Auto insurance costs across America have surged to record highs, and California is no exception. As drivers open their renewal notices, many are shocked to see double-digit rate increases — 20%, 30%, sometimes more.
In a recent Insurance Hour episode, host Karl Susman unpacked the reasons behind these painful premium spikes, exploring how inflation, supply chain disruptions, electric vehicles (EVs), and legal costs are converging to create the perfect financial storm for drivers.
This is more than a short-term blip — it's a structural shift in how auto insurance works and what it costs to stay protected in the modern era.
Everyone knows inflation makes groceries, gas, and rent more expensive. But few realize how directly it hits auto insurance.
"Insurance policies are buying all the stuff that now costs more money because of inflation," Susman explained. "When parts, labor, and medical care cost more, insurance has to cost more too."
Auto insurers base premiums on what they expect to pay out in claims. And those claims are now more expensive at every step:
Parts cost more — everything from bumpers to sensors.
Repairs take longer — delaying claims and extending rental car costs.
Labor rates are higher — body shops and mechanics are charging more due to worker shortages.
Medical costs are up — making bodily injury claims more expensive than ever.
Inflation doesn't just raise one number — it multiplies across every part of a claim. And because insurers must anticipate future costs, the effect compounds quickly.
You'd think the COVID-era supply chain crunch would be ancient history by now. Not so.
"It still takes 10 to 20 days to get a lot of parts for cars," Susman said. "Those parts used to be available in a day or two. We are still far beyond that timeframe."
This ongoing delay has a domino effect:
Repairs take longer.
Cars sit in shops for weeks.
Insurers pay mor ...
