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
Best home insurance companies in California
California has several home insurance companies to choose from. Here are the top five options:
- Amica: Amica is tied with USAA for the highest ratings for best homeowners insurance California. The insurer received five stars from J.D. Power & Associates across all six categories including policy offerings, interactions, price, billing and claims. Amica also received an A+ from the Better Business Bureau for promptly addressing customer complaints.
- Auto Club of Southern California: The Auto Club of Southern California comes in behind the top three insurers with four out of five on the J.D. Power list. The company has an excellent financial strength rating of ‘A+’ from A.M. Best.
- Erie Insurance: Tied with the top two homeowners insurance California companies, Eerie earned four out of five stars overall from J.D. Power. The company also earned a solid A+ from A.M. Best for financial stability and from the Better Business Bureau.
- State Farm: State Farm earned four out of five 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.
- USAA: USAA earned a perfect five out of five in J.D. Power’s Power Circle Ratings for overall satisfaction, making it one of the top ranked providers in the country that writes policies in California. In fact, USAA received a five out of five for every category in the J.D. Power 2019 ranking.
|J.D. Power Rating||AM Best Rating||BBB Rating|
|Amica||5 out of 5||A+||A+|
|Auto Club of Southern California||4 out of 5||A+||NR (Not Rated)|
|Erie Insurance||5 out of 5||A+||A+|
|State Farm||4 out of 5||A++||A|
|USAA||5 out of 5||A++||B+|
Average cost of homeowners insurance California
California homeowners pay about $1,008 annually for home insurance premiums, according to the Insurance Information Institute. But 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.
We comparison shopped using the fictitious profile of a homeowner in the Carlsbad area of San Diego who was seeking $550,000 worth of coverage for a newly built home. Here’s how the rates compared:
- Amica: $1,545 annual premium with $1,000 deductible
- Auto Club of Southern California: $1,432 annual premium with $1,000 deductible
- Erie Insurance: $1,707 annual premium with $1,000 deductible
- State Farm: $1,481 annual premium with $1,000 deductible
- USAA: $1,622 annual premium with $1,000 deductible
Types of Coverage Available 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.
|Types of coverage||More information|
|Dwelling coverage||Dwelling coverage protects the physical structure of your home when it’s damaged by a covered incident.|
|Other structures||As the name indicates, this coverage protects other structures on your property that are not attached to your home, like a garage or tool shed.|
|Personal property||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||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||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||If a guest gets injured on your property, this coverage will pay for their medical expenses, even if you weren’t at-fault.|
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 2020, 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.
Cheaper isn’t always better, especially when you need to file an insurance claim because of damage to your home and/or the valuables contained inside. The top homeowners insurance CA providers were chosen for their customer satisfaction and financial stability ratings. To make the list, the insurance providers had to rate above average with at least four out of five stars in overall satisfaction by J.D. Power.
We also used AM Best ratings to ensure the top companies had a solid financial history with the ability to pay out widespread claims in case of a natural disaster. All homeowners insurance prices were researched by obtaining actual quotes from each provider listed.