California's Auto Insurance Squeeze: Why Rates Are Rising — and What Comes Next

Californians are feeling it everywhere — at the grocery store, at the gas pump, and now in their car insurance bills.

According to a CBS–KCAL On Your Side investigation, auto insurance rates in California have surged by as much as 20%, with more increases likely on the way. For Los Angeles drivers, that means the average annual premium now tops $2,500 — and that figure could climb higher before the year ends.

What's behind this sudden surge? Experts say it's not a single issue but a convergence of economic pressures, behavioral shifts, and regulatory friction that's been building for years.

As insurance agent and radio host Karl Susman put it,

"You can look at this like a crock pot — all of these things have been stuffed in for the last three or four years, and the pressure has gotten to the point where it's starting to explode."

1. A Perfect Storm of Rising Costs

The first piece of the puzzle is pure economics. Cars — both new and used — have become dramatically more expensive to buy, repair, and replace.

During and after the pandemic, vehicle prices spiked due to supply chain disruptions, microchip shortages, and inflation in materials and labor. Even today, the average repair cost is up double digits compared to pre-pandemic levels.

At the same time, accident rates have increased as Californians returned to the road. With traffic congestion back to pre-2020 levels — and, according to some data, worse driving habits — insurers are paying out more for both collision and liability claims.

Add it all up, and insurers' loss costs (what they pay in claims per dollar earned in premium) have risen sharply.

"It's either the carriers are leaving because they're losing money," Susman explained, "or the Department of Insurance has to start allowing them to raise rates."

2. California's Regulatory Lag

California's insurance market operates under Proposition 103, a 1988 law that requires insurers to obtain approval from the Department of Insurance (CDI) before implementing any rate changes.

While designed to protect consumers, this system has also created a time lag between economic reality and regulatory response.

Insurers must file extensive documentation to justify their requests — and even when costs rise sharply, approvals can take months or years. In the meantime, carriers are stuck charging rates based on outdated data, unable to adjust for inflation or new claim trends.

The result? Carriers lose money, scale back operations, and a ...

Why Major Auto Insurers Are Leaving California — And What It Means for Drivers

California's car insurance market — once one of the most competitive in the nation — is showing serious cracks. Over the past year, several major auto insurers have scaled back or withdrawn from the state, citing unmanageable costs, regulatory gridlock, and higher claim expenses.

From Los Angeles to Sacramento, drivers are starting to feel the impact: rising premiums, shrinking availability, and longer waits for policy approvals. Yet, while insurers blame economic realities, regulators insist the problem lies elsewhere.

As CBS–KCAL's recent report put it, this issue has become a "he said, she said" battle between the industry and California's Department of Insurance — and the outcome will shape the future of driving in the state for years to come.

1. The Growing Exodus

In the past two years, a number of top national auto insurers — including State Farm, Allstate, and GEICO — have either paused writing new policies or sharply limited their California exposure.

While some have not formally exited the market, the pattern is clear: fewer quotes, stricter underwriting, and reduced marketing budgets for auto coverage.

"Major auto insurers are pulling back in the California marketplace," the CBS report noted. "They say we're just too expensive to insure."

The phrase "too expensive to insure" captures a complex problem — one rooted in both economics and regulation.

2. Why California Has Become So Difficult to Insure

The reasons behind this exodus are multifaceted, but they all tie back to one fundamental imbalance: the cost of doing business is rising faster than insurers can adjust their rates.

Several forces are converging:

🚘 Rising Repair and Replacement Costs

As seen in earlier reports, the price of new and used vehicles has soared since the pandemic — up 26% for used cars and nearly 10% for new models. Repair costs have followed suit due to inflation, supply chain delays, and advanced vehicle technology.

⚙️ Labor and Supply Chain Shortages

California's auto repair sector continues to face a shortage of qualified technicians. Parts delays mean cars spend longer in shops, forcing insurers to pay for more days of rental coverage and other supplemental costs.

🏛️ Strict Rate-Approval Regulations

Under Proposition 103, insurers must secure state approval for every rate change. These filings can take months or even years. During that time, carriers cannot adjust to inflation or increased cl ...

Navigating the Insurance Claims Maze: Legal Insights from Karl Susman and Attorney Dennis Beaver

When disaster strikes—whether it's a car accident, property loss, or a life insurance dispute—many policyholders are left wondering: When do I need a lawyer? Should I call my agent, my insurer, or head straight to court?
In a recent episode of Insurance Hour with Karl Susman, special guest and attorney Dennis Beaver—a longtime consumer advocate and Kiplinger columnist—offered candid, experience-backed advice on how to navigate claims, avoid legal missteps, and build trust in the insurance process.

