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California homeowners insurance

By Posted : October 13, 2017

When shopping for California home insurance, you need to know how much coverage to buy, how to get the best price and what you can expect to pay. We’ll explain everything you need to know to do that. We outline average California home insurance rates by coverage level, ZIP code and company. That means you can anticipate how much it will cost so you can stay on budget, and more importantly, you compare rates so you won’t overpay for it. We also explain how earthquake insurance protects your home, as well as the role home insurance plays in paying for wildfire damage.

What is the average cost of home insurance in California?

California is the fifteenth cheapest state for home insurance. Its average rate is $793. That’s $435 less, or 35 percent cheaper, than the national average of $1,228 for the coverage level of:

  • $200,000 dwelling coverage
  • $1,000 deductible
  • $100,000 liability

Here are the basic components of a home insurance policy that you decide the coverage amount for:

  • dwelling
  • liability
  • deductible

The limits of your coverage for the following are typically a set percentage of your dwelling coverage limit as shown below:

  • other structures – 10 percent
  • personal property – 50 percent
  • loss of use – 20 percent

Selecting a deductible amount

You will need to select a deductible, which is the amount you pay before your insurance kicks in. For example, if your home has $3,500 worth of damage, and you have a $500 deductible, you pay the first $500 out of pocket before your insurance coverage kicks in for the rest ($3,000).

You  choose a home insurance deductible amount, which applies to claims for damage to your home or belongings, but not if you’re sued or a medical claim is filed by someone injured in your home. Typically, deductible amounts are $500, $1,000, $1,500, $2,000 and $2,500.

California home insurance dwelling coverage: How much do I need?

When buying homeowners insurance, you should get enough dwelling coverage to match the full replacement cost of your home. The cost to repair damage to your home or rebuild it completely at equal quality — at current prices – is the replacement cost. Figuring out how to calculate home replacement cost  can be done by making a thorough inventory of building materials used for your home, using online calculators, or, you can hire an appraiser to do it for you.

How much home liability coverage do I need?

Liability insurance covers the medical expenses of people who are hurt while in your home or on your property, as well as damage caused to neighbors’ property. Personal liability also covers legal fees if you are sued, as well as any resulting judgments from a lawsuit, up to your policy limits.

Most home insurance policies come with $100,000 in personal liability insurance but this is rarely enough coverage. The cost to defend a lawsuit or to pay for medical expenses for a serious injury can easily exceed that amount. Most experts recommend upping your limits to at least $300,000. 

California home insurance rates by ZIP code

Warner Springs, a small enclave in northern San Diego County, Julian, known as a mountain get-away an hour outside of San Diego, and Boulevard, yet another small community, near the Mexican border, are among the most expensive places to insure a home in California. Neighborhoods in Mountain View, Palo Alto and Sunnyvale are among the cheapest areas for home insurance.

By entering your ZIP code in the tool above, you’ll see the average home insurance rate for that area, as well as the highest and lowest premium fielded from major insurers for the coverage level selected. This will give you an idea of how much you can save by comparing home insurance rates. For example, let’s look at Fresno, ZIP 93764, since its average rate is that of the state’s at $793. The highest rate ($1,132) is $591 more than the lowest ($541). That means you can save nearly $600 just by comparing rates and shopping around.

Cheapest California home insurance companies 

Here are home insurance rates by company for six coverage sets. Based on our rate analysis, you’ll see Mercury was the cheapest insurance company in California and Farmers was the most expensive insurance company for the coverage levels analyzed.

$200,000/$1,000/$100,000

$200,000/$1,000/$300,000

Mercury $492 Mercury $517
Travelers $732 Travelers $753
Allstate $801 Allstate $848
State Farm $852 State Farm $877
Liberty Mutual $921 Liberty Mutual $951
Farmers $962 Farmers $987
$300,000/$1,000/$300,000 $400,000/$1,000/$300,000
Mercury $645 Mercury $806
Travelers $1,030 Travelers $1,308
State Farm $1,210 State Farm $1,573
Allstate $1,216 Allstate $1,617
Liberty Mutual $1,490 Liberty Mutual $2,017
Farmers $1,609 Farmers $2,306
$500,000/$1,000/$300,000 $600,000/$1,000/$300,000
Mercury $963 Mercury $1,117
Travelers $1,597 Travelers $1,887
State Farm $1,951 State Farm $2,320
Allstate $2,057 Allstate $2,515
Liberty Mutual $2,537 Liberty Mutual $3,119
Farmers $3,018 Farmers $3,729


California home insurance FAQ

1. Does home insurance cover wild fire damage?

The short answer is yes. The Insurance Information Institute (III) — a non-profit consumer group sponsored by the insurance industry — notes damage or destruction from fire, including wildfires, are usually covered under a standard home insurance policy. Check with your insurance company and policy to confirm wildfires are covered as insurance offerings can change depending on location.

