. You’ll be grateful for having spent the extra time researching all of the possibilities for the best possible loan.
Compare Affordable Car Insurance Rates in California
Our top 5 picks for the best cheap car insurance in California
With so many options available today, it can be overwhelming. Some companies may work better for your needs with exclusive programs and discounts they may offer. Cost is just one factor when considering the best California car insurance for you.
We examined the options for California’s best cheap car insurance, taking into consideration their J.D. Power Ranking, which conveys customer satisfaction, and their AM Best placement, which judges the company’s financial stability.
These companies stand out for their exceptional customer support, a high financial rating and strong financial stability. All the companies on our list offer a safe driving discount, and most offer special pricing for the college student in your household. Many companies also offer exclusive discounts that apply to your car insurance policy.
J.D. Power conducts incredibly thorough customer service satisfaction surveys. Each of these companies possess a J.D. Power rating of “better than most” or higher within the California region. These companies also have earned favorable ratings from AM Best, which examines an insurance company’s financial viability and assigns it a score.
The combination of high scores from J.D. Power and AM Best will help you determine an insurance company’s reliability in case of loss. If you find yourself in a predicament one day, you don’t want to be stuck with an unresponsive insurance company.
|Company||J.D. Power Ranking||AM Best Financial Rating||BBB Rating|
|State Farm||4/5||A++ (Superior)||A+|
- Esurance – $1,196
- USAA – $1,425
- Geico – $1,421
- Allstate – $1.617
- State Farm – $2,160
Allstate has all the coverage options you’d expect and a few add-ons to give you extra peace of mind such as sound system and towing coverage. Allstate has several discounts, including options for safe drivers to save a lot of money on their insurance rates.
Esurance is a good option if you want to build your policy and customize it to your needs. The company has a streamlined quote system and lots of add-on options like gap coverage and custom equipment. Esurance also offers a Fast 5® discount for 5% off your first-term premium and a paid-in-full discount on your entire plan.
Geico is one of the most popular car insurance companies because of the low rates and discount options. Geico offers discounts for safe driving, good students, members of the military and senior drivers. Geico also provides exclusive discounts to federal employees and an emergency deployment discount.
State Farm is known for its customer service and coverage options, but it doesn’t always have the best prices unless you can get a discount or live somewhere with less expensive rates. It does have a lot of discounts to use such as for bundling and safe driving. You can also get a discount if you have a student away at school.
USAA is an auto insurance company that exclusively serves the military and their families. It usually has the least expensive auto insurance rates for people who are eligible, and it has some discounts to lower the cost even more.
How are car insurance rates determined in California?
Each state has different requirements for drivers and these impact your car insurance policy. It is essential to know the laws and requirements for your specific state because you may be eligible for additional savings. Here are some things to know about in California.
In California, drivers benefit from Proposition 103, a state-mandated discount that rewards safe drivers with lower car insurance premiums. To qualify, drivers must be a licensed driver without multiple points on your driving record for the last three years. You also cannot have been found at fault in an accident within the last three years that caused damage of $1,000 or more.
Eligible drivers receive 20% off their auto policy.
Other factors included in your rate
Regardless of whether you qualify for Proposition 103, other factors impact your car insurance policy can include:
- Your age
- Where you live
- The make and model of your car
- Your driving record
- How much you drive
Even your gender can affect your insurance, as studies have shown that women have fewer accidents and DUIs. The cheapest car insurance in California for you will depend on these factors.
California’s minimum coverage requirements for 2019
The most basic level of insurance coverage required for auto insurance in California is $15,000 for bodily injury per person, $30,000 for bodily injury per incident and $5,000 for property damage, also known as a 15/30/5 plan. When calculating your auto insurance policy, you also have the option of adding $1,000 for medical expenses.
If you do not have an insurance policy, California offers a special caveat that still allows you to operate your vehicle legally. Per state laws, California drivers have the choice of eliminating their auto insurance if they can prove their financial responsibility to the state.
Drivers must do one of the following to meet the requirement:
- Pay a $35,000 cash deposit with the California Department of Motor Vehicles (DMV)
- Receive a Certificate of Self-Insurance from the California DMV
- Possess a $35,000 surety bond from a licensed California company.