Start with the Basics: Work Within the System

Both Susman and Beaver agree that one of the most common mistakes policyholders make after a loss is immediately contacting a lawyer or public adjuster.
Beaver, who's worked decades in insurance and consumer law, didn't mince words:

"The worst thing you could do is immediately contact a lawyer, regardless of what the claim is. Always try to work within the system first—with your adjuster, your insurer, and your agent."

In other words, the first step is not litigation—it's communication.
Insurance companies have structured claims departments designed to resolve issues internally. Going outside the system too early often adds unnecessary complexity, delays, and fees that could otherwise be avoided.

If your claim isn't progressing, Susman recommends escalating through proper channels—first your adjuster's supervisor, and then your insurance agent or broker. Agents and brokers, unlike anonymous call centers, can often advocate for you directly. "That's part of the value we bring," Susman says. "When clients can't get the response they need, we step in."

When It's Time to Call a Lawyer

There are situations when bringing in an attorney makes sense. Beaver lists a few red flags:

• You're being ignored. If your calls go unanswered or your insurer isn't investigating your claim, you may need legal help.

• The adjuster is "playing games." Lowball offers, misrepresentation of coverage, or excessive delays can justify legal action.

• There's a serious injury or complex loss. In cases of major bodily harm, wrongful death, or high-value property damage, experienced counsel is essential.

Still, Beaver stresses that many people overestimate what attorneys can achieve in minor claims:

"With a simple fender bender or minor injuries, it's the rare case when an a ...

Unraveling the Mysteries of Life Insurance: What You Need to Know

When most people hear the phrase life insurance, they think of one thing—death. It's not the easiest topic to talk about, and that's part of why so many people misunderstand what life insurance actually does, how it works, and who it's really for. In a recent episode of Insurance Hour, host Karl Susman took listeners on a deep dive into the subject, breaking down not just the types of life insurance available, but also the motivations behind buying it, the hidden benefits it can offer, and why it may be one of the most important financial tools you'll ever own.

Why Life Insurance Exists

As Susman points out, most types of insurance are inherently self-serving. You buy health insurance for your medical needs, auto insurance to fix your car, homeowners insurance to rebuild after a disaster. Life insurance, however, is different. It's the one kind of policy you buy not for yourself—but for the people you love.

That's the key distinction. Life insurance isn't about you; it's about ensuring that your family, business, or chosen beneficiaries are protected financially when you're no longer around to provide for them.

Some of the most common reasons for purchasing life insurance include:

• Income replacement: Protecting your family's financial stability if you're the main breadwinner.

• Paying off debt: Ensuring your loved ones don't inherit credit card balances, mortgage debt, or car loans.

• Final expenses: Covering funeral and burial costs, which can easily exceed several thousand dollars.

• Estate planning: Creating liquidity for taxes or leaving a planned inheritance.

• Charitable giving: Using life insurance to make a lasting impact on organizations or causes you care about.

As Susman puts it, "If I die, they pay money—that's true, but there's much more to it than that."

Understanding the Two Main Types: Term and Permanent Life Insurance

Although the industry offers many subcategories, nearly every policy falls into one of two broad types: term life or permanent life. Think of them as temporary protection versus lifelong coverage.

1. Term Life Insurance: Simple, Affordable Protection

🏠 Decoding Homeowners Insurance: Understanding What's Really in Your Policy

When it comes to protecting your home, few documents are as important — or as misunderstood — as your homeowners insurance declaration page. For many Californians navigating an increasingly volatile insurance market, understanding what's actually covered (and what's not) can make the difference between peace of mind and financial distress.

Insurance expert Karl Susman, host of The Insurance Hour, breaks it all down — helping homeowners demystify the fine print and make smarter decisions. Let's unpack the essentials.

The Declaration Page: Your Policy's "Snapshot"

Every homeowners insurance policy begins with what's called the declaration sheet (or "deck page"). This is not just administrative fluff — it's the summary that personalizes your coverage. While the policy itself contains standardized legal language, the declaration page makes your policy unique by specifying:

• Your policy number – the official identifier for your coverage.

• Policy period – the exact start and end dates of coverage (usually effective from 12:01 a.m. on the first day).

• Named insureds – everyone listed as covered under the policy.

• Property location – the exact address being insured (double-check this — especially if your home has multiple street addresses).

