The State of Homeowners Insurance in California: What Homeowners Need to Know in 2026

If you own a home in California, you have probably noticed that homeowners insurance is not what it used to be.

Over the past several years, California homeowners have faced rising premiums, non-renewals, stricter underwriting requirements, fewer available insurance companies, and—in some areas—difficulty finding a traditional homeowners policy at all.

Wildfires have understandably been at the center of the conversation, but the situation is more complicated than simply blaming fires. Rising construction costs, inflation, reinsurance costs, catastrophe losses, regulatory challenges, and the increasing cost of rebuilding a home have all contributed to the pressure on California's homeowners insurance market.

So where do things stand today?

The short answer: California's homeowners insurance market is still challenging, but there are some encouraging signs that the situation is beginning to stabilize.

Why Has Homeowners Insurance Become So Difficult in California?

California has always been exposed to natural disasters, particularly wildfires. What has changed is the financial cost of those disasters.

When a home is destroyed, an insurance company isn't simply replacing the structure that existed 10 or 20 years ago. Today's reconstruction costs can include significantly more expensive labor, building materials, permits, debris removal, temporary housing, and other expenses.

At the same time, insurers have to consider the cost of reinsurance—the insurance that insurance companies themselves purchase to protect against catastrophic losses.

All of these factors affect the price and availability of homeowners insurance.

The result has been a difficult cycle:

Higher losses → higher costs → higher premiums → tighter underwriting → fewer available policies.

For some California homeowners, this has meant being non-renewed by their insurer and having to search for another option.

The California FAIR Plan Has Become a Much Bigger Part of the Conversation

If you have been shopping for homeowners insurance recently, you have probably heard of the California FAIR Plan.

The FAIR Plan is designed to provide basic property insurance to homeowners who cannot obtain coverage through the traditional insurance market. It is intended to be an insurer of last resort—not necessarily a replacement for a comprehensive homeowners policy.

The FAIR Plan has grown substantially as more homeowners have struggled to find traditional coverage.

According to the California Department of Insurance, there were approximately 668,609 FAIR Plan homeowner and commercial policies as of December 2025.

That number is significant.

However, there is some encouraging news.

The growth of the FAIR Plan has slowed considerably. In the first quarter of 2026, approximately 16,000 residential policies were added—about 2.4% growth from the previous quarter. That's a substantial slowdown compared with the tens of thousands of policies being added each quarter during the height of the insurance market disruption.

That doesn't mean the problem has disappeared.

It does mean that the market may finally be moving in a better direction.

More Insurance Companies Are Beginning to Expand in California

Perhaps the most encouraging development is that some insurers are beginning to increase their presence in California again.

California's Department of Insurance has implemented what it calls the Sustainable Insurance Strategy, which is designed to modernize the state's insurance regulations and encourage insurers to write more policies in areas where homeowners have struggled to obtain coverage.

As part of the strategy, insurers are being encouraged—or required through their commitments—to expand coverage in wildfire-distressed areas.

Several major insurance groups have announced plans to increase their California presence.

Farmers, Travelers, Liberty Mutual, Mercury, CSAA and others have all been involved in efforts to expand coverage or increase their participation in California's market.

That's important because homeowners need choices.

The more companies willing to write homes in California, the more opportunities homeowners have to find coverage that fits their property and budget.

But Don't Expect Insurance to Suddenly Become Cheap

This is an important distinction.

A healthier insurance market doesn't necessarily mean inexpensive insurance.

California homeowners should still expect insurance to be more expensive than it was several years ago in many areas.

The goal is not necessarily to return to the prices of 2019.

The goal is to create a market where homeowners can actually obtain appropriate coverage from financially stable insurance companies at prices that reflect the risk.

The California Department of Insurance currently reports an average California homeowners premium of approximately $1,571, compared with a national average of approximately $1,512.

But averages can be misleading.

Your home's location, age, construction, roof, claims history, proximity to wildfire risk, replacement cost, and many other factors can have a significant impact on your individual premium.

Two homes that look nearly identical on the outside can receive very different insurance quotes.

Wildfire Risk Is Still a Major Factor

There is no way around it: wildfire risk remains one of the biggest issues affecting California homeowners insurance.