Shop for a new policy every couple of years
Many companies will offer loyalty discounts to long-time customers, so most customers don’t look for another insurance provider. However, other companies could provide greater deductions that substantially reduce your costs for California auto insurance.
Until recently, it was legal in California for car insurance companies to set their rates by their own criteria. Risk factors could include an instance where a company would upcharge your policy if they think you might be willing to foot the bill. This practice is called price optimization, and it was a popular practice used by nearly half of insurance companies. Some carriers used extra data to determine price elasticity, using things like your social footprint and how long you’ve been with your cellphone carrier.
Basing your rates upon your complacency as a customer makes auto insurance less about protection and more about cost margin and increased profit. That comes at the price of the customer. Bob Hunter, the director of insurance for the Consumer Federation of America, refers to it as “profit maximization.”
Fifteen states, including California, have banned price optimization through official regulation. The California Department of Insurance issued a notice in February 2015, announcing that “any use of price optimization in the rate-making/pricing process or in a rating plan is unfairly discriminatory in violation of California law.”
Still, shopping around isn’t a bad idea. Some argue that loyalty discounts are more complicated than they seem. Not only do they incentivize you to remain with your current carrier despite rate hikes. Your rate might go up a lot, but the loyalty discount could make it appear cheaper than it is. Even though price optimization is illegal in California now, you could still be paying an optimized rate on a policy created before the law was made.
Check with your agent to ensure that you are not locked into price optimization with your current policy. By law, insurance agents are required to divulge that information so you can decide how comfortable you are with that company. Gather a few competitor quotes first, so you’re educated on the different options available to you. Your current company may offer to match pricing.
Keep in mind some factors could affect the cost of a different policy. For example, adding a new or teenage driver to your policy could increase your expenses. Your credit score can also affect your insurance rate. If your credit score is below 620, you may pay a higher price. Discounts like safe driving incentives can help to mitigate those costs.
Frequently asked questions
Why are California’s rates so expensive?
While there is a bevy of different factors at play here, the high urban population of the state contributes to its higher rates. More urbanized states tend to have more car accidents and thefts, and California is no exception. There have also been significant weather-related events, such as wildfires, which have prompted insurance companies across the board to raise their rates in response.
What if I’m not a full-time California resident?
To purchase insurance in the state of California, you must either be a resident or prove that your vehicle is principally garaged within the state. An exemption applies to those with active military status.
Should I get more than minimum coverage?
With an average of six million accidents each year, you will likely have to file a claim in your lifetime. When that happens, you might want full coverage liability instead of minimum coverage. Even with a simple auto accident, it’s expected the other party will experience damages totaling more than $25,000. If the other vehicle has multiple passengers with injuries, costs could exceed $65,000 for damages to include medical bills, lost wages or lost income and pain and suffering.
In most cases, upgrading to a top-tier 50/100/50 plan isn’t as daunting as you might think. The extra coverage can add just a few hundred dollars, a drop in the bucket compared to out-of-pocket expenses in the event of an accident.
Do I need collision or comprehensive coverage?
When considering more than the minimum coverage, collision and comprehensive insurance are a critical part of your policy. Factors like your driving style and where you live can determine whether you are at high risk for an accident.
Collision insurance protects you when your vehicle hits an object or another car. It can also apply if your vehicle is damaged from road conditions, like potholes. Comprehensive insurance, on the other hand, covers a wide variety of damages. It applies if you hit a deer or a tree branch falls on your car. Vandalism and theft are covered, and you can also claim comprehensive insurance in the event of a natural disaster, such as California’s infamous wildfires. If you are more likely to have one kind of accident over another, that can help determine your type of insurance.
Is California a no-fault state?
In a no-fault state, both parties are covered no matter who caused the damages. California is not a no-fault state, so the person that causes the accident is responsible for the damages.
What is SR-22 insurance?
An SR-22 policy is required for a few different reasons, such as those who had an accident without insurance or have a DUI or DWI on their record. It also applies if you have multiple traffic violations over a short period. The SR-22 should remain on your policy until otherwise ordered by the court.
In these instances, SR-22 insurance may be required for the driver to remain licensed. It is a policy that you can purchase from your regular insurance provider, but it is a longer and more expensive process because of the extensive paperwork required.