Here’s How California Saved Residents $100 Billion on Car Insurance

What's Hot

2 Types of Black Marks Might Vanish From Your Credit File SoonBorrow

6 Ways the Obamacare Overhaul Might Impact Your WalletInsurance

7 Dumb and Costly Moves Homebuyers MakeBorrow

This Free Software Brings Old Laptops Back to LifeMore

Obamacare Replacement Plan Gets ‘F’ Rating from Consumer ReportsFamily

Beware These 12 Common Money MistakesCredit & Debt

21 Restaurants Offering Free Food Right NowSaving Money

17 Ways to Have More Fun for Less MoneySave

House Hunters: Beware of These 6 Mortgage MistakesBorrow

30 Household Uses for Baby OilSave

25 Ways to Spend Less on FoodMore

Nearly Half of Heart-Related Deaths Linked to These 10 Foods and IngredientsFamily

5 Surprising Benefits of Exercising Outdoors in WinterFamily

10 Ways to Save When You’re Making Minimum WageSave

Boost Your Credit Score Fast With These 7 MovesCredit & Debt

7 Painless Ways to Pay Off Your Mortgage Years EarlierBorrow

The Most Sinful City in the U.S. Is … (Hint: It’s Not Vegas)Family

The True Cost of Bad CreditCredit & Debt

10 Companies With the Best 401(k) PlansGrow

This Scam Now Tops ID Theft as the No. 2 Consumer ComplaintFamily

6 Stores With Awesome Reward ProgramsFamily

6 Ways to Save More at Lowe’s and The Home DepotSave

6 Healthful Treats for Your DogFamily

New Study Ranks the Best States in the U.S.Family

Thousands of Millionaires Moving to 1 Country — and Leaving AnotherGrow

Strapped for College Costs? How to Get the Most From FAFSABorrow

6 Overlooked Ways to Save at Chick-fil-AFamily

Ask Stacy: What’s the Fastest Way to Pay Off My Mortgage?Borrow

Where to Sell Your Stuff for Top DollarAround The House

8 Ways to Get a Good Price on a Shiny New AutoCars

Ask Stacy: How Do I Start Over?Credit & Debt

Secret Cell Plans: Savings Verizon, AT&T, T-Mobile and Sprint Don’t Want You to Know AboutFamily

30 Awesome Things to Do in RetirementCollege

14 Super Smart Ways to Save on TravelSave

The Rich Prefer Modest Cars — Should You Join Them?Cars

You’ll Soon Pay More to Shop at CostcoSave

10 Ways to Save When Your Teen Starts DrivingFamily

A 1988 California law saves driving households an average of $345 a year. Why hasn't every other state done this?

In the past 25 years, only one state has seen car insurance prices drop: California.

Nationwide, the average cost of car insurance has risen by 43 percent since 1989, a new Consumer Federation of America report says. In the median state, Wisconsin, rates rose 56 percent.

Poor Nebraska saw average rates jump 108 percent, the report says. Louisiana, Montana, and Wyoming didn’t fare much better, with rates rising more than 95 percent.

The smallest increases were in Hawaii, New Hampshire, New Jersey, and Massachusetts, CFA says. All of those states managed to keep average rates from rising more than 25 percent over a quarter century.

What’s most interesting, of course, is how California managed to lower its average insurance rates. The CFA report takes an in-depth look at that. If you compare California’s rates to the national average increase in insurance costs, the state saved its consumers more than $100 billion in the past 25 years, “as a result of lower auto insurance rates driven by the strong regulatory oversight and more competitive market fostered by the 1988 insurance reform measure known as Proposition 103.”

The report goes into detail about what that law accomplished, but here are some highlights. According to CFA, Proposition 103:

  • Adopted a prior approval system that forced insurance companies to justify any potential rate change to the insurance commissioner before it could take effect.
  • Requires insurance companies to sell auto insurance to any good driver who requests it.
  • Requires insurers to give all good drivers an automatic 20 percent “good driver discount.”
  • Requires insurers to base auto insurance premiums primarily on driving safety record, miles driven and years of driving experience.
  • Prohibits companies from charging customers who went without insurance for a period more.

The report notes that while deregulated states offered the highest profits for insurers, even a prior approval system like California’s allowed for profit. According to the report, we could all have a system like California’s and insurers would still profit.

“If every state in the nation were to implement and enforce a regulatory agenda as demonstrably pro-consumer as that in California,” the CFA report says, “Americans could save over $350 billion over the next decade, even as insurance companies realize reasonable profitability.”

While you’re waiting for your state to institute reforms, here’s a video with some tips on saving on your car insurance. After you watch it, shop your coverage with our insurance shopping tool.

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!


Read Next: Considering a Fixer-Upper? 15 Ways to Avoid a Money Pit

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 1,978 more deals!