Tonia Roberts, a resident of California and the founder of Legacy Innovative Builders, has noticed a significant increase in her car insurance costs. This rise has occurred despite her having no driving violations on record. While there are multiple factors influencing car insurance pricing, recent reports have underscored the role that an escalating number of lawsuits is playing in the rising insurance costs for Californians.
"So I opened my car insurance bill from AAA Insurance this afternoon for this year, and it was increased by 300," said Roberts, according to X. "I called the rep and she said, well there was a California State rate adjustment that affects everyone. No tickets, no accidents, mileage lower than declared…and…. $6000.00+ to insure one 2019 jeep that goes 150 yds to work everyday, a 1993 GMC beater grocery getter and a Ford 350."
David Williams, president of the Taxpayers Protection Alliance, commented on this issue during a recent episode of the Business of America podcast. He noted that when businesses become targets of mass lawsuits, they are compelled to raise their prices in order to offset litigation costs. "You have lawsuits that cost billions of dollars that they settle for," said Williams. "Well, consumers pay that because they're going to pass that cost onto the consumer."
The Insurance Information Institute (III) uses the term "social inflation" to describe this phenomenon where insurance costs are rising faster than overall inflation. According to III, one of the primary drivers behind social inflation is "skyrocketing legal costs". The report from III suggests that attorney involvement can escalate claims costs and prolong resolution times while reducing value for claimants.
As reported by the Northern California Record, residents in California are experiencing first-hand effects of social inflation on everyday expenses such as car insurance. Large-scale legal advertising campaigns and third-party funders' participation result in an increased number of lawsuits. This situation subsequently leads to heightened litigation costs for companies and steeper prices for Californian residents.
Legacy Innovative Builders, Roberts' company, operates across Solano County, Yolo County, and Napa County as per its website information. The firm undertakes both residential and commercial remodeling projects. In 2022, GC Magazine recognized Legacy Innovative Builders as one among the best general contractors operating in the Vacaville area.