In the event your home is rendered inhabitable because of the fire, you can also file claims for additional living expenses. For example, you may need to get a hotel room and your insurance company may reimburse you for these costs. Additionally, you have the option to have your vehicle covered for fire damage under your auto insurance policy if you carry comprehensive insurance. 

2. Why do I need flood insurance?

Floods are a potentially costly danger for homeowners in California. A 2007 report from the state's Department of Water Resources found that since 1978, flood insurance policyholders in the state had received more than $474.2 million in claim payments.

In the U.S., most flood insurance is sold through the National Flood Insurance Program. Such policies offer up to $250,000 in coverage for the structure of the home, and another $100,000 in protection for personal possessions. The III says a typical policy in the U.S. costs about $400.

California had about 240,000 flood insurance policies in force as of the end of February 2017.

Overall, flood insurance rates remain low. Just 12 percent of U.S. homeowners have a flood policy, according to III. That leaves them in great danger should flood waters or mudslides damage their homes.

Recently, there has been speculation that California might pull out of NFIP and create its own state-run flood insurance program. But for now, your best bet of getting coverage is through NFIP. For more information on flood insurance coverage, visit the National Flood Insurance Program website.

3. Why do I need earthquake insurance?

More than any other U.S. state, California is infamous for its history of earthquakes. Every part California is at risk for these natural disasters, according to the California Governor's Office of Emergency Services.

Californians who have a mortgage are required to have homeowners insurance.

However, homeowners are not required to buy earthquake insurance. As a result, just 10 percent of Golden State homeowners have earthquake coverage, according to the III.

By law, a California homeowners insurance policy must cover fire damages that result from an earthquake. However, all other earthquake damages fall outside the scope of homeowners insurance coverage. Therefore, you must purchase earthquake insurance to be protected.

The California Earthquake Authority is a privately funded, publicly managed nonprofit that provides a large percentage of the earthquake insurance policies sold to California homeowners. You cannot buy such insurance directly from the CEA, but instead buy it from insurers that are members of the CEA. 

You can find a list of such insurance companies at the CEA website. California regulations require you to purchase earthquake insurance from the same company that sells you a homeowners policy. 

The CEA offers an online premium calculator that can help you estimate your earthquake insurance costs.

Earthquake insurance has its limits. The purpose of such coverage is simply, "to help put a roof back over your head," according to the CDI. That means this insurance does not cover all damage associated with temblors, including damage to other structures such as garages and pools.

Earthquake insurance also does not cover:

  • Fire damage. Your homeowners policy covers this.
  • Land damage. This includes sinkholes and other hidden openings.
  • Vehicle damage. Auto insurance covers this damage.
  • Flood damage. Lake flooding, sewer backup and tsunami inundation are examples of flooding not covered by earthquake insurance. You need flood insurance to protect you from these dangers.

A CEA policy does offer some coverage for personal property and loss of use. Other coverages beyond basic protection of the home might be available to homeowners willing to pay additional premiums.

Today, earthquake coverage typically includes a percentage deductible that determines how much you must pay out of pocket before your insurance kicks in. A typical CEA earthquake policy has a percentage deductible this is 15 percent of the home's replacement value, according to III.

That means someone whose home replacement value is $300,000 would be on the hook for $45,000 in repairs before their hurricane insurance policy begins to reimburse them.

4. How can I save on earthquake insurance?

The way your home was constructed – and the nature of the soil supporting it – largely influence the price you are charged for earthquake insurance. By law, your homeowners insurance company must offer you earthquake insurance, even if your home doesn't measure up to the latest earthquake codes.

Your premium costs might soar if your home is not up to snuff, though. By contrast, premium costs could drop sharply if you take steps to make your home more earthquake resistant. Examples of making your home stronger include:

  • Bolting the house to the foundation
  • Bracing the water heater to a wall
  • Adding valves that automatically shut off valves

5. What can I do if I can't get homeowners insurance in California?

California residents who cannot find homeowners insurance can turn to the insurer of last resort, known as the California FAIR Plan. You can check out this coverage at the CFP website or by calling 800-339-4099.

Coverage in the FAIR Plan is limited to losses associated with fire or lightning, internal explosion, and smoke. If you pay an extra premium, you can get coverage for other perils, such as windstorm, hail, explosion and other damages.

Because FAIR Plan coverage is less comprehensive, you should only consider it if you absolutely cannot find an appropriate homeowners insurance policy, warns the CDI.

If you need theft or liability coverage, consider purchasing a "differences in conditions" policy that will cover these gaps. You can find a list of providers of such coverage at the CDI website. 

6. Where do I get claims processing info or file a complaint?

If you end up in a dispute with your insurer, consider contacting the California Department of Insurance. You can file a complaint by dialing 800-927-4357.

Or, you can file a complaint online. When doing so, you can upload supporting documents, such as:

  • A copy of your insurance card, both front and back
  • Any relevant correspondence between you and the insurer
  • A copy of a completed authorization and designation of agent form