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
Communities, fire districts and others are doing their part, too. But some insurance companies citing growing risks and costs have paused or stopped writing new policies in California, causing a crisis of home-insurance affordability and availability.
Why are insurance companies pulling out of California today? ›
The decision is the latest blow to California property owners, as insurance companies continue to raise rates for customers or discontinue coverage. In 2022, insurance giant AllState paused its sales of new home insurance policies in California due to wildfires and higher costs of doing business in the state.
Is Allstate cancelling homeowners insurance in 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.
Which insurance is leaving California? ›
Tokio Marine and Trans Pacific join State Farm and Allstate in discontinuing coverage for California residents.
Why is it so hard to get insurance in California? ›
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.
How much is the average homeowners insurance in California? ›
The average cost of homeowners insurance in California is $1,250 per year, or $104 per month. For comparison, the national average is $1,915 per year.
Why is Allstate leaving California? ›
It is the latest insurance giant to say it will no longer offer coverage, citing worsening climate and higher building costs that have made it harder to do business in the nation's most-populous state.
Is USAA pulling out of California? ›
To clarify, State Farm, Allstate Farmers USAA, Travelers, Nationwide and Chubb are still active in California, they have just either limited or stopped writing new home insurance policies. Current home insurance policies with these providers are still being honored.
Why is Geico not in California? ›
The Chronicle reports that insurance industry magazines linked Geico's decision to close California sales offices to its failure to raise insurance prices in compliance with Sacramento regulations and other market forces.
Is State Farm pulling out of California? ›
Starting in July 2024, State Farm will stop insuring more than 30,000 residential homes in California, and starting in August, will discontinue coverage on 42,000 commercial apartment properties.
Allstate has joined other major insurers with its decision to stop issuing new homeowners insurance policies in California. Responding to inquiries from the San Francisco Chronicle, Allstate spokesperson Brittany Nash said the decision was driven by the escalating costs associated with insuring properties in the state.
Why did State Farm cancel my homeowners policy? ›
Last month, State Farm, the Illinois-based company and California's largest insurer, cited soaring costs and the increasing risk of natural disasters — like wildfires and outdated regulations — as reasons it won't renew the policies of thousands of homes.
Who is the largest insurer in California? ›
State Farm is the largest auto insurer in California as well as the largest property and casualty insurer in the United States overall, providing more than 87 million insurance policies.
Is AAA writing homeowners insurance in CA? ›
Insurance products in California are offered through AAA Northern California Insurance Agency, License #0175868, in Montana by AAA Montana, Inc., License #9756, in Nevada by AAA Nevada and in Utah by AAA Utah.
What is the cheapest home insurance in California? ›
At $886 a year on average, Allstate is the cheapest home insurance company in California. That's based on a policy with $300,000 in dwelling and liability coverage and a $1,000 deductible.
Why is California a no fault state? ›
The short answer is no, California is not a no-fault state for auto accidents. This means that the person responsible (i.e, the “at-fault” party) for the car accident has to pay for the resulting injuries and property damage. For this reason, California is an at-fault state.
Why is California penalizing for no insurance? ›
Gavin Newsom signed a law requiring Californians to buy insurance and instituting a penalty for those who go uninsured.. The health mandate has been regarded as unpopular but effective in nudging people to get covered. In 2022, California reached an uninsured rate of 6.2% in people under 65 — a historic low.
Why is auto insurance so expensive in California? ›
Climate change plays a far larger role in the cost of auto premiums than most consumers believe. That's because the effects of this change have been felt throughout California, and they effectively put vehicles in the state at enhanced risk.
Why is health insurance in California so expensive? ›
Healthcare Inflation
The ever-increasing costs within the healthcare sector contribute significantly to Covered California's pricing. Medical advancements, prescription drug costs, and the general inflation of healthcare services all contribute to the overall expense of providing comprehensive coverage.
