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Car insurance in California has price caps. And as many of us know from econ 101, price caps lead to shortages. The California auto insurance market basically

• kkielhofner 3y ago
  I tried to get car insurance in California last year. It was so absurd I just sold the car.
  • TexanFeller 3y ago
    Have you considered moving to any other state rather than just trying to live without a basic necessity of life in America?
    • techsupporter 3y ago
      I live in one of the "any other states" (Washington) without a car quite comfortably. A lot of us can't or don't drive. It's nice to not have to put up with car insurance companies.
      • danielhep 3y ago
        Hello fellow car free Washingtonian! Selling my car was one of the best decisions I ever made.
      • anon291 3y ago
        As a car lite person, this comment is condescending. As much as I'd love if it were the case, efficient public transit is not a thing in most parts of the country. A car is a necessity. California needs to greatly expand transit or figure something out quick.
        • techsupporter 3y ago
          Why is it condescending? I can't drive or at least I can't do it very well. But before that, my spouse and I had long since sold our car. To me, it is more condescending to insist that a car is a basic life necessity. It demeans those of us who live without one.
          • nullindividual 3y ago
            What a weird take. If you do live in WA, you’re well aware of just how rural WA is. You full well know public transportation isn’t a viable option. You should also know that Seattle’s public transportation isn’t something to write home about. And you’re fully aware that commutes of >30 minutes are not uncommon, in part die to how unaffordable the greater Puget Sound if. A car is a basic necessity of life for the vast majority of Washingtonians. Congratulations on being the vast, vast minority.
            • techsupporter 3y ago
              > You full well know public transportation isn’t a viable option. I do not know this. I have over a thousand taps of my ORCA card in 2023. My wife has more. We have been as far north as Bellingham and as far south as Portland on transit. We attended the wedding of a friend's kid in Yakima by riding transit to Issaquah and taking Greyhound from there. I don't appreciate being told that my actual, lived experience "isn't viable", especially when I know several other people who do it just the same as me. Not all of us can or want to drive. This is even more true as people get older. > And you’re fully aware that commutes of >30 minutes are not uncommon, in part die to how unaffordable the greater Puget Sound According to AAA, the annual cost of owning a car is $12,000. We don't spend that money, so we can afford to live closer-in where transit is better. I am not here to judge people who choose to move far away but I haven't done it and I won't. But even if I did, I could just move to where I already have acquaintances in Lynnwood or Redmond or Renton or Burien and take the bus just the same as I do today.
      • tomcam 3y ago
        I'm impressed--no sarcasm. Would you mind giving us a glimpse of your day-to-day?Except in Seattle near downtown it seems like there would be tons of challenges.
        • steelframe 3y ago
          I'm in a suburbia (not rural), but we have more of a trail system than a lot of other places in the United States. There really isn't much I can't do on a bicycle, and when I absolutely need to transport something myself, which happens maybe once every couple of years, I've rented a truck for a few hours. My e-bike does most of the heavy lifting when my total travel distance is over 15 miles and I need to transport stuff. I get up, check the weather, throw on clothes for whatever's happening, jump on the e-bike, buzz half a mile down to a gravel trail that runs north-south through my city, and go do what I need to do. I use panniers mounted on a rear rack to hold stuff. For groceries I tend to go to Trader Joe's which is in a shopping area off the trail about a mile and a half from my house. Hardware stuff I get from a family-owned place that's 7 miles away, 5 miles of which is on trails. Electronics is from a store that's sort of like Radio Shack on steroids that's about a mile from the trail system, but that's more like 10 miles each way. I don't need to go there often. Work is 10 miles away, 9 miles of which is on a trail. I park in a bike cage, and there is a locker room with showers.
          • whimsicalism 3y ago
            thank you - super interesting answer to me. a lot of this seems like it was enabled in the last decade or so? or is the e-bike not even necessary
            • wyre 3y ago
              E-bikes certainly make it more accessible and I would highly recommend one if you are trying to drive less. Myself and many of my friends commute primarily by bicycle and get around fine on regular bikes, but our city is small and commutes are less than 5 miles.
