Skyrocketing home insurance premiums are weighing on the finances of California homeowners, with a South Bay family recently being left "dumbfounded" by the doubling of their coverage costs despite living in an area that's not at high risk of fire.
Pamela Tremain told NBC Bay Area that the premium on her family's second home in Amador County went from $9,000 to $18,000 a year. "I was dumbfounded," Tremain said, "because our annual premiums absolutely doubled."
The family's insurers, Farmers Insurance, told them that the increased premiums were due to California's inflation. Newsweek reached out to Farmers Insurance for comment via email on Friday morning.
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What happened to the Tremain family is hardly a unique experience in the Golden State, which is suffering from a home insurance crisis. Several private insurers have announced they'll cut coverage or stop offering new policies in California in recent years, citing the higher risk posed by climate change.
The Golden State is particularly vulnerable to extreme weather events, especially wildfires.
Forty-six confirmed weather and climate disaster events in California occurred between 1980 and 2024, with losses exceeding $1 billion each as of April 8, 2024, according to the National Centers for Environmental Information (NCEI). These devastating events included 14 droughts, six floods, three freezes, four severe storms, and 19 wildfires.
As extreme weather events are expected to become more severe and more frequent due to the warming of the planet caused by the burning of fossil fuels, insurers know that they're likely to have to pay more in damage claims in the coming years. But in California, insurers are not allowed to hike their premiums without the consent of the state's insurance commissioner.
Some companies are cutting coverage because they might pay more than they can make in profits. In March, State Farm announced it would discontinue coverage for thousands of California homeowners starting this summer—right at the peak of what could be a devastating wildfire season. In the same month, American National said it would stop offering homeowner insurance policies by this fall.
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This, in turn, has contributed to raising premiums as California homeowners scramble for options and are sometimes forced to rely on the state's insurer of last resort, the FAIR Plan. This privately run insurer is meant to temporarily provide coverage to homeowners who can't get a policy with a private company.
Faced with the higher premiums, Tremain found an alternative insurer for her second home, AAA Insurance. Her new premium is less than $7,000 a year, she told NBC Bay Area—a staggering difference from what she would have paid with Farmers.
Others might not be so lucky.
According to Bankrate, the average home insurance annual premium for policies with a $300,000 dwelling coverage in California is $1,452, which is $701 lower than the national average.
Are you a California homeowner facing higher home insurance premiums? Write about your experience at g.carbonaro@newsweek.com.
Uncommon Knowledge
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Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
About the writer
Giulia Carbonaro is a Newsweek Reporter based in London, U.K. Her focus is on U.S. and European politics, global affairs ... Read more
