Homeowners insurance in California

The average cost of home insurance in California is $1,166, making California the second-cheapest state in the country for home insurance. Its average cost is $1,139, or nearly half the national average of $2,305, for the coverage level of:

• $300,000 dwelling coverage
• $1,000 deductible
• $300,000 liability

A deductible is the amount of money you pay before your insurance company pays out on a claim. For example, if your home sustains damage of $3,000 and you have a $500 deductible, you pay the first $500 and your insurer pays $2,500.

Some deductibles are based on dollar amounts. Others are based on a percentage of your home's value. If your home is insured for $200,000 and your deductible is 2%, you will owe $4,000 before insurance coverage kicks in.

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. These are typically in the amounts of $500, $1,000, $1,500, $2,000 and $2,500.

Understanding the implications of the deductible you choose when buying homeowners insurance is important. In California, as in all the states, a higher deductible means you'll save on insurance premiums.

The savings can be significant. Barry says that most insurers recommend a deductible of at least $500, which may be ok for you. But keep in mind that by raising that to $1,000, you're likely to save as much as 25% on your policy, according to the III. Of course, that's $1,000 out of your pocket if there are major problems, so it's a bit of a balancing act.

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. 

However, due to the frequency of severe wildfires in the state over the past several years, insurers have started to charge extra for coverage in some cases, refuse to renew policies or refuse to sell new policies in some areas.  In California, for example, if you live within 2,500 feet of a canyon or area deemed high-risk by insurers, you may have to pay extra for coverage or you may even be denied a policy.

To help homeowners, the state insurance commissioner enacted a law that prevents home insurance companies from denying coverage due to wildfire risk up to December 2020. The mandatory one-year moratorium covers more than 800,000 residential policies in ZIP Codes adjacent to recent wildfire disasters under the Wildfire Safety and Recovery Act. “While existing law prevents non-renewals for those who suffer a total loss, the new law established protection for those living adjacent to a declared wildfire emergency who did not suffer a total loss—recognizing for the first time in law the disruption that non-renewals cause in communities following wildfire disasters,” reads a statement from the commissioner.

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

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. 

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