Homeowners in California Face Coverage Cuts as Insurance Rates Surge

GOLETA, Calif. — As insurance companies scale back operations, reduce coverage, or raise premiums, many Californians are searching for answers.

On Thursday, State Sen. Monique Limón hosted an insurance town hall in Goleta alongside Insurance Commissioner Ricardo Lara to discuss the challenges facing homeowners seeking coverage.

“Our Central Coast and the entire state are feeling the pressures of the insurance market, particularly when it comes to homeowners insurance,” Limón said.

In recent years, several insurance providers have either exited California or significantly reduced coverage due to increasing risks from natural disasters, particularly wildfires. For instance, Allstate stopped issuing new home insurance policies in the state in 2022.

This week, Lara met with State Farm executives in Oakland to discuss the company’s request for a statewide rate increase: 22% for homeowners, 15% for renters and condo owners, and 33% for rental property owners. The increase aims to offset an estimated $7.6 billion in wildfire-related losses.

Lara said he hopes to reach a decision within two weeks and has urged State Farm to commit to expanding coverage in California if the rate hike is approved. The company recently announced plans to drop 72,000 policies across the state, including 30,000 for homeowners.

State regulators have also approved rate increases for two other major insurers, affecting approximately 660,000 customers. Mercury General, the state’s fifth-largest home insurer, will raise rates by an average of 12% for homeowners starting in late March. Meanwhile, Safeco, a subsidiary of Liberty Mutual—the fourth-largest home insurer—will increase rates by an average of 7.2% in May, impacting about 86,700 policyholders.

During the town hall, Lara emphasized the importance of preparation, citing recent California wildfires as a reminder of climate change’s ongoing impact.

“This is a reminder to understand your insurance policy, know your rights as a consumer, take photos of your property, and update your coverage after making home improvements,” Lara said.

Limón added that many residents are unsure where to turn for help.

“Many people are struggling and don’t know who to contact. In addition to reaching out to state legislators, the insurance commissioner, and the Department of Insurance, there are great resources available,” she said.

For more information or to ask questions about insurance coverage, visit insurance.ca.gov or call 1-800-927-4357.