Finding Homeowners Insurance in California Just Got Harder. Here’s Why

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California’s wildfires are making it hard for homeowners to find insurance. Here’s what residents need to know. 

California has already experienced over 1,600 wildfires so far in 2023, with more than 4,000 acres burned. But that’s only part of the devastation these natural disasters cause. They can also destroy entire communities and lead to costly insurance claims. And homeowners aren’t the only ones feeling the strain.

State Farm has recently announced that it will temporarily stop selling new homeowners insurance policies in California due to the high risk of wildfires and increased rebuilding costs. Here’s what homeowners insured by State Farm or those seeking new coverage need to know.

Why State Farm won’t sell new California homeowners insurance policies

After evaluating the risk that California’s wildfires posed and the amount it paid out in claims due to historic increases in construction costs, State Farm has made the decision to stop selling new homeowners insurance in California for the time being. The company will continue to sell personal auto insurance policies throughout the state.

State Farm says it feels this is necessary for the time being in order to preserve its financial strength and that it will continue to evaluate the situation over time. It’s possible that it may resume selling homeowners insurance policies in the state eventually, but only time will tell.

What this means for California homeowners

California homeowners who are already insured through State Farm won’t lose their coverage, and they don’t have to worry about their policies not being renewed when their current term ends. The company will continue to provide coverage and service claims for existing customers as it always has. But the increased risk of wildfires in the state could mean that these customers will pay more if they hope to renew their policy for another term.

Homeowners looking for new coverage still have about 115 homeowners insurance companies to choose from. But it’s likely that those who live in areas at high risk of wildfire will pay more with all of them, in light of the increased risk and higher building costs.

The state of California is doing its best to manage this by mandating that insurers reward businesses and homeowners who take wildfire mitigation steps with discounts on their policies. But discounts can vary widely from one company to the next, and the company that offers the most discounts isn’t always the most affordable. That’s why it’s usually best to get quotes from multiple companies before purchasing a policy.

Homeowners who haven’t already done so should look over their coverage and make sure the policy limits are high enough to cover a full rebuild of the home. They may need to purchase additional protection to account for the higher rebuilding costs these days. Those who have questions about how much coverage they need should reach out to their home insurer or a local builder in their area to gauge what these costs might be.

What California is doing about it

California’s government cannot mandate that State Farm sell homeowners insurance policies to its residents, but it’s doing what it can to make things easier on customers affected by the rising cost of homeowners insurance due to wildfires. In addition to mandating that insurers reward customers that take wildfire mitigation measures, it has also placed a one-year mandatory moratorium on non-renewals and cancellations.

Essentially, if the governor declares a state of emergency due to a wildfire, insurers cannot use that wildfire as an excuse to cancel or fail to renew a homeowners policy for at least one year following the disaster. This enables homeowners to focus on rebuilding their homes without having to worry about seeking new insurance coverage right away.

The state also offers its FAIR Plan, which is basic fire insurance coverage for those who live in areas at high risk of wildfire damage. These plans are often more expensive than traditional homeowners insurance policies, but they at least provide some protection for those who might otherwise struggle to get coverage from traditional companies.

Californians still have plenty of options for homeowners insurance coverage. But it’s never been more important to shop around before purchasing a policy. Every company evaluates risk a little differently, and some insurers may be willing to charge a homeowner a lot less for the same coverage.

Our picks for best homeowners insurance companies

There are many homeowners insurance companies to choose from. We’ve researched dozens of options and short-listed our favorites here. Looking for a green build discount or easy bundle policies? Want an easy-to-use interface? Read our free expert review and get a quote today.

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