New California Car Insurance Laws Taking Effect in 2023

California regulators and lawmakers regularly enact new laws and regulations affecting auto insurance for the state’s drivers. As 2023 gets underway, several impactful new car insurance laws are taking effect in California. This guide examines key changes for 2023 that will expand consumer protections and rights involving auto coverage.

Overview of New 2023 California Car Insurance Laws

The California Department of Insurance announced that 11 newly passed laws addressing climate issues, health access, fraud prevention and more will come into effect on January 1, 2023. Here are some that impact auto insurance specifically:

• AB 2238 – Directs creation of a statewide extreme heat warning system that car insurance companies can utilize to be climate-prepared.

• SB 852 – Allows local California governments to establish Climate Resilience Districts to mitigate climate threats that raise insurance costs.

• SB 972 – Updates regulations for sidewalk food vendors that carry commercial auto insurance.

• SB 1040 – Strengthens the Insurance Commissioner’s ability to punish illegal, unlicensed auto insurance schemes.

• SB 1242 – Tightens agent education requirements and cracks down on insurance fraud that drives up car insurance rates.

These new laws aim to lower costs and risks for California drivers through proactive climate planning and by reducing fraud.

New Climate Resilience Protections for Auto Insurance

Two new laws take aim at the impacts climate change is having on car insurance rates for Californians:

Extreme Heat Warning System (AB 2238)

• Directs agencies to develop a statewide system for ranking and communicating extreme heat events by January 2025.

• Will provide specific data about climate risks that auto insurers can incorporate into their rate models.

• Aims to improve climate resiliency and preparedness in the insurance industry.

Climate Resilience Districts (SB 852)

• Allows local California governments to establish special climate resilience districts.

• These districts can access funding and resources to mitigate climate threats proactively.

• Will ideally reduce risks and insurance costs in communities particularly vulnerable to wildfires, flooding, extreme heat and other climate impacts.

• Can address climate issues that contribute to higher auto insurance rates such as costlier car repairs.

These two new laws take important steps toward addressing the key role climate change plays in rising insurance costs, including for auto coverage.

New Laws Combating Auto Insurance Fraud

Two other measures aim to cut down on fraudulent activities that drive up car insurance premiums:

Illegal Insurance Scheme Crackdown (SB 1040)

• Gives the Insurance Commissioner more power to punish illegal auto insurance operations.

• Targets schemes like unauthorized “extended vehicle warranties” sold via robocalls.

• Stops scammers from unlawfully collecting car insurance premiums.

• Could reduce overall auto insurance fraud costs passed on to consumers.

Increased Anti-Fraud Education (SB 1242)

• Strengthens educational requirements for insurance agents about spotting and reporting fraud.

• Clarifies processes for reporting alleged car insurance fraud to state regulators.

• Better anti-fraud training and enforcement helps reduce losses.

• Savings can then be passed on to consumers through lower premiums.

Fraud prevention is an important tool for limiting the overhead costs built into California auto insurance rates.

New Protections for Food Trucks and Vendors

Many small food trucks and vendors across California require commercial auto insurance for their business. A new law updates licensing regulations for these sidewalk food vendors:

Safe Sidewalk Vending Act Update (SB 972)

• Brings sidewalk food vendors into a safer, more equitable regulatory framework.

• Requires participating cities to streamline the permitting process for vendors.

• Provides pathways for previously unlicensed vendors to operate legally, including obtaining auto insurance.

• Encourages vendors cited previously for minor violations to clear their records.

By allowing more small vendors to operate legally and get insured, this new law can help expand California’s commercial auto insurance market.

Renewed Focus on Consumer Protections

In announcing the new 2023 car insurance laws, Insurance Commissioner Ricardo Lara underscored that consumer protection is his top priority:

• Committed to bringing more fairness across the nation’s largest auto insurance market.

• Leveraging partnerships with lawmakers to enact meaningful reforms.

• Has also recently implemented tougher regulations on unfairly discriminatory insurance rates.

• Oversaw $2.5 billion in auto premium refunds during pandemic slowdowns.

Commissioner Lara continues prioritizing new laws and regulations that defend the interests of California drivers and insurance consumers first and foremost.

Ongoing Issues with Auto Insurance Affordability

While these new laws tackle climate concerns, fraud and unfair practices, auto insurance affordability remains a stubborn problem in California:

• Drivers say finding affordable car insurance has become more difficult over the past year.

• Insurers continue seeking rate increases higher than California’s historical annual average.

• Proposition 103 puts limits on rate hikes, but insurers say it creates burdensome legal and regulatory processes.

• The state has approved over 110 rate increase requests in 2022 as costs rise.

• But consumer advocates argue Prop 103 has saved residents billions in excessive premiums.

There appears to be more work ahead to balance affordable auto insurance with insurer profitability in the California market.

Key Takeaways on New 2023 Car Insurance Laws

As 2023 kicks off, California is implementing several new laws and regulations aimed at:

• Better incorporating climate risk models into insurance.

• Expanding fraud prevention and enforcement.

• Removing unfair barriers for vendors needing commercial auto policies.

• Refocusing the state insurance department onto consumer protection.

However, the state must still tackle ongoing auto insurance affordability issues and rate equity concerns through collaborative legislative and regulatory efforts in the months ahead. Drivers are encouraged to provide feedback to lawmakers on any insurance protection gaps they want to see addressed.