The average cost of car insurance in California is almost 21% higher than the national average, as reported by MarketWatch, a subsidiary of Dow Jones. The elevated cost of insurance, which is uniformly distributed among all Californians, has been particularly burdensome for low-income and minority residents who are already struggling to afford basic necessities. This surge in prices is attributed to "unnecessary" lawsuits.
In California, drivers pay an average of $2,089 for full coverage car insurance, a figure that significantly surpasses the national average, according to MarketWatch. Younger drivers and urban dwellers often face even steeper rates. Like most states, California mandates that drivers carry car insurance.
According to the Cato Institute, a think tank established in San Francisco and currently based in Washington D.C., low-income and minority Californians have been disproportionately affected by these escalating costs. Michael Tanner, author of the report and a former senior fellow at the Cato Institute, said that before the pandemic hit, nearly 7 million California residents—over 17% of the state's population—lived below the poverty line. This made it the state with the highest poverty rate in the country. Tanner added that the pandemic and "its associated economic fallout have only made poverty in California deeper, more widespread, and more painful." By December 2020, about one-third of low-income Californians reported being unable to pay at least one monthly bill over the past year; 43% had resorted to using a food bank; and 35% had missed a rent or mortgage payment.
A commentary published by the San Diego Union-Tribune alleges that attorneys in California are exploiting the state's legal system through "frivolous" lawsuits at public expense. These "wasteful and unnecessary lawsuits," often funded by Wall Street bankers and foreign investors who take a share of the profits, are costing taxpayers "billions," according to the piece. Low-income Californians have little choice but to pay these inflated, necessary bills.
According to Dordulian Law Group, there has been a significant increase in civil lawsuits related to vehicle accidents in California—nearly 20% more suits were filed last year than in 2022.
MarketWatch, founded in 1997 by Bill Bishop, Derek Reisfield, James Kaplan, and Larry Kramer, provides investment tools and data, financial information, and business news as per CrunchBase. The company is headquartered in San Francisco.