While there are signs of improvement, California’s property insurance market remains challenging due to wildfire risk, insurer pullbacks, and regulatory changes. Other states’ insurance markets are suffering similar challenges. Understanding these developments is an important part of protecting your financial plan.

Why Premiums Are Rising
Many homeowners have seen higher premiums, stricter underwriting, or reduced coverage options. Insurers continue to face wildfire losses, rising rebuilding costs, and higher reinsurance expenses, leading some carriers to raise rates or limit new business in higher-risk areas.

The FAIR Plan Continues to Grow
The California FAIR Plan, the state’s insurer of last resort, continues to expand as homeowners struggle to find traditional coverage. While it provides an important safety net, it generally offers more limited protection and may need to be supplemented with additional coverage.

Signs of Improvement
California policymakers are trying to balance two competing goals: keeping insurance affordable while ensuring insurers are willing to offer coverage. Recent regulatory reforms are intended to encourage insurers to write more policies in California, but the long-term success of these efforts remains uncertain as the state continues to confront growing wildfire risk. 

California’s Sustainable Insurance Strategy allows insurers to use forward-looking wildfire models and include reinsurance costs in pricing. In return, participating insurers are expected to write more policies in wildfire-prone areas. Several carriers have already begun expanding their presence in California. While progress will take time, these changes may gradually improve coverage availability.

The upcoming election of a new Insurance Commissioner adds another layer of uncertainty, as future leadership and regulatory priorities could influence the direction of California’s insurance market in the years ahead.

What Homeowners Should Do

  • Review homeowners, auto, umbrella, and earthquake insurance coverage.
  • Confirm dwelling limits reflect current rebuilding costs. Consider obtaining an independent estimate from a local contractor, as insurer estimates may be low.
  • Consider higher deductibles and avoid filing small claims when possible. Multiple small or even not-at-fault claims can affect insurability.
  • Maintain a current inventory of valuable personal property.
  • Read all communications from your insurer to avoid missing important notices or requests.

The Bottom Line
Property insurance remains a critical part of a comprehensive financial plan. Rising costs can impact cash flow, while insufficient coverage can create significant financial risk. We recommend reviewing your insurance strategy regularly to ensure your assets remain properly protected.