            • steelframe 3y ago
    • jghn 3y ago
      I spent nearly 20 years in an American state without a car. Plenty of people I know do the same
    • i80and 3y ago
      I'd say maybe a third of people I know don't have cars. In America. That's not a "basic necessity of life", especially when we're talking about well-developed regions like the west coast.
      • nullindividual 3y ago
        You must not live in the west coast if you believe it is “well developed”. All west coast states are largely rural where public transportation is ineffective and cars are a basic necessity of life.
      • creer 3y ago
        Even in large cities in California, it really depends on how much time you want to or can afford to waste on public transit. Specific cases do work - or at least work better than the car-owning alternatives, for example major transit directions for short-ish distances in San Francisco. If your life revolves around a few of these, you are doing pretty well without a car ... and you still can't escape from that area without one. A significant additional "sweet spot" zone is where car usage has been made - deliberately and assiduously - unbearable. The choice is then about a lesser aggravation, rather then desirable service. And so we get the quality of life we deserve, and that's not great. Nobody is arguing that YOU should own a car. If you are happy without one that's great and carry on. But that's rather specific situation.
        • whimsicalism 3y ago
          fwiw Californian cities have some of the worst public transit of major metros that I have seen like the Muni is cute and all but it’s a joke compared to the east coast systems i grew up with (wmata, mbta, nyc mta) many of which are in smaller cities.
    • mplewis 3y ago
      Is there something in particular that causes you to be this aggressive to a complete stranger?
• redsoundbanner 3y ago
  Price caps are pathetic stand-ins for profit caps.
  • jncfhnb 3y ago
    Profit caps incentivize bigger costs and bigger payouts
    • collegeburner 3y ago
      i do not care for them, but profit cap is not the same as margin cap
      • jncfhnb 3y ago
        Profit cap is not a real thing as far as I know But if it were, it would encourage serving the smallest possible cohort and doing no more business
  • hamandcheese 3y ago
    Notably, the Affordable Care Act limited administration costs to 20%.
    • TexanFeller 3y ago
      I’ve always suspected that that incentivized health insurance companies to let hospitals inflate costs. If the government forbids me from increasing my percentage of the pie and I need to increase revenue I have to increase the size of the pie.
      • FooBarBizBazz 3y ago
        Yes, this and vertical integration. The insurance company may have limited profit, but if the hospital doesn't, and they're both owned by the same parent company, then the prices "inside the control volume" can be whatever fiction is most convenient to report to the government.
• jncfhnb 3y ago
  3 weeks lead time sounds inconvenient but not really a big deal?
  • whimsicalism 3y ago
    This is the lead up to them exiting the state like in Florida (and California for other types of insurance). I believe state farm and allstate have already exited california, but I may be wrong. Three weeks delay is just the most visible thing, they are basically pulling out all the stops to try to avoid covering as many people as possible. But even 3 weeks delay in driving a vehicle you just purchased is considerable.
  • hnrodey 3y ago
    Last week I switched car insurance company and coverage was offered in the literal same day, all over the phone. In comparison, three weeks seems like an eternity.
    • jncfhnb 3y ago
      That’s just semantics though. Whatever an “eternity” means to you, it’s still three weeks. And is very different from not being available at all.
      • syndicatedjelly 3y ago
        Not being able to drive for 3 weeks is not an option for a lot of people. It’s not “semantics”
        • jncfhnb 3y ago
          Ok and not being able to drive for 3 weeks is different from not being able to drive ever.
          • vacuity 3y ago
            But maybe it is a big deal? You shifted from your previous statement.
• dclowd9901 3y ago
  Not just California. In Arizona, I was looking to shop around insurance recently and couldn’t even get a quote from my home insurer (who also recently raised my rates, mind you).
• hot_gril 3y ago
  CA also has sort of a price cap on wildfire home insurance, which has prompted many insurers to leave the state entirely.
  • whimsicalism 3y ago
    This one frustrates me because when the government intervenes to try to lower wildfire insurance premiums they are literally risking people’s lives. People should have to pay the full cost of the risk of living in these dangerous areas so the price system encourages them to move.