• The insurer's name and policy type.

It might look like a simple one- or two-page form, but this page defines who is protected, where, and for how much.

The Core Coverages in Your Homeowners Policy

Most homeowners policies include several major lines of coverage. Susman breaks them down into easy-to-understand categories:

1. Dwelling Coverage – Protecting the Structure

This is the heart of your policy — the amount the insurer will pay to rebuild or repair your home if it's damaged or destroyed. For example, if your dwelling coverage is $500,000, that's the cap the insurer pays toward reconstruction.

But beware: that figure must also cover architecture fees, city permits, and other costs tied to rebuilding. In a catastrophe where many homes are destroyed at once, construction costs can skyrocket due to labor and material shortages. That's why you may want an "extended replacement cost" endorsement, which can increase your coverage by 25% to 50% above the li ...

Insurance Policies Are Not Savings Accounts: Understanding What You're Really Paying For

One of the most common misconceptions about insurance—whether home, auto, or life—is that it's a kind of savings plan. You pay into it, year after year, and somewhere in the back of your mind, you expect to get something back. After all, that's how bank accounts, investments, and retirement funds work, right?

Not quite.

As insurance expert Karl Susman often reminds his listeners on The Insurance Hour, "Your insurance policy is not a savings account. Your insurance policy is an insurance policy. There is a difference."

That difference is more than just semantics—it's foundational to understanding how the entire insurance system functions, and why confusion about it causes so many people to feel frustrated, cheated, or misled.

The Core Idea: Hope You Never Use It

When you deposit money in a savings account, your goal is to grow your funds. You expect to get your principal back, plus interest. It's a predictable, cumulative relationship between your money and your returns.

An insurance policy, however, operates on a completely different premise. You pay a premium not as an investment but as a shared risk contribution—a pool of resources designed to protect you and others from financial ruin in the event of a loss.

As Susman puts it:

"With an insurance policy, you put money in, and you hope you never get a penny out. Because if you get a penny out, it means something bad has happened."

That's the paradox of insurance—it's the only financial product you buy hoping you never have to use.

Why the Misunderstanding Happens

Insurance feels transactional. You write checks, sometimes for decades, and see no immediate return. Human psychology naturally seeks reciprocity—if you give something, you expect something back. When that doesn't happen, frustration builds.

But unlike a deposit, an insurance premium isn't money you're setting aside for yourself—it's money you're contributing to a collective safety net. That net helps thousands of other policyholders recover from fires, accidents, and disasters.

You're not "paying into" your future claim. You're buying peace of mind that if disaster strikes, your insurer will absorb the financial shock so you don't have to.

This misunderstanding often leads to dangerous thinking—people start viewing their policies as personal piggy banks to be "cashed in" when times get tough. That mindset can lead to:

• Unnecessary claims for minor issues.

This episode (recorded live on KNX AM radio in Los Angeles on 12/28/2023) primarily revolves around the significant 20% rate increase in State Farm Homeowners Insurance policies and its impact. Karl Susman, an insurance agent from Los Angeles, discusses the broader implications of this hike. The conversation explores the reasons behind the increase, its effects on policyholders, and possible reactions from the market and other insurance carriers.

Wanna text us?

Insurance Hour is hosted by renowned insurance expert Karl Susman. Karl is a frequent guest on television stations such as ABC, CBS, Spectrum, The CW and FOX, and now his popular radio program is available online throughout California and world-wide.

Listeners can now tune in to Insurance Hour on great AM radio station KMET throughout the state of California.

In addition to traditional radio, Insurance Hour is available on several popular streaming platforms, ensuring that listeners can access the show at their convenience.

Audiences worldwide can now enjoy Insurance Hour at InsuranceHour.com, on YouTube, Amazon Music, Tuneln, Alexa, Apple Podcasts, and the iHeartRadio app.

For more information about "Insurance Hour" and its programming, please contact Lara Starr at [email protected]

"Insurance Hour," hosted by Karl Susman, is an informative and engaging radio show dedicated to demystifying insurance topics. In this episode, Karl focuses on auto insurance, explaining various coverage types and their importance. He starts with basic coverage, including liability and property damage, and delves into collision and comprehensive coverage. The show also covers lesser-known aspects like uninsured motorist coverage, medical payments, and GAP insurance. Karl emphasizes understanding your policy's declaration sheet and encourages listeners to consult their insurance agents for personalized advice.

Wanna text us?

