(Airdate: 2024-05-29) CBS - KCAL - Tips for navigating the high costs of homeowners insurance
Published Date: 05/29/2024
Navigating California’s Homeowners Insurance Crisis: Expert Tips to Survive Soaring Costs
If you live in California, you’ve probably noticed your homeowners insurance premium climbing faster than almost anything else — except maybe your property taxes or grocery bill. Since 2018, homeowners insurance rates have risen more than 43% statewide, and in some areas, the increases have been far worse.
But for many Californians, the biggest challenge isn’t just higher prices — it’s finding coverage at all. Entire neighborhoods are facing non-renewals as major insurers pull out of the state or refuse to write new policies in wildfire-prone regions.
In a recent CBS/KCAL segment, consumer reporter Christine Lazar explored this growing crisis and spoke with insurance expert Karl Susman of The Insurance Hour for actionable advice on how homeowners can protect their properties — and their wallets — in this difficult market.
Here’s what’s happening, why it matters, and what you can do about it.
A Market on Fire
For West Hills homeowner Gaurav Barjuaj, the insurance rate hikes came as a shock.
“It’s not near a brush-filled hillside or a dangerous slope,” he explained, “but our homeowners insurance just increased more than 200%.”
Barjuaj’s story is becoming increasingly common. His 1,600-square-foot home isn’t in an obvious high-risk zone, yet his premiums more than tripled. When he tried to shop around, he found only minor savings — “maybe four or five, ten bucks a month” — not nearly enough to justify the hassle of switching carriers.
That’s because availability, not price, has become the real issue. As insurers limit coverage by ZIP code or territory, homeowners are left with fewer and fewer options.
In some communities, homeowners who once paid $1,500 to $2,000 per year now face bills between $5,000 and $6,000 — and those in the highest-risk areas can see premiums exceeding $30,000 or $40,000 annually.
“It’s ridiculous,” Susman told CBS. “People are paying more for homeowners insurance than they are for their property tax.”
Why Coverage Is Getting So Hard to Find
California’s insurance crisis is being driven by multiple factors converging at once:
- Wildfire losses — Insurers have paid billions in claims over the past decade as fires grow larger and more frequent.
- Rising rebuild costs — Labor shortages and construction inflation have dramatically increased what it costs to repair or replace homes.
- Regulatory lag — State laws under Proposition 103 require insurer approval before rate changes, slowing their ability to adapt to current risk.
- Reinsurance costs — Insurers themselves must buy insurance (called reinsurance) to cover catastrophic losses, and those costs have surged globally.
As a result, many insurers — including household names — have paused or withdrawn from the state, leaving the California FAIR Plan (the insurer of last resort) to pick up the slack.
Unfortunately, FAIR Plan coverage is often more expensive and offers limited protection, leaving homeowners frustrated and exposed.
Tip #1: Raise Your Deductible
When it comes to immediate cost savings, Susman recommends the simplest and most effective strategy: raise your deductible.
“Don’t just say, ‘I’ll go from $500 to $1,000,’” he advised. “Look at going from $1,000 to $5,000, even $10,000 if you can.”
It may sound counterintuitive, but higher deductibles can significantly lower premiums — sometimes by 20% or more. And in a major loss, such as a total fire, that higher deductible becomes almost insignificant.
“If your home burns to the ground, $10,000 isn’t going to make or break your ability to rebuild,” Susman explained.
The key is to treat homeowners insurance as protection for catastrophic events, not minor repairs. Cover smaller maintenance issues out-of-pocket and use insurance for the disasters that could truly threaten your financial security.
Tip #2: Reevaluate Your Coverage Levels
Many homeowners are unknowingly over-insured in certain areas of their policy — especially personal property coverage.
Most insurance carriers automatically calculate personal property (your belongings inside the house) as a percentage of the dwelling limit — often around 50% to 70%. But if you don’t own that much stuff, you could be paying for coverage you don’t need.
“If you look at that number and say, ‘I don’t have that much personal property,’ reach out to your broker or carrier,” Susman suggested. “Ask them to lower it.”
The same goes for Loss of Use coverage, which pays for hotel or rental costs if your home becomes uninhabitable. If you have family or friends nearby who could take you in temporarily, you may not need the full default amount.
By customizing these coverage categories to reflect your actual needs, you can trim your premiums without reducing essential protection.
Tip #3: Think Twice Before Filing a Claim
Susman also warned that filing even small claims can have long-term consequences.
“Every claim you file stays on your record,” he said. “It can lead to higher premiums or even non-renewal.”