    • idopmstuff 3y ago
      Definitely agree, and I also firmly believe that each property should get exactly one FEMA bailout ever. If you live in Florida and your house gets destroyed by a hurricane, FEMA should pay you for it. If you choose to rebuild on that exact same spot, and your house gets destroyed by a hurricane, you should get exactly bupkis. This should carry with the property address - the next person who buys it should have to sign a form acknowledging that they aren't going to get a FEMA bailout if it gets destroyed. Lots of Florida Republicans out there who complain about welfare but rely on some of the biggest welfare checks that get written to repair their homes because of the absolutely foreseeable results of their choices.
      • bdowling 3y ago
        > the next person who buys it If they can’t build on it, who would buy it? Urban farmers? In any case, your plan would destroy the land value, and the corresponding property tax revenue.
        • burnerthrow008 3y ago
          > In any case, your plan would destroy the land value, and the corresponding property tax revenue Sounds like the market effectively discovered the true value of the property with all externalities priced in. I don’t see a problem here?
• BurningFrog 3y ago
  I just moved to Nevada from California. My Nevada insurance costs half of what I paid in California.
  • imbusy111 3y ago
    Cause labor is cheaper in Nevada, people drive cheaper cars and there are less cars in Nevada on the road in general, so you are less likely to get into an accident. These are just the top reasons off the top of my head.
    • queuebert 3y ago
      Also could be less fraud, smaller average liability claims, lower costs of litigation, etc.
    • xnx 3y ago
      Less rain and snow as well
  • desert_rue 3y ago
    Same for me when I moved to Arizona. California doesn’t let insurers use credit rates to price insurance, but Arizona does.
    • sgammon 3y ago
      Thank god. I honestly sat here and tried and can’t think of a more regressive barrier to transportation.
• talldatethrow 3y ago
  I don't really understand. Geico gives you a quote instantly and let's you buy it instantly. I'm in California and have been buying insurance like this for 20 years. Last time was 18 months ago. Basically instant.
  • whimsicalism 3y ago
    Geico will not give you a quote instantly and let you buy instantly. you say you last bought coverage 18 months ago. i said the market failed in december. i encourage you to try to buy coverage now and see. i was also surprised since i expected the previous situation of instant insurance to still be in place. not sure why i am being downvoted, i encourage anyone to try for themselves
    • bblcla 3y ago
      Yes. I tried to get car insurance in July in California and barely succeeded — I had to walk in to an AAA branch and they quoted me 2-3 times the Geico price. Geico will quote a price but forces a 15 days waiting period. Then they’ll send you snail mail and ask you to send in a picture of your car within two days, by snail mail. This is the car you don’t have insurance on, so it’s probably still at the dealer’s or at the seller’s house! I think they’re not allowed to actually refuse to sell insurance but they’ll do everything they can to make it annoying enough that you go away. State Farm and the others are all equally bad.
      • whimsicalism 3y ago
        I eventually was able to get well priced insurance same day through “toggle” which is a Farmers subsidiary, even though Farmers is no longer offering online applications and has 14 days waiting. AAA also was available but like you quoted me 3x the price.
    • ailun 3y ago
      I just got car insurance last week through Progressive in California. It was cheaper than the same coverage in Washington and activated instantly.
• BMc2020 3y ago
  As for those refunds, Californians are still waiting for about $3.5 billion of the $5.5 billion that Consumer Watchdog estimates policyholders are owed for pandemic-era overcharges. The matter still hasn’t been fully resolved, say the state’s insurance officials, who argue that rate hike decisions aren’t interfering with unfulfilled rebates. “These are separate processes,” said Michael Soller Don't forget fraud isn't covered in econ 101.
  • kristjansson 3y ago
    TBF, that’s overcharged in a very insurance-specific sense, not a mustache-twirling fraud sense. Effectively they didn’t adjust prices fast enough to the actual changes in risk, which on the whole seems like something best dealt with ex post, not ex ante.
    • sangnoir 3y ago
      > Effectively they didn’t adjust prices fast enough to the actual changes in risk, which on the whole seems like something best dealt with ex post, not ex ante. If the insurers could have it their way, they wouldn't have to adjust at all (for overcharging), while avoiding undercharging ahead of time. Oversight is necessary to counter misaligned incentives.
      • kristjansson 3y ago
        Right, this is a reasonable compromise between stability/profitability of risk-buyers and fair pricing for risk-sellers. Prices are unconstrained at transaction, but outsized profits can be clawed back. The point is no part of this is _fraud_.
