California Homeowners Insurance Guide
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Homeowners Insurance in California
Explore California Homeowners Insurance State Guides, Laws and Regulations before You Buy Insurance
Like most states, California does not require homeowners or renters insurance, but if you have a mortgage, or are a part of a condo association, you are more than likely contractually obligated to maintain these coverages. Besides, your home, apartment, or condo protects your family and most prized possessions. Why not ensure it is also protected in return.
The Golden State is known for its extreme terrain and abundance of beauty. From the winding roads of San Francisco and the Pacific Coast Highway, to the rolling hills in Napa Valley, California affords those that are lucky enough to call it home, a ton to appreciate. The drawback to all of that beauty, is that California has several miles of coastal land, mountain ranges, and everything in between. The state’s vastness, and severe extremes of its terrain and climate present its inhabitants with several perils that a customary homeowners or renters policy simply does not cover.
How Much Does it Cost and What Does it Cover?
Although California’s property-related risks far outstrip many other states’, the average premium Californians pay is more in line, and in the case of homeowners insurance, less than the average paid across the country. This speaks volumes given the fact that the typical homeowners and renters policy covers perils such as fire, theft and vandalism; yet the Golden State presents additional, unique risks associated with earthquake, flood and wildfire.
Average Homeowners and Renters Insurance Premium
| STATE | HOMEOWNERS | RENTERS |
| California | $1,008 | $182 |
| USA | $1,211 | $180 |
Source: Insurance Information Institute (2018)
What About Catastrophic Risks?
The years 2017 and 2018 included the most destructive wildfires in California’s history, and the state is still reeling from what it endured in 2019. It is true that the Golden State naturally has wildfires due to its landscape, but because of climate change as well as several other factors, over time the wildfire season has increased, and become more severe over the years. It became so untenable in 2019 that the state had to ban insurers from dropping customers located in wildfire zones.
Fire Insurance Claims
| FIRE (REGION) | YEAR | AMOUNT |
| Wine Country and Sacramento Valley | 2017 | $10.0 billion |
| Camp Fire | 2018 | $8.5 billion |
| Woolsey Fire | 2018 | $3.3 billion |
| Southern California | 2017 | $1.8 billion |
| Carr and Mendocino Complex | 2018 | $970.0 million |
Source: California Department of Insurance
Note that these figures only incorporate one disastrous peril, wildfire. California is also prone to earthquakes and floods, although in recent years, these have not inflicted as much damage as the persistent wildfires. Due to the inherent risks of owning property in the Golden State, homeowners and renters insurance are virtual necessities.
Which Carrier Do I Choose?
Insurance carriers are certainly in the business of assessing risk, but some of the catastrophes that characterize the regions in California can make obtaining insurance slightly difficult.
Top 5 Home Insurance Carriers in California
| COMPANY | MARKET SHARE |
| State Farm | 17.6% |
| Farmers Insurance Group | 16.0% |
| CSAA Insurance Exchange | 6.5% |
| Liberty Mutual | 6.2% |
| Auto Club Exchange Group | 6.1% |
Source: Insurance Information Institute (2018)
Typically, regional and national carriers have equal footing as it relates to their respective sales pitch to potential customers. Given the catastrophic nature of the risk in parts of the Golden State, analyzing the financial stability of an insurance company carries more weight. Over the years, several insurance carriers have gone insolvent in part due to the losses endured from catastrophes in California. Your circumstances will surely dictate which carrier and coverage is best for you, but make sure a carrier’s propensity and ability to pay a claim is a part of your analysis.
Note that if you are experiencing problems obtaining insurance, you can utilize California’s Fair Access to Insurance Requirements (FAIR) Plan, which is an association of property insurers that are licensed in California. You can also obtain flood coverage through the National Flood Insurance Program (NFIP).
The Golden State has a plethora of natural beauty. Unfortunately, that beauty can sometimes come at the cost of natural disasters. If you’re lucky enough to call California home, or will in the future, make sure your property is properly covered.
California Regulating Agencies And References