The January 2025 wildfires in the Los Angeles area demonstrated just how devastating wildfire losses can be.

The insurance industry, homeowners, regulators, and communities are all trying to determine how to make California's property market more sustainable in the face of that risk.

One important part of the conversation is mitigation.

Things such as:

• Class A roofing
• Ember-resistant vents
• Defensible space
• Vegetation management
• Fire-resistant building materials
• Hardening vulnerable portions of a home

can potentially make a property more attractive to insurers and, depending on the company and program, may also qualify for insurance discounts.

Some insurers expanding in California have specifically announced increased consideration of wildfire mitigation measures when determining eligibility and discounts.

That means homeowners shouldn't simply ask:

"How much is my insurance?"

They should also ask:

"What can I do to make my home easier to insure?"

Your Insurance Policy May Need a Second Look

One of the biggest mistakes a homeowner can make in today's market is assuming that the policy they purchased several years ago is still adequate.

Imagine purchasing a home with $500,000 of dwelling coverage five years ago.

If the cost to rebuild that same home has increased significantly, $500,000 may no longer be enough.

And remember: the market value of your home is not the same thing as its insurance replacement cost.

Your insurance policy is generally designed around the cost to repair or rebuild the insured structure—not simply what the home could sell for.

This is why reviewing your dwelling limit, extended replacement cost provisions, personal property coverage, additional living expense coverage, deductibles, and other policy provisions is so important.

What Should California Homeowners Do Right Now?

If you own a home in California, I recommend taking a proactive approach rather than waiting for a problem to occur.

1. Review your current policy

Don't just look at the premium.

Look at what you're actually getting for that premium.

2. Make sure your dwelling coverage is appropriate

Construction costs change. Your insurance limits should be reviewed periodically to make sure they remain reasonable for the cost of rebuilding your home.

3. Understand your deductible

A lower deductible generally means a higher premium, while a higher deductible can reduce the premium but increase your out-of-pocket responsibility after a claim.

Make sure you understand what you would actually be responsible for paying.

4. Ask about wildfire mitigation

If you've upgraded your roof, cleared vegetation, installed ember-resistant vents, or taken other steps to protect your home, make sure your insurance professional knows about them.

5. Don't wait until your policy is canceled

If you receive a non-renewal notice, start exploring alternatives immediately.

The California insurance market is changing quickly, and finding the right solution can take time.

6. Compare coverage—not just price

The cheapest quote isn't necessarily the best policy.

A homeowners policy is something you buy hoping you never need to use it. But if you do need it, the differences between policies can become extremely important.

Look beyond the premium and compare deductibles, coverage limits, exclusions, endorsements, replacement cost provisions, additional living expenses, and other important policy features.

Is California's Homeowners Insurance Crisis Over?

No. But there are reasons to be cautiously optimistic.

California's Department of Insurance reports that the number of insurers expanding their presence in the state is increasing, while FAIR Plan growth has slowed.

The state is attempting to modernize its insurance regulations, encourage insurers to write more policies in higher-risk areas, and create a market that is more sustainable over the long term.

At the same time, California is still dealing with enormous wildfire exposure and the financial consequences of catastrophic losses.

And recent events—including ongoing disputes over wildfire claims and insurance company responsibilities—show that the broader conversation about California homeowners insurance is far from finished.

In other words, we're not out of the woods yet.

But there are signs that California may finally be moving toward a more stable homeowners insurance market.

The Bottom Line for California Homeowners

If you've been frustrated by homeowners insurance in California, you're not alone.

The market has changed dramatically, and navigating it can be confusing.

But today's market is not necessarily the same market you'll be dealing with six months or a year from now. New companies are entering or expanding, existing insurers are adjusting their underwriting strategies, regulations are changing, and homeowners are becoming more proactive about protecting their properties.

That makes one thing especially important:

Don't assume that the only option is the option you've been given.

Your home is likely one of the largest investments you'll ever make. Taking the time to review your coverage, understand your options, and make sure your policy actually protects what you've worked so hard to build is worth it.

If you haven't reviewed your homeowners insurance recently, now is a good time to start.