Why is California home insurance so high?
Asked by: Estel Hoeger | Last update: November 4, 2025Score: 4.7/5 (26 votes)
Why is California homeowners insurance so expensive?
They cite the rising risk of wildfires, the high cost of rebuilding homes and state regulations hurting their business. State law, passed by voters in 1988 in the form of Proposition 103, requires insurance companies to get prior approval from the state before raising rates.
Why has insurance gone up so much in California?
There are plenty of reasons why this happens – more claims, inflation, higher repair costs – but in 2025, Californians saw an even larger increase than normal. That's because the state legislature raised the required minimum liability limits, and these new limits took effect Jan. 1.
What is the average price for homeowners insurance in California?
The average cost of homeowners insurance in California is $1,405 a year or $117 a month, well below the national average annual rate of $2,601. California home insurance rates vary by location; home insurance rates in Los Angeles are above average, while homeowners in San Jose pay lower-than-average rates.
What state has the highest home insurance rates?
The average cost of homeowners insurance in the U.S. is $2,601 a year for a policy with $300,000 in dwelling coverage. Oklahoma is the most expensive state for home insurance, while Hawaii is the cheapest. Home insurance rates vary by state based on things like severe weather and what's included in a standard policy.
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What is the cheapest homeowners insurance company in California?
- Cheapest in CA: $971/yr. Most affordable: Mercury. Most affordable: Mercury.
- $1048/yr. Best for great service: AAA. Best for great service: AAA.
- $2792/yr. Best for high-value homes: Chubb. Best for high-value homes: Chubb.
What is the average increase in homeowners insurance in 2024 in California?
Insurance News
implemented an average homeowners insurance rate increase of 25.9% in California as of Dec. 1, 2024, with some policyholders facing hikes as high as 48.5%, according to filings reported by AM Best.
What state has the cheapest homeowners insurance?
Hawaii, Vermont, Maine, New Hampshire and Delaware are the cheapest states for home insurance. These states tend to have either fewer natural disasters or lower costs to rebuild a home, and sometimes both.
Why are insurance companies pulling out of California?
Several insurance companies have either fled California, stopped writing new policies or otherwise reduced their exposure in the Golden State, citing business risks amid rising replacement costs and the inability to adequately raise premiums.
Why is my Covered California premium so high?
The rate change can be attributed to many factors, including a continued rise in health care use, increases in pharmacy expenditures, the rising cost of care, labor shortages and other issues affecting the health care industry.
Why has homeowners insurance gone up so much?
Climate change, inflation and industry woes have caused premiums to soar nationwide. Homeowners insurance rates rose dramatically between 2023 and 2024, according to a Bankrate analysis of rate data from Quadrant Information Services.
Who insures the most homes in California?
It found that the insurer with the most direct homeowners insurance premiums written in California in 2023 was State Farm, which accounted for over $2.7 billion in written premiums for residences in the Golden State. Farmers Insurance ranked second with more than $2 billion in written California homeowners premiums.
Is AAA cancelling homeowners insurance in California?
Who still offers home insurance in California? While several big players have left the California homeowners insurance market, it's still possible to get coverage from Mercury, AAA, Lemonade and Travelers, among other companies.
Who has the most expensive home insurance?
The average rate of home insurance premiums for these states has breached the national average cost by more than a hundred percent. At the top is the state of Florida, where homeowners pay a whopping $5,770 per year to insure their homes and properties according to the latest analysis by Bankrate.
Does State Farm cover California?
State Farm serves more customers in California than any other insurer, and we've been doing this for nearly 100 years. In LA County, we insure 250,000 homes and 880,000 automobiles. We continue to insure over 1 million homes and more than 4 million autos representing billions in risk across the state.
How much should homeowners insurance cost in California?
How much does homeowners insurance cost in California? The average cost of homeowners insurance in California is $1,250 per year, or about $104 per month.
How can I lower my homeowners insurance cost?
- Shop around for the best home insurance rates.
- Bundle your home and auto policies.
- Increase your home insurance deductible.
- Improve home security.
- Make home improvements.
- Review your coverage every year.
- Ask about savings.
- Consider actual cash value vs. replacement cost.
Do you legally have to have homeowners insurance in California?
There's no law requiring California property owners to carry insurance, but the vast majority buy it to protect themselves from fire and other perils, or are required to do so by their mortgage lenders.
What insurance company is closing in California?
Tokio Marine Insurance Co., Trans Pacific Insurance Co.
and Trans Pacific Insurance Co., both owned by Japanese firm Tokio Marine Holdings Inc., filed notices to California's Department of Insurance in April 2024 saying the companies would cease offering homeowners insurance and umbrella policies in the state.
Why is USAA homeowners insurance so expensive?
USAA homeowners' insurance tends to be more expensive due to its commitment to high standards for comprehensive coverage, superior customer service, and consideration of location-specific risk factors.