Insurance Hour is hosted by renowned insurance expert Karl Susman. Karl is a frequent guest on television stations such as ABC, CBS, Spectrum, The CW and FOX, and now his popular radio program is available online throughout California and world-wide.

Listeners can now tune in to Insurance Hour on great AM radio station KMET throughout the state of California.

In addition to traditional radio, Insurance Hour is available on several popular streaming platforms, ensuring that listeners can access the show at their convenience.

Audiences worldwide can now enjoy Insurance Hour at InsuranceHour.com, on YouTube, Amazon Music, Tuneln, Alexa, Apple Podcasts, and the iHeartRadio app.

For more information about "Insurance Hour" and its programming, please contact Lara Starr at [email protected]

Unpacking Auto Insurance Essentials: What's Really in Your Policy (and Why It Matters)

Most of us don't think much about our auto insurance until something goes wrong—a fender bender, a stolen car, or that moment when the repair estimate makes your jaw drop. Suddenly, that piece of paper (or PDF) from your insurance company becomes the most important document in your life.

Yet few people actually understand what's in their policy. They may know they're "covered," but covered how? For what? And how much?

Insurance expert Karl Susman, host of The Insurance Hour, breaks down the fundamentals of auto insurance in plain English, explaining what every driver should look for on their declarations page (or "dec sheet") and how to make sure your coverage fits your real-world needs.

The Declarations Page: The Roadmap to Your Policy

Your auto insurance policy actually has two parts:

1. The Policy Form — This is the legal contract. It defines what's covered, what's excluded, and under what circumstances the insurance company must pay.

2. The Declarations Page (Dec Sheet) — This is the customized summary that makes the policy yours. It lists your name, address, policy dates, vehicles, coverage types, and coverage limits.

"If the policy is the instruction manual, the dec sheet is the cover page that tells you which model you own," Susman explains.

Start by checking the basics:

• Is your name spelled correctly?

• Is your vehicle listed with the right year, make, and VIN?

• Do the effective dates match what you expect? (Policies are usually 6 or 12 months long.)

• Does the garaging address match where the vehicle is actually kept?

It sounds simple, but clerical errors happen—and a mistake could complicate a claim later. Make sure the paperwork actually represents you and your car.

Liability Coverage: Protecting Others (and Your Finances)

If you only remember one thing about your auto insurance, make it this: liability coverage protects everyone but you.

Liability coverage pays when you cause injury or property damage to someone else. It's usually the first number listed on your dec sheet and appears i ...

Join your host, Karl Susman as he discusses the California insurance market, including the challenges with limited availability and high premiums, as well as potential solutions like the California Sustainable Insurance Strategy. Topics include the California FAIR Plan struggles handling increased volume, new catastrophe modeling and mitigation discounts, modernizing regulations to enable competition and stabilize the market, and clarifying umbrella policy coverages.

SHOW HIGHLIGHTS:

California Insurance Market Overview

The host introduces the insurance talk show for California consumers and provides background on the restricted insurance market, with 87% heavily restricted, driving limited availability and increased premiums.

California Sustainable Insurance Strategy

The strategy for reviving the California insurance market is outlined, including 5 key components: increasing availability, depopulating the FAIR plan, integrating catastrophe modeling and mitigation discounts, modernizing the FAIR plan, and improving overall market stability through updated regulations.

California FAIR Plan Challenges

Issues with the FAIR plan insurer of last resort are noted, like long wait times from limited staff and exponential premium increases from new catastrophe modeling approaches.

New Catastrophe Modeling

Usage of big data and AI for more granular location-based catastrophe risk modeling is discussed as a way to enable more discounts tied to wildfire mitigation steps.

Umbrella Policy Clarifications

Umbrella policy coverages are clarified as relating to liability only, with recommendations to purchase higher limits given large recent lawsuit rewards.

Wanna text us?

Insurance Hour is hosted by renowned insurance expert Karl Susman. Karl is a frequent guest on television stations such as ABC, CBS, Spectrum, The CW and FOX, and now his popular radio program is available online throughout California and world-wide.

Listeners can now tune in to Insurance Hour on great AM radio station KMET throughout the state of California.

In addition to traditional radio, Insurance Hour is available on several popular streaming platforms, ensuring that listeners can access the show at their convenience.

Audiences worldwide can now enjoy Insurance Hour at InsuranceHour.com, on YouTube, Amazon Music, Tuneln, Alexa, Apple Podcasts, and the iHeartRadio app.

For more information about "Insurance Hour" and its programming, please contact Lara Starr at [email protected]