The Rising Cost of Living in California

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By Court Leve

Prepare yourselves, because if you haven’t felt the sting of higher home and auto insurance rates yet, brace for impact. Increases ranging from 20 to 50% are looming on the horizon, and it’s a topic surprisingly absent from public discourse.

What’s going on? An industry specialist could provide a more technical, detailed, and thorough explanation, but long story short, most carriers in the State of California have been losing money on policies, and the department of insurance, which regulates the insurance industry, has essentially allowed, for lack of a better term, a “market correction” overnight. Over the years, these companies have struggled to keep up with inflation and changing market demands, hamstrung by state regulations.

If you’re a homeowner, you’re familiar with the frustration and ever-increasing cost of securing insurance, with major carriers exiting the state and leaving loyal customers high and dry with little notice. The insurance companies are doing this to protect themselves for when, not if, another catastrophic event occurs.

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The end result: we will have more insurance options and potentially the big players will start writing policies again in the state. All this will come at a premium, though. As I mentioned, prepare for a 20 to 50% increase across the board.

My auto insurance renewed with an increase of 27.96%. I have a clean record and have been with Allstate for over 20 years. Allstate sent me a courtesy notice about the increase two weeks prior to renewal. I found a less expensive option via AAA, but I would lose my bundle discount by not having my home and auto with the same carrier, and I would be paying more at the end of the day piecemealing my insurance together with separate carriers. So, I’m stuck with a near 30% bump for my auto. My home insurance renews at the end of the year, and I can expect a similar, if not steeper, increase. Shop around and you’ll find the same song and dance with all brokers. If you haven’t been hit yet, you will be on your next renewal.

This issue is that this is simply not being adequately, or at all, publicized by the state and insurance industry, leaving everyone unprepared, and the ramifications are huge. Regardless of whether you rent or own, everyone will see a significant bump in rates. If you rent, be ready for an increase when your lease renews. If you are a landlord, you could find yourself in a pickle if your insurance renews in the middle of a lease term. Your insurance rates could substantially increase, but you won’t be able to raise rent accordingly until the end of your current lease agreement. This is potentially devastating for landlords that will simply have to eat this expense, which will eventually be passed along to renters already facing a tough housing climate. 

In my opinion, these increases will have major ramifications to the housing market. On the plus side, we will have more options for insurance, but at a much higher cost, and anyone that owns in the region has already seen substantial increases in the past number of years. Buying, selling, and renting will all be affected, possibly displacing people along the way. And regarding auto insurance, my guess is we can expect to have more under-/uninsured drivers on the road due to increases that put policies out of reach for some.

It’s understandable that rates need to reflect the realities of risk, but the lack of foresight from California’s governor and lawmakers is a huge disservice to constituents by not providing any warning or way to plan accordingly. The repercussions could be felt for years to come, adding not only to the housing crisis but also yet another burden to the already high cost of living in the Golden State. This time next year, it’s feasible that I’ll be paying nearly $18,000 a year just to insure my home and car. We hear the word “sustainable” an awful lot, yet life here is becoming anything but.

~ Court Leve, a 20-plus year resident of Truckee, brings two decades of experience to his roles as a photographer and video producer. Immersed in the community, Leve’s work reflects the beauty of Truckee’s landscapes and culture. His keen eye and technical skill capture moments that resonate with authenticity and depth.

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