Navigating Through the California Home Insurance Crisis

A young couple hugging and trying to cope with the home insurance crisis in California.

What if you did not have coverage when you needed it the most? 

Typically, people rely on good homeowners insurance to protect their most important investment. However, on the West Coast, an increasing number of residents are facing a California home insurance crisis in which one carrier after another has stopped offering coverage in the state. 

Why are insurance companies leaving California? What does it mean for the state, and what can you do to protect yourself and your family? Keep reading to discover the answers. 

The Current State of Home Insurance in California 

If you have not been impacted yet, you might wonder if the crisis over California home insurance has been blown out of proportion. However, things have gotten very dire, something many in the state realized when State Farm recently declared they would not be renewing a staggering 72,000 homeowners policies. 

Sadly, this is just the latest carrier to take drastic action. Other big-name insurers like Allstate and Farmers have instituted restrictive steps, either stopping underwriting new policies altogether or severely limiting them. 

Interestingly, this is affecting residents from different areas in distinct ways. If you live within an urban area, your policy may not have been affected. But those living in areas prone to events like wildfire are facing fewer and fewer options. To make matters worse, the policies that are still available are getting more expensive. 

Actions Taken by the California Insurance Commissioner 

One measure of the current crisis’s seriousness is that the California Insurance Commissioner has had to take direct action. Last September, Commissioner Ricardo Lara announced a series of executive actions collectively labeled the Sustainable Insurance Strategy. This strategy aims to reform the market completely, something the state hopes to accomplish by the end of 2024. 

The commissioner’s actions are directly due to Governor Gavin Newsom, who issued an executive order instructing Lara to act. The governor is concerned with the overall economic picture. If it becomes prohibitively difficult to get homeowners policies, plans to develop new housing in the affected areas could stall. The biggest hurdle to California’s strategy is carriers who have been concerned by things like rampant wildfires may be hesitant to come to the table and negotiate. 

The Impact of California Wildfires on Home Insurance 

Several issues are currently fueling the California crisis. For example, inflation has increased the cost of construction, and some carriers have even blamed outmoded state regulations. By far, though, the biggest problem has been wildfires, which have only become worse over time. 

That would be bad enough on its own, but climate change virtually guarantees these fires are only going to become more prevalent and more intense. In the eyes of more and more carriers, insuring California residents in riskier areas (hills, mountaintops, or anywhere else a bit too close to highly combustible natural features) is becoming prohibitively expensive. Accordingly, more carriers are canceling policies and tightening underwriting requirements to mitigate the financial risks posed by these fires. 

Navigating Through the Home Insurance Challenges 

If you live in California, this news is understandably concerning. Fortunately, there are steps you can take to protect yourself if you are worried about being affected or even after your policy is not renewed. 

For example, it is never a bad idea to shop around for a new policy. In the short term, this might help you lower your monthly premiums and discover a company with better customer service. In the long term, this can help you get a better idea of what your different options will be and what your new homeowners insurance will and will not cover if your current carrier refuses to renew your policy. 

Female insurance agent explaining home insurance policy to a Californian.

Is Home Insurance Required in California? 

For better or for worse, home insurance is not required in California. It might be more accurate to say that it is not required by the state. If you (like many homeowners throughout the state) have financed your home through a mortgage lender, there is a strong chance the lender will require you to have coverage in place. 

That being said, it is always a good idea to have a homeowners policy. Such policies can pay to repair or even replace your home in the event of something as catastrophic as a wildfire, depending on your specific plan inclusions. Additionally, such policies can pay to repair or replace precious items that may get damaged or stolen, and you get liability coverage that will pay for the medical bills and even your legal fees in the event a guest is injured and holds you liable. 

Steps to Take If Your Policy Is Not Renewed 

If your existing homeowners insurance policy is not renewed, it’s a good idea to start shopping around for a different carrier. You can get free quotes without making any firm commitments. Considering that affected areas typically face higher coverage costs, it is important to shop around to get the lowest possible rate for yourself. 

Before this happens, though, make sure you are prepared in the event of a disaster. It is worth taking some time to research how to recover after a fire and get your home back on track

Exploring the Ripple Effects 

Obviously, the current homeowners crisis is terrible for residents throughout the state who are in danger of losing their policies. This leaves expensive homes very vulnerable to wildfire and other threats. However, there are also ripple effects that could affect the state and its residents for a long time if this crisis goes unresolved. 

Economic Consequences for Californian Homeowners 

When you buy a home, it is an investment in your economic future. Unfortunately, one ripple effect of the current crisis is that California residents are facing declining property values. For example, the Center for International Environmental Law reports that “homeowners could lose between $9.87–$32.1 billion in property value due to more than 100,000 non-renewals.” That prospective economic loss may get even worse if carriers do not positively respond to the state insurance commissioner’s strategy. 

The Broader Implications for the Real Estate Market 

The insurance crisis may also negatively affect the housing market in California. Governor Newsom is understandably concerned about how this will affect the state economy due to the number of housing projects that have been suspended or outright canceled. This has a trickle-down effect on homeowners as well. Home values in affected areas are plummeting, and it has generally become much harder to buy or sell a home. 

How InsureOne Offers a Beacon of Hope 

Fortunately, there is a beacon of hope in this situation. With InsureOne, you do not have to worry about your policy suddenly getting canceled or about paying too much. You will continue to get the best possible coverage, and that is just one of the benefits of choosing InsureOne. 

The Benefits of Choosing InsureOne for Your Home Insurance Needs 

What do you get when you do business with InsureOne? You get top-notch customer service and high-quality insurance. In these stressful times, a sympathetic ear and a kind heart will go a long way. Get both by switching to InsureOne for your coverage needs. 

Another benefit of working with InsureOne is that you will get the best price for your homeowners policy. Agents will compare quotes across different carriers, making sure you get a competitive rate no matter which carrier you choose. 

How to Get the Best Homeowners Insurance in California 

Now you know how to navigate through the California home insurance crisis. But do you know who can help you find your way and secure the protection you and your family deserve? 

At InsureOne, we are committed to keeping your home and everyone in it safe. Ready to secure yourself against the unknown and better prepare for the future? When you are ready, navigate to our website and get a quote online. You can also pick up the phone and give us a quick call at 800-836-2240. Finally, feel free to visit an InsureOne office near you