Attention Black Small Businesses: California’s Escalating Auto Insurance Costs are Worsened by New Regulations

The Black Business Association (BBA) is the oldest ethnic business organization, and headquartered in the State of California. Along with others, the BBA is concerned about the increasing severity and frequency of auto accidents, and the growing trend that will most likely result in an increase in insurance costs for the Golden State.

The BBA supports AB 1679 because it’s the right thing to do in support of the small business community in California, which contributes significantly to the economy, and the communities it serves. We cannot afford to make doing business in California unaffordable to small business owners, whose contribution to the local economies throughout the State of California is very significant, and represents jobs for many of the residents of the state.

California has seen an alarming increase in auto accidents, fatalities and injuries recently. California ranks as #6 in the top 10 states with the biggest increase in auto accidents, with a whopping 6.9 percent increase! In 2016, Californians paid the ultimate price with a 13 percent increase in traffic fatalities, which outpaced the national average of a 6 percent increase.

But that is not the end of bad news for California’s drivers. New auto repair regulations that were approved by the California Department of Insurance (CDI) are propelling auto repair costs even higher. Consumers and small businesses that rely on cars to run their businesses may be in for more gray skies when they open their auto insurance bills.

Typically insurers negotiate rates with body shops in order to control costs. The new CDI approved regulations are forcing insurers to pay “rack rates” which are arbitrarily set by body shops and these costs will eventually be passed onto consumers and businesses. Auto insurance pays for 80 percent of all auto body repairs. So when insurers see higher costs, it could hit policyholders in the wallet next.

The new regulations took effect on March 1, 2017, and body shops have wasted no time implementing new higher labor rates. Insurers are seeing labor rates jump significantly and quickly. For example, one large body shop in the Bay Area raised their labor rate for mechanical labor from $71.00 per hour to $116.00 per

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