LOS ANGELES (KABC) -- Amid an ongoing insurance crisis in California, many customers are being dropped by their insurance companies.
And among those who can get insured, including homeowners and drivers, the coverage is likely to cost more.
"I contacted nine insurance companies and none of them wanted to take us. None of them," says customer Steve Besbeck.
Besbeck says after 15 years his former insurance company dropped him. So he had to go with the California FAIR plan for fire coverage. The FAIR plan is for California homeowners unable to find insurance in the traditional marketplace.
Besbeck still had to get a separate policy for other home risks. "And the premium increased about 30% year over year with FAIR plan so it's been very expensive," he said.
Insurance policy costs have gone up steadily every year, from just over $1,000 in 2015 to almost $1,500 in 2021.
"I think the home insurance industry is abandoning Californians who have diligently paid their premiums for decades," said Carmen Balber with Consumer Watchdog, an advocacy group.
More and more Californians are finding it difficult, or even impossible, to keep their homes insured amid skyrocketing rates and policies being canceled by insurance companies.
According to insurance agent Rick Dinger, finding polices for his clients is nearly impossible.
"Ninety percent of our job is talking people off the ledge and explaining to them that it's not them, everyone is going through the same situation right now," said Dinger. "It's very few, and the rest we say 'I'm sorry we can't help you.' Or the rates are so outrageous they get upset and don't call back."
Experts say there are things you can do so your insurer is less likely to drop you. One thing is to make sure you have enough coverage to rebuild.
"Sometimes construction costs are not equal to fair market value. They are higher and so it really just depends, but you do want to pay special attention to what those costs are going to be and make sure that your insurance coverage matches that," said Omar Ochoa, an attorney and Insurance expert.
Higher insurance costs are not just hitting customers with big increases in homeowners polices, but also with auto policies. Besbeck says he's been struggling with both. When it comes to car insurance, he's driving less but paying more.
"I drove less than 4,000 miles last year on each of our cars. We have two cars and insurance went up this year like 20%, something like that, for nothing," said Besbeck.
California regulates insurance companies and their rate increases, so a number of insurance companies have simply pulled out of the state.
It's one reason it's getting harder to find a policy. Allstate stopped issuing homeowners insurance policies to new customers in California in 2022, and stopped directly selling new auto insurance policies in the state. The company decided to return but only after regulators agreed to let it raise auto insurance rates by an average of 30%.
Allstate always offered auto insurance policies to new customers through agents.
"Just to be clear, that Allstate increase, that 30% increase, was an auto insurance increase, not a home increase," Balber said. "But we're absolutely seeing insurance companies holding California hostage for deregulation that they're trying to get out of the Department of Insurance."
Editor's note: This story has been updated to clarify that while Allsate temporarily stopped selling new auto insurance policies, the company continued to offer such policies through agents. A previous version also stated that Allstate stopped issuing homeowners insurance policies to new customers in California last year. That has since been updated.
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FAQs
Rather, there are several key reasons. California's state insurance regulations, inflation, increased wildfires and heightened reinsurance costs have all contributed to the current California home insurance crisis.
Why does California have an insurance crisis? ›
The companies have offered numerous reasons for their decisions, but a report from Gallagher Re released late last year showed the threat of damaging wildfires in conjunction with inflation and pricing challenges has led to a distressed insurance and reinsurance market, particularly in California.
Why are California insurance rates going up? ›
After pandemic-era stay-at-home orders were lifted, Giusti said, people hit the road in droves — and continue to drive more now than before. The cars people are driving are also a factor in increased coverage costs. New cars are more expensive, which means there's a higher cost to insure them, he said.
Why are so many insurance companies pulling out of California? ›
The companies are blaming wildfires, inflation that raised reconstruction costs, higher prices for reinsurance they buy to boost their balance sheets and protect themselves from catastrophes, as well as outdated state regulations — claims disputed by some consumer advocates.
Why is State Farm not renewing policies in California? ›
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The largest carrier in California announced in March it would not renew more than 70,000 policies in the state — 30,000 of them home insurance policies. Much of the reason centered on the increasing risk of wildfires in the state.
Is State Farm pulling out of California? ›
State Farm, the nation's biggest home insurance company, will no longer sell home insurance in California and Allstate and Farmers have made similar moves. Risks associated with climate change are creating a home insurance crisis in California, but homeowners still have options.
Why is Geico pulling out of California? ›
The conditions in the state have led the insurers to believe that California drivers are too expensive to insure. Auto accidents increased 25% between 2020 and 2021, where at the time, premiums increased only 4.5%. The insurers were paying more in claims than they were making in premiums.
Is Progressive leaving California? ›
Since the beginning of 2023, several major insurance companies have announced that they would stop writing policies or drastically reducing offerings in two of the three most populous states in the U.S. Industry heavyweights such as Geico, Progressive, and Farmers have started leaving the California and Florida auto ...
Who is writing homeowners policies in California? ›
6 Best Homeowners Insurance Companies in California
- Nationwide: Our pick for inclusive standard coverage.
- USAA: Our pick for club members.
- Liberty Mutual: Our pick for discounts.
- Progressive: Our pick for bundling.
- Farmers: Our pick for customizable coverage.
- Hippo: Our pick for fast quotes.
Higher insurance rates are also based on the rising cost of cars and how much it costs to fix them these days. Insurers are also factoring in the increase in natural disasters, like hurricanes and wildfires, all of which damage cars and trucks.
"Under Prop 103, which is the consumer protection law passed more than 30 years ago by voters, insurance companies are free to choose where they write policies, and they can choose their rates," Department of Insurance spokesperson Michael Soller said.
Why is my Covered California premium so high? ›
The rate change can be attributed to many factors, including a continued rise in health care utilization following the pandemic, increases in pharmacy costs, and inflationary pressures in the health care industry, such as the rising cost of care, labor shortages and salary and wage increases.
Who is the largest insurer in California? ›
State Farm is the largest auto insurer in California, with a market share of more than 12%, as well as the largest property and casualty insurer in the United States.
Is Allstate pulling out of California? ›
Allstate stopped issuing new insurance policies for all business and personal property in California back in 2022. Since then, companies like State Farm, Farmers Insurance and The Hartford have made similar business moves.
What is the cheapest homeowners insurance in California? ›
California's cheapest home insurance companies
Travelers has the cheapest home insurance for most California residents. Its rates average $901 a year ($75 a month) for a typical home. This is roughly 28% less than the state average of $1,260 a year.
Why are insurance companies not writing in California? ›
A growing number of property insurers have paused or stopped writing policies in California in recent years, citing increased fire risk and inflation.
Why are insurance policies canceled? ›
If at any time: you fail to pay the premium by the due date. you obtained the policy through misrepresentation or fraud. anyone insured on the policy violated the terms or conditions of the policy.
Why is it so difficult to get car insurance in California right now? ›
California regulates insurance companies and their rate increases, so a number of insurance companies have simply pulled out of the state. It's one reason it's getting harder to find a policy.
What to do if your homeowners insurance is cancelled in California? ›
NOTE: If your insurer did not give you 75 days notice, or their reasons for dropping you seem unfair, seek help from the California Department of Insurance (CDI) at 1-800-927-HELP, www.insurance.ca.gov. Limited circ*mstances where an insurer must renew your policy: You have a policy with a guaranteed renewal provision.