    • sokoloff 3y ago
      How would they adjust prices for policies already sold and used, in the event the price for those policies was too low? Issuing refunds after the fact works in a way that issuing bills does not.
  • Ferret7446 3y ago
• drc500free 3y ago
  This has become a significant political issue in most states, and auto insurance is regulated at the state level. Many insurance commissioners are elected positions, and if not they are closely tied to the governor. No one wants premiums to go up during inflation, so there is government pressure like never before. What happened is that with the shutdowns, profits went from 2-3% to 20-30%. Some of that money was given back to consumers, but most went into an absolutely insane soft market where every carrier paid more than they ever had to acquire any driver they could. This led to a lot of carriers having drivers on their books that they really didn't know how to price correctly. Everyone realized at roughly the same time that they had screwed up more than usual - and that was when drivers got back on the roads. Suddenly frequency and severity of accidents were up to historic levels because everyone forgot how to drive and is driving ANGRY. So there's a double whammy, it's drivers they haven't insured before on the one hand and the drivers they do know how to price changing their behavior en-masse. So we've gone from once-in-a-lifetime industry profits to massive losses. For the first time, when the carriers tell the government the price is unsustainable they actually mean it. Hence the California shut downs - carriers are TRULY taking a loss on most policies they write and are trying to shut down new customer operations as much as legally possible. You'll notice a surprising lack of auto insurance ads on tv compared to 3-4 years ago. Progressive's underwriters are so far ahead of everybody that they got a lot of their price changes submitted before everyone (the other carriers and the government) figured out what was going on. You can see that in many states where the prices are public, in an incomprehensible data format. So they have been one of the only carriers still getting new customers. It's basically been a state-by-state showdown now between state insurance commissioners and carriers, and the commissioners are starting to give in. Premiums were up almost 20% last year nation-wide and it's only going up.
  • acjohnson55 3y ago
    Even Progressive last year said they were basically uninterested in new business.
  • simonbarker87 3y ago
    > state insurance commissioner As a Brit the fact this position exists AND is elected is bonkers to me. It seems like the US talks about a free market but has done everything possible to add voting and red tape all over the place.
• eweise 3y ago
  I live in California and my latest insurance quote was $7k for the year for a family of four, with no accidents or tickets. If this is cheap I'd hate to know what expensive is.
  • oh_sigh 3y ago
    My guess by family of 4 you mean two young adult children, which will significantly increase your rates, especially if they are male.
  • mint2 3y ago
    How many miles do you drive and what cars do you have? Do you mean four cars?! What cars.
    • eweise 3y ago
      I have two cars, an outback and a golf. Yes we do have two teenage drivers which of course is expensive, but they've had no accidents or tickets. We drive maybe 20K miles per year all together.
• refurb 3y ago
  It's very similar to the dumpster fire that is PG&E electrical rates. PG&E is a private company, but the CPUC has strict controls over it's operations. You can read the CPUC meeting minutes for yourself. Things like "PG&E would like to replace the chain link fence surrounding substation X at a cost of $150,000 - DENIED". CPUC is a commission whose members are selected by the governor. They are the defacto decisionmakers. Yet Gavin Newsom will give quotes to the media on how "PG&E will need to be punished for it's mismanagement". My only theory is that keeping PG&E private provides a convenient scapegoat for the utter mismanagement by CPUC.
  • jandrese 3y ago
    Do they list the reason why they were denied? Something like: Utility attempted to charge $150k to replace $5,000 worth of fence with 10 hours of labor?
    • refurb 3y ago
      The utility isn't doing the work, they are hiring it out. The reason it's denied is because more spending on infrastructure means higher rates. CPUC is trying to control rates. For anyone interested you can read about the 2024 rate decision here: https://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M520/K800/520800165.pdf https://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M520/K... For example, PG&E wanted to replace gas service lines made "with Aldyl-A plastic that were installed before 1985" due to the risk of line failure. The CPUCs decision was "PG&E’s request to replace unidentified services is denied. Moreover, the Commission does not find that PG&E has supported rounding up the number of services to be replaced by 73 per year." It's a byzantine system of regulations that dive into the minutia of running a utility. Not to mention a lot of these decisions are by administrative judges since the regulations are written into law.