Allstate Lifts California Auto Policy Restrictions Following 30% Rate Hike

Insurer limited new Golden State policies in 2022.

Evelyn Pimplaskar
Evelyn PimplaskarEditor-in-Chief, Director of Content
  • 10+ years in insurance and personal finance content

  • 30+ years in media, PR, and content creation

Evelyn leads Insurify’s content team. She’s passionate about creating empowering content to help people transform their financial lives and make sound insurance-buying decisions.

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John Leach
Edited byJohn Leach
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John LeachSenior Insurance Copy Editor
  • Licensed property and casualty insurance agent

  • 8+ years editing experience

John leads Insurify’s copy desk, helping ensure the accuracy and readability of Insurify’s content. He’s a licensed agent specializing in home and car insurance topics.

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Published February 18, 2024 at 4:00 PM PST | Reading time: 2 minutes

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Allstate has stopped requiring a 50% down payment for new car insurance policies in California as of Feb. 7, following a settlement with state insurance regulators and a consumer advocacy group that greenlighted a 30% rate increase for the insurer.

“We feel comfortable writing business in California given the rate level we’re operating at,” the company’s president of property and liability, Mario Rizzo, said in a Q4 earnings call, P&C Specialist reported.

Allstate is the fourth-largest U.S. auto insurer by market share, according to the National Association of Insurance Commissioners. It accounts for about 12% of California’s auto insurance market, state data shows.

Allstate’s down payment restriction

In July 2022, the Northbrook, Illinois-based Allstate began requiring 50% down payments on new auto policies. While a down payment is a standard requirement for new car insurance policies, most insurers either accept the first month’s premium as a down payment or charge a low percentage of the annual premium.

The average annual cost for car insurance in California ranges from $1,500 to $1,999, according to Insurify data. Allstate’s restriction meant consumers buying a new policy for a $1,500 total premium would have to pay $750 up front and the remaining $750 in installments. By comparison, a standard down payment of one month’s premium would have been about $125.

California insurance regulations

Like other states, California requires insurance companies to get approval from the state department of insurance for any rate increases. Additionally, California’s Proposition 103, passed by voters in 1988, allows consumer advocates — referred to as “intervenors” — to participate in the negotiation process for rate approvals.

The non-partisan consumer advocacy organization Consumer Watchdog acted as an intervenor in Allstate’s 2023 application for a 35% auto rate increase. It’s also an intervenor in multiple other rate-increase applications from other insurance companies selling home and car insurance in California.

Allstate’s settlement stipulation

The California Department of Insurance, Consumer Watchdog, and Allstate negotiated the insurer’s rate increase application, reaching an agreement that:

  • Allows Allstate to increase rates 30% after Feb. 7, 2024

  • Prohibits Allstate from getting a subsequent rate increase before Aug. 7, 2024 (although the insurer can apply for an increase before then)

  • Requires Allstate to offer the same payment plan options for both new and renewing policies — effectively ending the 50% down payment requirement for new policies

What’s next?

Significant losses in 2022 prompted Allstate to reduce its business in California. But the insurer reported a fourth-quarter profit of $1.3 billion in 2023, according to P&C Specialist. Of that profit, $93 million came from Allstate’s car insurance business.

While the settlement between Allstate, the state DOI, and Consumer Watchdog means many drivers buying a new policy from the insurer will face more standard down payment costs, they could still be paying a higher total premium. The insurer’s average annual car insurance rates in California will increase between $450 and $600, based on Insurify data.

Evelyn Pimplaskar
Evelyn PimplaskarEditor-in-Chief, Director of Content

Evelyn Pimplaskar is Insurify’s director of content. With 30-plus years in content creation – including 10 years specializing in personal finance – Evelyn’s done everything from covering volatile local elections as a beat reporter to building fintech content libraries from the ground up.

Before joining Insurify, she was editor-in-chief at Credible, where she launched and developed the lending marketplace’s media partnership’s content initiative and managed the restructuring of the editorial team to enhance content production efficiency. Formerly, as tax editor for Credit Karma, Evelyn built a library of more than 300 educational articles on federal and state taxes, achieving triple-digit year-over-year growth in e-files from organic search.

Her early career included work as a content marketer, vice president and managing officer of a boutique public relations agency, chief copy editor for 14 weekly Forbes publications, reporting for large and mid-sized daily newspapers, and freelancing for the Associated Press.

Evelyn is passionate about creating personal finance content that distills complex topics into relatable, easy-to-understand stories. She believes great content helps empower readers with the information they need to make important personal finance decisions.

John Leach
Edited byJohn LeachSenior Insurance Copy Editor
Photo of an Insurify author
John LeachSenior Insurance Copy Editor
  • Licensed property and casualty insurance agent

  • 8+ years editing experience

John leads Insurify’s copy desk, helping ensure the accuracy and readability of Insurify’s content. He’s a licensed agent specializing in home and car insurance topics.

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