California is home to one of the largest insurance markets in the world, but it can also be one of the most challenging states for homeowners searching for coverage. That’s because the state has faced historic losses in recent years due to wildfires. In 2019, California wildfires burned roughly 4.7 million acres and displaced roughly 200,000 people, according to the Insurance Information Institute. That year, there were 50,477 recorded wildfires, which was down significantly from 58,083 wildfires in 2018.
However, the risk of wildfires means many insurers are no longer offering policies in California, dropping coverage to many or hiking rates, leading to limited options for consumers. And unlike natural disasters that occur in specific locations, California’s dry climate and frequent droughts mean that millions of homes across the state are at-risk of fire damage.
Living in California, you’ll also want to ask about coverage for such natural disasters as earthquakes, landslides and mudslides. The challenges posed by the state’s wildlife history aside, the California Department of Insurance says it’s important to shop around for insurance just as you would for any other product, doing your homework and asking plenty of questions
The average annual cost of homeowners insurance in California is $1,101. Despite the weather-related risks in the state, California homeowners pay slightly less in homeowners insurance than the average homeowner in the U.S. Homeowners in California on average pay $233 less than the national average of $1,333.80.
The best home insurance companies in California
California has several home insurance companies to choose from. Here are the top five options:
|Home insurance company||Average annual premium for $250K dwelling||J.D. Power customer satisfaction score||AM Best Rating|
|The Hartford||$1,203||832/1000||A+ (Superior)|
|CSAA Insurance Group||$837||825/1,000||A (Excellent)|
|State Farm||$811||829/1000||A++ (Superior)|
Allstate is tied with State Farm in J.D. Power ratings for overall customer satisfaction across several categories. Allstate offers a broad list of coverage options for homeowners in California to choose from. From the standard coverage options like dwelling coverage, liability protection, personal property and guest medical protection, to the not-so-common options like flood insurance coverage and yard and garden coverage and more. Allstate also received an A+ Superior rating from the Better Business Bureau for promptly addressing customer complaints.
CSAA Insurance Group
CSAA Insurance Group is an AAA insurer. The insurance company offers affordable premiums with an average annual premium of $837 for a $250k dwelling. However, in terms of customer satisfaction, the insurer was rated average with a score of 825/1,000. CSAA Insurance Group was given an Excellent rating from AM Best. The downside of CSAA Insurance Group is that it is only accessible to homeowners in Alaska, Arizona, Northern California, Nevada, Montana, Utah and Wyoming.
State Farm earned 829/1000 from J.D. Power for overall satisfaction and in several other categories, including policy offerings, billing and interaction. The company writes more policies in California than any other on our list, according to the Insurance Information Institute.
The Hartford is an AARP homeowners insurance program. With a J.D. Power Rating of 832/1000 points, customers are satisfied with the Hartford’s homeowners insurance offerings and services. Homeowners in California who choose The Hartford can enjoy customizing their homeowners insurance policy to fit their coverage needs and options. The drawback is that The Hartford is only available to AARP members, however, the AARP membership enables you to receive more benefits and savings on homeowners insurance.
USAA earned 889/1000 points in J.D. Power’s ratings for overall satisfaction, making it one of the top ranked providers in the country that writes policies in California. It is only available for members of the military and their immediate families, but it’s often one of the most affordable. It also has unique options that are beneficial to military members.
Additional companies to consider
Kin Insurance is an insurtech startup founded in 2016 and headquartered in Chicago. Its tagline is “home insurance costs are through the roof- Kin can help” and its mission is to lower the costs of car insurance by an average of $500 in savings.
With Kin, the average insurance cost in California is $1,188 per year. With Kin’s HO3 policies, California homeowners will receive coverage on belongings, home, liability, medical payments, and more. Additionally, the coverage options take into consideration California’s wildfires and provides wildfire damage protection.
Average homeowners insurance cost in California
California homeowners pay about $1,101 annually for home insurance premiums for a $250k dwelling. This is less than the national average of $1,333.80. The price varies by provider and the property’s value. The increased damages from wildfires in recent years are likely to affect insurance prices, pushing homeowners insurance California prices higher.
Home insurance coverage options in California
There are various types of insurance coverages available in California ranging from dwelling coverage to loss of use coverage. Here are the options and key information to understand about each.
