Why is it So Difficult to Get Homeowners Insurance in California? (2024)

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Why is it So Difficult to Get Homeowners Insurance in California? ›

The companies are blaming wildfires, inflation that raised reconstruction costs, higher prices for reinsurance they buy to boost their balance sheets and protect themselves from catastrophes, as well as outdated state regulations — claims disputed by some consumer advocates.

The California Department of Insurance not only inhibits how much insurers can raise rates, but also how they are able to calculate rate changes. California insurers have been historically unable to incorporate wildfire modeling into rate calculations and are limited to historical data when determining rates.

If you are turned down or non-renewed by your current insurance company, or are otherwise in need of coverage, you may apply for coverage under the FAIR Plan through an agent or broker licensed to sell property insurance and registered with the California FAIR Plan.

A growing insurance provider pullback from the state's homeowners market—carriers pulling back have blamed wildfire losses as well as regulations—has driven brokers to take buyers into the state's FAIR Plan, a limited and expensive last resort.

Last month, State Farm issued a written statement explaining its decision to no longer write new policies for new California homes and to end coverage for about 50,000 existing California customers.

The average cost of home insurance in California is $1,405 per year or $117 a month, making California the second-cheapest state in the country for home insurance. These rates are based on the following coverage amounts: $300,000 dwelling. $300,000 liability.

However, Travelers has the best rates, while AAA, USAA and Chubb are among California's top home insurance companies for other reasons. Ratings include satisfaction scores from J.D. Power's 2023 U.S. Home Insurance Study and 2023 complaint data from the National Association of Insurance Commissioners (NAIC).

If you're unable to get a policy through the standard market, you may be able to obtain coverage through your state's FAIR (Fair Access to Insurance Requirements) plan. A FAIR plan is a state-run program designed to provide home insurance to homeowners that may be too risky for standard home insurance companies.

SACRAMENTO — A new draft regulation announced today by California Insurance Commissioner Ricardo Lara will require that insurers that use new catastrophe modeling must write more policies in distressed areas, with larger insurance companies required to insure properties in distressed areas at a rate equal to 85% of the ...

Carriers typically look at the history of claims on a given property — if there have been a lot of payouts for foundation repair, for example, it might suggest a more serious structural problem. In addition, If you've filed a lot of claims on a previous homeowners policy, it could also count against you.

Who is writing homeowners insurance in California in 2024? ›

AAA agents are ready to customize your homeowners insurance coverage. Find your local AAA California branch and stop by in person.

Since the beginning of 2023, several major insurance companies have announced that they would stop writing policies or drastically reducing offerings in two of the three most populous states in the U.S. Industry heavyweights such as Geico, Progressive, and Farmers have started leaving the California and Florida auto ...

The companies are blaming wildfires, inflation that raised reconstruction costs, higher prices for reinsurance they buy to boost their balance sheets and protect themselves from catastrophes, as well as outdated state regulations — claims disputed by some consumer advocates.

State Farm said in March that it would not renew about 30,000 property insurance policies for homeowners and business owners. It also plans to withdraw from renewing approximately 42,000 commercial apartment policies. These non-renewals are California-specific and will happen over the next year on a rolling basis.

As of 2022, State Farm held the largest market share in the state, at 8.7%, for property and casualty insurance.

California regulates insurance companies and their rate increases, so a number of insurance companies have simply pulled out of the state. It's one reason it's getting harder to find a policy.

Despite its good intentions, Proposition 103 has led to unintended consequences, such as long approval times for rate increases and insurance companies withdrawing from the market. As a result, limited competition has caused insurance premiums to soar and in some cases it is nearly impossible to find insurance.

Starting in July 2024, State Farm will stop insuring more than 30,000 residential homes in California, and starting in August, will discontinue coverage on 42,000 commercial apartment properties.