California Home Insurance in Crisis? What You Need to Know Before You Buy

Homeowners in California are facing what some might call a perfect storm: rising insurance premiums, shrinking coverage, and carriers pulling out of the market altogether. If you're planning to buy a home—or even if you already own one—understanding how the insurance market works today could save you serious time, money, and stress.

To unpack it all, I sat down with insurance expert Valerie Howard of Farmers Insurance. We covered what’s really happening, how to navigate the shifting market, and the smartest ways to protect one of your biggest investments

Full interview can be seen here: https://www.youtube.com/watch?v=vkpEMrevVWQ.

The Insurance Market Is Tight—But Not Broken

Valerie explains that while California has avoided a full-blown insurance crisis, the market is tight and unpredictable. Depending on the home's location, condition, and claims history, getting insurance can be straightforward—or it can be a challenge.

What’s changed? A big factor is carrier participation. Many insurance companies have pulled back or left California entirely due to regulatory restrictions on raising rates, especially in fire-prone areas.

“We used to have artificially low premiums in California,” Valerie notes. “Now, we’re seeing a correction—and it feels like a shock, but it’s long overdue.”

Sticker Shock: The Real Cost of Waiting Too Long

From a mortgage broker’s perspective, I often see buyers quote a $300/month policy online, only to find out later that it’s actually $800/month. This surprise can blow up a home loan by pushing the debt-to-income ratio over the limit.

Takeaway: Don't treat insurance like a closing checklist item. Start early—as soon as you have a property address—so you know the true cost and can resolve any red flags that might show up on the property’s claim history.

It’s Not Just About the House—It’s About the Buyer Too

One of the biggest misconceptions Valerie sees is that buyers think the home’s address alone determines their premium. In reality, your own insurance history—including past claims on rental properties—can affect your rate and eligibility.

Plus, buyers often don’t know key details about the home:

• Age of the roof

• Type of electrical wiring

• Fire hydrant proximity

• Plumbing materials

“The more you know about the house, the better the pricing—and the better the coverage,” says Valerie.

Understanding the California FAIR Plan

If you’ve heard the term “California FAIR Plan” and thought it meant second-tier coverage, think again.

The FAIR Plan is a state-backed program funded by all home insurance carriers in California. It’s designed to provide coverage when traditional (admitted) carriers won’t take on the risk. In high-risk fire zones, homeowners often need a FAIR Plan policy plus a supplemental policy from another carrier (like Farmers) to be fully protected.

“It’s not an inferior policy—it’s just a different delivery system,” Valerie explains.

How to Protect Yourself in a Shifting Market

Here’s what every California homebuyer (and homeowner) should do now:

✅ Start early – Begin the insurance process as soon as you have a property address.✅ Know your home – Gather details about the roof, wiring, plumbing, prior claims, etc.✅ Work with a real agent – Online quotes are limited. An expert can do a full risk analysis and tailor coverage.✅ Don’t just buy for the mortgage – Make sure your policy lets you sleep at night, not just satisfy your lender.✅ Prepare to be flexible – Some carriers may require dual policies or higher deductibles, especially in high-risk areas.

Final Thoughts

Yes, the California insurance market is evolving—but that doesn’t mean you’re out of options. With the right approach and a knowledgeable agent, you can still get great coverage at a fair price. Just don’t wait until the last minute to figure it out.

Special thanks to Valerie Howard with Farmers Insurance for sharing her insights. If you're in California and need a quote, I highly recommend reaching out to her directly. (Contact info in show notes!)

Need help navigating insurance during your home purchase?

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