- Dwelling coverage protects the physical structure of your home when it’s damaged by a covered incident.
- Other structures coverage protects other structures on your property that are not attached to your home, like a garage or tool shed.
- Personal property coverage protects your personal belongings inside your home, as well as items that belong to the family who live in the home.
- Loss of use coverage is designed to cover any living expenses you may incur if the event your home is damaged and you cannot remain there, like hotel and food costs.
- Personal liability coverage is designed if you or any resident of your household is held legally responsible for damage to someone else’s property, or a guest’s injury at your home, personal liability coverage would apply.
- Medical payments coverage is designed if a guest gets injured on your property, this coverage will pay for their medical expenses, even if you weren’t at-fault.
Since California is prone to natural disasters like earthquakes and wildfires, homeowners will want to know where to find earthquake coverage in California. You can refer to the California Earthquake Authority for additional information on obtaining earthquake coverage.
Important insurance coverage for California residents
In a state prone to wildfires, mudslides and earthquakes, it’s important to ask providers specific questions about what your policy does and does not include.
For instance, even though California is prone to earthquakes, home insurance companies do not typically include coverage for such incidents, according to the California Department of Insurance. So if your home was completely destroyed in a massive earthquake, insurance wouldn’t cover the repairs.
However, insurers are legally obligated to offer earthquake insurance for an additional premium. Earthquake insurance is an important investment for every California homeowner, because earthquake damage can be incredibly costly. Earthquake coverage may be written directly by your insurance provider or by another provider.
If you live in a hillside area, consider getting a flood insurance policy to protect your home from mudslides. You can get flood insurance through most private insurance providers, or through the National Flood Insurance Program.
The other major hazard that California homeowners face is wildfires. Most basic home insurance policies cover damage resulting from fires. But if you live in a region where wildfires are common, you might have to purchase special fire insurance coverage to protect your home. You can get fire coverage through California’s FAIR Plan.
Common causes of home insurance losses in California
Some of the risks most pertinent in California include wildfires, earthquakes, floods and mudslides, with wildfires being among the most pressing in recent years. The 10 costliest wildfires to occur in the United States all took place in California, according to the Insurance Information Institute.
The recent years have been especially catastrophic for California, due to these fires:
- Camp Fire: November 2018, $8.7 to $10.7 million in losses
- Tubbs Fire: October 2017, $7.8 to $10.1 million in losses
- Atlas Fire: October 2017, $3.1 to $5.1 million in losses
- Thomas Fire: December 2017, $2.6 to $4.7 million in losses
Frequently asked questions
What is the cheapest homeowners insurance in California?
According to our findings of the Cheapest Homeowners Insurance in 2021, Nationwide Insurance had the cheapest rates. Nationwide didn’t make our list of California homeowners insurance providers because they missed the mark on customer satisfaction, but if you live in a low-risk area in California, the insurer should suffice.
How do I get homeowners insurance in California?
The California Department of Insurance recommends contacting agents and brokers located near your home. You can also try using the department’s Residential Insurance Company Contact List. Read more about homeowners insurance to learn how you can save on your homeowners insurance policy and how to figure out how much you need.
What is the California FAIR Plan?
Due to the threat of wildfires in California, many companies have stopped offering coverage in the state. The FAIR Plan provides last resort insurance coverage to homeowners who are unable to obtain coverage. A Los Angeles-based association, the FAIR Plan is made up of insurers who are authorized to offer basic property insurance in California.
Bankrate utilizes Quadrant Information Services to analyze rates for all ZIP codes and carriers in all 50 states and Washington, D.C. Quoted rates are based on 40-year-old male and female homeowners with a clean claim history, good credit and the following coverage limits:
- Coverage A, Dwelling: $250,000
- Coverage B, Other Structures: $25,000
- Coverage C, Personal Property: $125,000
- Coverage D, Loss of Use: $50,000
- Coverage E, Liability: $300,000
- Coverage F, Medical Payments: $1,000
The homeowners also have a $1,000 deductible and a separate wind and hail deductible (if required).
These are sample rates and should be used for comparative purposes only. Your quotes may be different.
Rates are determined based on 2020 Quadrant Information Services data.