This caution was echoed by Eric Brooks, a Calabasas homeowner who has experienced both skyrocketing costs and dropped coverage — twice.
After being canceled by two different insurers, Brooks eventually secured a policy through Lloyd’s of London, one of the few remaining providers willing to write in his area. But it came at a steep price: his new premium tripled from the previous year.
“It was almost three months from start to finish,” he recalled. “We sent it out to various carriers, and no one came back with anything favorable.”
Now Brooks pays more for his insurance than his property tax — and he’s afraid to file a claim at all.
“I actually have a leak right now,” he admitted, “but I’m not filing an insurance claim for fear of losing coverage again.”
It’s an increasingly common dilemma: homeowners are paying more for insurance but using it less, worried that one claim could make them uninsurable.
Tip #4: Stay Proactive with Home Hardening
Despite the grim outlook, Susman believes relief is coming, thanks to reforms from California Insurance Commissioner Ricardo Lara.
Under the proposed Sustainable Insurance Strategy, homeowners who invest in wildfire mitigation — things like replacing their roof, clearing vegetation, or installing ember-resistant vents — could see lower rates and improved eligibility.
“With this plan,” Susman explained, “you’ll be able to do things to your home to save money that maybe your next-door neighbor chooses not to do. Instead of pricing by ZIP code or county, it’ll be much more granular.”
That means risk will be assessed at the property level, rewarding homeowners who take measurable steps to reduce fire exposure.
This shift — from generalized risk mapping to individualized property scoring — could be a game-changer for residents in high-risk areas who’ve spent thousands on safety improvements yet seen no financial recognition from insurers.
Tip #5: Don’t Ignore New Legislative Efforts
While regulatory reforms work their way through the system, lawmakers in Sacramento are exploring ways to help consumers manage rising costs.
A new bill, AB 1867, would allow homeowners to deduct the full amount of their homeowners insurance premiums from their state income taxes.
It’s a creative solution that recognizes the growing financial burden of insurance as a necessary cost of homeownership — much like mortgage interest or property tax.
If passed, it could provide immediate relief to those now paying thousands more each year just to stay insured.
Why California’s Situation Is Unique
Although insurance prices are rising nationwide, California’s crisis stands out for its complexity.
Other states, like Florida, face similar challenges due to hurricanes, but California’s issues are amplified by:
- Wildfire-prone terrain surrounding urban areas.
- Strict consumer-protection laws that slow premium adjustments.
- High construction and living costs that drive up claims.
- Litigation exposure that adds to insurer risk.
Ironically, California homeowners still pay below the national average — but only if they can find coverage at all.
Tip #6: Work with a Knowledgeable Independent Broker
In today’s market, it’s more important than ever to work with an independent insurance broker — someone who can access multiple carriers, navigate surplus markets, and advocate on your behalf.
Unlike captive agents who represent only one company, independent brokers can compare coverage across many options, including specialty insurers and excess-line carriers.
They can also help you structure your policy strategically — for example, by combining FAIR Plan fire coverage with a separate “wraparound” policy that adds theft, liability, and water-damage protection.
“A good broker can save you thousands,” Susman noted. “Not because they have magic discounts, but because they understand how to tailor coverage to your real needs.”
A Market at a Crossroads
As Susman and Lazar both pointed out, California’s Department of Insurance has one of the most consumer-friendly oversight systems in the country — a fact that has, paradoxically, contributed to today’s challenges.
While strict regulation has prevented price gouging, it has also limited insurers’ ability to adjust quickly to changing risk. Many companies have decided it’s easier to stop writing new business altogether than to navigate the state’s outdated rules.
Still, the Department recognizes that the current system is not sustainable. Commissioner Lara’s office is actively working to modernize the regulatory framework, bringing it in line with today’s environmental and economic realities.
“I do believe they’re working on a solution,” Lazar said, “and that their proposal to reward fire-hardening will be beneficial for a lot of people.”
Final Thoughts: Hope and Hard Choices
For now, Californians are stuck in what many describe as an insurance Catch-22 — paying more for less, and afraid to use what they’re paying for.
It’s an infuriating place to be as a consumer. Yet experts like Karl Susman remain cautiously optimistic that relief is coming.
The key, he says, is staying informed and proactive:
- Review your policy annually.
- Adjust your deductibles and coverages to match your needs.
- Document all mitigation efforts.
- Work with a trusted broker.
- Avoid unnecessary claims.
Until reforms take hold, smart choices and patience are the best defenses in a market still struggling to find equilibrium.
Because while the cost of living in California’s paradise keeps rising, the peace of mind that comes from true financial protection — especially when disaster strikes — is still worth every dollar.
Author