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California Car Insurance Rates Plunged by 8% in 2025, New Report Finds

Lower claims costs and fewer accidents spurred some insurers to lower rates.

Evelyn Pimplaskar
Evelyn PimplaskarEditor-in-Chief, Director of Content
  • 10+ years in insurance and personal finance content

  • 30+ years in media, PR, and content creation

Evelyn leads Insurify’s content team. She’s passionate about creating empowering content to help people transform their financial lives and make sound insurance-buying decisions.

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Chris Schafer
Edited byChris Schafer
Chris Schafer
Chris SchaferDeputy Managing Editor, News and Marketing Content
  • 15+ years in content creation

  • 7+ years in business and financial services content

Chris is a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more.

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John Leach
Reviewed byJohn Leach
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John LeachLicensed P&C Agent, Chief Copy Editor
  • Licensed property and casualty insurance agent

  • 10+ years editing experience

  • NPN: 20461358

John is Insurify’s Chief Copy Editor, helping ensure the accuracy and readability of Insurify’s content. He’s a licensed agent specializing in home and car insurance topics.

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Despite new, higher minimum car insurance requirements, Californians paid less for car insurance in 2025 than in the previous four years, a new report shows. The average cost of full-coverage car insurance fell 8% in the Golden State last year, according to Insurify’s 2026 American Driver Report (ADR).

At the end of 2025, the average annual cost of full coverage for Californians was $2,333 — $208 less than 2024’s average, according to the report. Most of the decreases occurred in the last six months of 2025.

The state’s car insurance premiums had increased steadily since 2021 and peaked at $2,589 in January 2025, Insurify data shows. But California’s average annual cost of full coverage began falling in February and plunged by $149 in the final six months of last year.

State
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2025 Average Annual Cost
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Projected 2026 Change
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Projected 2026 Year-End Cost
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Change From 2024 to 2025
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United States$2,1440.6%$2,158-6% (-$148)
California$2,3091.0%$2,333-8% (-$208)

Higher liability limits and falling rates

In January 2025, California implemented new minimum requirements for liability insurance. State law now requires all drivers to have at least $30,000 per person and $60,000 per accident of bodily injury coverage, and $15,000 for property damage. While the higher limits might have increased costs for California drivers who carry only minimum coverage, full-coverage drivers experienced less impact for multiple reasons.

“Some California insurers have asked the state Department of Insurance for permission to decrease their rates,” said Matt Brannon, Insurify’s senior economic analyst and the author of the ADR. “For example, the state’s largest insurance company, State Farm, has proposed a 6.2% rate decrease that could take effect as soon as late March.”

In a press release announcing the proposed rate decrease, State Farm said it’s able to lower rates due to “less costly physical damage claims.”

Fewer crashes and crash fatalities could also contribute to the fall of insurance rates in California, Brannon said.

In the first half of 2025, the state’s number of motor vehicle fatalities plunged 43%, according to preliminary data from the National Safety Council. Only Washington, D.C., saw a larger percentage point drop in the number of fatal accidents, the data indicate.

The number of accidents in the state also dropped significantly in 2025 — by about 9%. California Highway Patrol (CHP) data shows 414,453 accidents occurred in the state in 2024. In 2025, only 377,410 crashes occurred, the CHP reports. Moreover, accident-related injuries fell 8% last year.

“Fewer accidents mean fewer claims and lower costs for car insurance companies,” Brannon said. “In California, some insurers have decided to pass those savings on to policyholders.”

Some cities fared better than others in 2025

Rates also fell in many California cities, with only San Francisco seeing a notable increase of 9%. Like many other cities, San Francisco experienced fewer accidents overall and fewer crashes with injuries and fatalities in 2025 vs. 2024. But the state’s dense population, coupled with a high cost of living, can contribute to higher repair costs and higher rates of vehicle theft or vandalism.

City
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2024 End-of-Year Cost for Car Insurance
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2025 End-of-Year Cost for Car Insurance
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Year-Over-Year Change in Cost
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Los Angeles$3,634$3,476-4%
San Francisco$2,609$2,8429%
Oakland$2,789$2,712-3%
Anaheim$2,837$2,495-12%
Sacramento$2,854$2,451-14%
San Diego$2,146$2,047-5%
*Source: Insurify

What’s next? 2026 may bring more increases

Insurify data scientists predict California drivers will see car insurance rates tick up slightly in 2026. The projected increase is 1%, which is on par with the 0.6% increase the comparison platform’s analysts forecast for the national average. That would nudge California’s average cost of full-coverage car insurance to $2,333 at the end of 2026, up from $2,309 at the end of 2025.

However, Brannon cautioned, “We could see increased rate volatility if insurance companies start to feel the impact of tariffs.”

“Prolonged tariffs could increase the cost of auto parts, which in turn raises claims costs for insurers,” he said. “If that happens, companies will likely pass those higher expenses on to policyholders — and a 1% increase could turn into 4% in 2026.”

Evelyn Pimplaskar
Evelyn PimplaskarEditor-in-Chief, Director of Content

Evelyn Pimplaskar is Insurify’s director of content. With 30-plus years in content creation – including 10 years specializing in personal finance – Evelyn’s done everything from covering volatile local elections as a beat reporter to building fintech content libraries from the ground up.

Before joining Insurify, she was editor-in-chief at Credible, where she launched and developed the lending marketplace’s media partnership’s content initiative and managed the restructuring of the editorial team to enhance content production efficiency. Formerly, as tax editor for Credit Karma, Evelyn built a library of more than 300 educational articles on federal and state taxes, achieving triple-digit year-over-year growth in e-files from organic search.

Her early career included work as a content marketer, vice president and managing officer of a boutique public relations agency, chief copy editor for 14 weekly Forbes publications, reporting for large and mid-sized daily newspapers, and freelancing for the Associated Press.

Evelyn is passionate about creating personal finance content that distills complex topics into relatable, easy-to-understand stories. She believes great content helps empower readers with the information they need to make important personal finance decisions.

Chris Schafer
Edited byChris SchaferDeputy Managing Editor, News and Marketing Content
Chris Schafer
Chris SchaferDeputy Managing Editor, News and Marketing Content
  • 15+ years in content creation

  • 7+ years in business and financial services content

Chris is a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more.

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John Leach
Reviewed byJohn LeachLicensed P&C Agent, Chief Copy Editor
Photo of an Insurify author
John LeachLicensed P&C Agent, Chief Copy Editor
  • Licensed property and casualty insurance agent

  • 10+ years editing experience

  • NPN: 20461358

John is Insurify’s Chief Copy Editor, helping ensure the accuracy and readability of Insurify’s content. He’s a licensed agent specializing in home and car insurance topics.

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