Understanding the Rise in Homeowners Insurance Costs

If you’ve opened your mail lately and discovered your homeowners’ insurance has gone up, you’re not alone. Across California, many homeowners are seeing higher premiums as insurance companies adjust to rising costs from floods, wildfires, and other climate-related disasters.

Price hikes can be stressful and knowing how to stay protected without breaking the bank in the event of an emergency can be a relief. Below, we discuss the reasons for the recent rise in insurance rates and how Flood Response supports homeowners, helping them recover from property damage and handle insurance claims.

Why Homeowners Insurance Rates Are Rising in California

In recent years, alongside a consistent rise in premium costs, many insurance carriers have withdrawn, reduced, or stopped writing new homeowners insurance policies in California. The reasons? More climate change events, increasingly expensive building materials, and rising property costs, according to CBS News.

Property insurance premiums have generally gone up for homeowners across the U.S. However, in places that are more vulnerable to climate-related disasters—such as California, a common location for wildfires, earthquakes, droughts, and flooding—residents are experiencing the largest increases. Inflation and supply shortages drive up the cost of building materials, which are essential for repairing severely damaged homes affected by natural disasters. This also contributes to the increase in insurance rates.

California regulation also played a substantial role in the state’s insurance problems. Because insurers could not get their rate increases approved on time, they were backed up with claims as climate disasters increased.

California’s Efforts to Improve Coverage and Costs

The withdrawal of many major insurance carriers in recent years has led to a approximately 400% increase in premiums on the California FAIR Plan, an insurance option for California residents and businesses in urban and rural areas who cannot get coverage from regular insurance companies. Now, several insurance carriers have agreed to return to California:

Farmers
Allstate
Mercury
CSAA
USAA
Pacific Specialty
CA Casualty

With carriers returning, the CA FAIR Plan is pushing homeowners to seek market coverage again. These carriers must follow The Sustainable Insurance Strategy, implemented by Insurance Commissioner of California, Richard Lara, and designed to stabilize the insurance market and benefit consumers, homeowners, and businesses.

The policy mandates coverage in high-risk areas, requiring insurers to increase their coverage in these areas by 5% every two years until they meet the threshold. They also must provide discounts to homeowners who protect their properties from wildfires by creating defensible space with fire-resistant materials.

Under The Sustainable Insurance Strategy, insurers are allowed to set rates using catastrophe models that account for climate change and wildfire risk, so long as they cover a set percentage of the market in high-risk zones. In addition, insurers can incorporate the costs of reinsurance into their rate, which gives insurance holders a more accurate idea of expenses.

What to Do About Increased Insurance Rates

As a result of rising premiums, a concerning trend has emerged: Some homeowners are hesitant to file a claim for property damage, worried that it might raise their rates further. Others are choosing to forgo insurance altogether, deciding the monthly premiums are not worth the coverage.

Your investment in homeowners’ insurance is the safest and best option. Coverage can save you both money and stress if your home suffers damage from water, fire, mold, or other disasters. And while it’s wise to take preventative measures to protect your home, these are not always enough to keep storms, floods, and other natural events from wreaking havoc on your property. Homeowners insurance provides guaranteed protection and peace of mind, no matter what happens.

To find out if you can lower your premium costs while staying covered, call your insurance agent and ask for a review of your current coverage. Together, you can determine whether it’s wise to reduce or add coverage. You can also ask your agent if additional living expense insurance coverage is available in case you need to stay outside of your home during restoration work and repairs.

If your California home experiences damage, filing an insurance claim ensures the following benefits:

Financial Protection: Home repairs after water damage or fire can cost hundreds of thousands of dollars. Insurance helps absorb those costs.
Peace of Mind: Instead of worrying about payment for your entire restoration job upfront and out of pocket, you can focus on recovery, knowing your policy is working as intended.
Property Value Protection: Prompt restoration keeps damage from spreading, protecting your home’s value.
Professional Support: Trusted restoration companies, including Flood Response, help evaluate and fully document your home’s needs, then work directly with your insurance company to get your claim filed.

Wildfire Preparedness

Along with securing coverage, you can further protect your home from wildfire damage. The Insurance Institute for Business & Home Safety (IBHS) offers guidance to homeowners aiming to defend their properties and mitigate damage. Consider implementing their recommendations:

Building Features: Install ember- and flame-resistant vents; ensure 6-inch vertical noncombustible clearance at base of wall
Defensible Space: Create a home ignition zone (0-5 feet) and remove branches that overhang in this area; maintain the underdeck; clear your yard of debris; replace combustible fencing within 5 feet of the home
Roof Maintenance: Choose a Class A fire-rated roof maintained clear of debris; choose noncombustible gutters and downspouts
Other Mitigation Techniques: Remove back-to-back fencing; eliminate combustible siding; enclose eaves and under bay windows; upgrade to a wildfire-resistant deck; cover gutters; move outbuildings at least 30 feet away.

In addition to fortifying your property and increasing your family’s safety, several of these recommendations can help homeowners earn insurance discounts. Learn more about wildfire preparedness at the IBHS website.

How Flood Response Supports You

At Flood Response, we work for you, not your insurance provider. Our team of experts advocate for Southern California homeowners in need of comprehensive home restoration. Communicating with insurance companies allows us to ensure the claim is processed fairly and to begin the restoration process as quickly as possible.

Our team is also aware that homeowners’ insurance does not cover every type of damage a home can experience. According to the California Department of Insurance, coverage gaps may include:

Earthquakes, landslides, and other earth movements
Flooding
Mold
Wear-and-tear
Pests (termites, insects, mice, etc.)

To assist our clients with costs not covered by insurance, Flood Response has partnered with GreenSkyⓇ, a trusted provider of home improvement financing. The GreenSky^Ⓡ Loan Program provides homeowners with a streamlined, convenient way to finance home improvement projects without needing to dip into savings.

Providing Expert Property Restoration Services Since 2002

Unpredictable weather events and property damage are overwhelming, and rising insurance costs only add to the stress. But we strongly advise that you remain insured and stay protected against disasters.

At Flood Response, our IICRC-trained and certified technicians will arrive quickly at your property to assess and document the damage. The team provides unmatched service, mitigating all damage, cleaning debris, and reconstructing any lost property materials. We also pack out your personal belongings to avoid further damage, keeping your items safe and off-site until the restoration is complete.

We proudly offer the following damage restoration services:

For over 20 years, Flood Response has helped families and business owners in Southern California take the necessary steps to restore their properties and rebuild their lives in the aftermath of disaster. We’re available 24/7 and ready to provide excellent service.

Need emergency damage restoration? Contact us at 760-933-5278 today!