California homeowners are facing an insurance crisis that is no longer confined to wildfire zones or rural communities—it is spreading statewide.
In a recent ABC 10 News report by Austin Grabish, insurance experts and property owners described what they called a “real crunch” in the market: shrinking availability, rising premiums, and growing uncertainty about the future of coverage.
Longtime insurance broker Karl Susman summed it up bluntly: “In California right now, there’s a real crunch for insurance availability.” The latest shock to the system came when Foremost Insurance, a division of Farmers, announced it would immediately stop writing new home insurance policies in California—another major withdrawal in an already fragile market.
Foremost Stops Writing New Home Insurance Policies
Foremost’s decision to stop offering new homeowner policies adds to a growing list of insurers pulling back from California. State Farm, Allstate, Liberty Mutual, and others have already frozen new business, exited certain product lines, or begun non-renewing customers.
For homeowners, this means fewer options in a market that was already severely constrained. For brokers and real estate professionals, it signals a deeper systemic breakdown.
Despite official data suggesting more than 100 companies still write new homeowners insurance in California, Susman reports that fewer than a dozen are actually writing without major restrictions.
The Homeowner Experience: Coverage Denied or Doubled in Cost
For property owners like Tim Gordon in Oceanside, the crisis is immediate and personal. Gordon’s commercial insurance policy for two rental buildings was abruptly canceled, forcing him into a frantic search for replacement coverage.
When he began calling other carriers, he quickly realized how limited the market had become. The moment he mentioned one of his property ZIP codes—Ramona, an area with higher wildfire exposure—many insurers declined to even quote.
After weeks of searching, Gordon finally secured coverage, but at double the cost he paid the year before. The uncertainty, he said, has become the most unsettling part of the experience.
The Reality Behind California’s “Open” Insurance Market
While the California Department of Insurance reports that many insurers are still active, brokers working in the field see a different reality. Most carriers now impose strict underwriting limits that effectively shut out large portions of the state.
In practice, many insurers:
- Limit new business to low-risk ZIP codes
- Require large deductibles or bundled auto policies
- Accept only renewals from existing customers
The few carriers still broadly open are overwhelmed with applications, creating severe delays. These bottlenecks are now affecting real estate transactions, as lenders cannot finalize loans without proof of insurance.
Why California’s Insurance Market Is in Retreat
The crisis did not happen overnight. It is the result of three powerful forces colliding at once.
Wildfire losses have exploded since 2017, with insurers paying more than $30 billion in claims. Reinsurance companies, which backstop insurer losses, have raised prices sharply or exited California entirely.
At the same time, inflation has driven rebuilding costs up 30–40% since 2020. Labor, materials, and supply chain disruptions mean that even modest claims now cost far more to settle.
Layered on top of this is Proposition 103, California’s 1988 insurance regulation law. It requires rates to be based on historical losses, not future risk, and strictly limits how and when insurers can raise premiums. As costs and risks surged, insurers argue they were trapped in a system that could not adapt fast enough.
The Ripple Effects Across Housing and the Economy
When insurance availability shrinks, the consequences extend far beyond individual homeowners.
Home sales are delayed or canceled when buyers cannot secure coverage in time for closing. Lenders impose stricter requirements. Landlords see overhead rise and pass those costs on through higher rents. Small businesses dependent on property insurance for permits and financing face new barriers.
As Susman noted in the ABC 10 report, “Everyone is competing for the same limited capacity.”
The Emotional and Financial Toll on Homeowners
Beyond the numbers, the human impact of the crisis is significant. Homeowners describe constant stress, fear of non-renewal, and shock at sudden premium increases.
Even when coverage can be found, it is often at prices that strain retirees, middle-income families, and small property owners. Being dropped without warning has become a defining fear in today’s market.
What Insurance Experts Recommend Right Now
Brokers interviewed by ABC 10 offered practical guidance for homeowners trying to survive this unstable market.
Keep policies on auto-pay to avoid accidental lapses that can trigger immediate cancellation. Start renewal discussions 60 to 90 days before the policy expiration date. Once dropped, replacing coverage becomes much harder.
Work with an independent broker who can search multiple carriers and specialty markets. Strengthen your home’s fire defenses with defensible space, fire-resistant roofing, and ember-resistant vents to improve insurability and qualify for possible mitigation discounts.
The Growing Role and Limits of the FAIR Plan
When private insurers refuse coverage, homeowners often turn to the California FAIR Plan, the state’s insurer of last resort.
FAIR Plan policies are usually limited to fire-only coverage and must be supplemented with separate policies for liability, theft, and water damage. Premiums are high and rising as the plan absorbs more high-risk properties.
As more homeowners are pushed into the FAIR Plan, concerns are mounting about long-term sustainability and growing exposure for the state.
Pending Reforms and the Path Forward
Insurance Commissioner Ricardo Lara’s Sustainable Insurance Strategy aims to modernize the system by allowing catastrophic risk modeling, requiring broader participation in high-risk areas, and streamlining the rate approval process.
These reforms are expected to take full effect by December 2024. However, they offer little immediate relief for homeowners currently facing cancellations, non-renewals, and skyrocketing premiums.
Until those changes are fully implemented, brokers expect continued volatility and restricted underwriting.
The Bigger Picture for California Homeowners
California’s insurance crisis is not just about policy renewals. It is the result of climate risk, economic inflation, and regulatory structure colliding at the same time.
As more insurers step back, homeowners are left navigating a fragile and overburdened system with limited choices and rising costs. The new reality is one of uncertainty—not just about disasters, but about whether coverage will even be available next year.
The Bottom Line for 2024
There is, as Karl Susman described, a very real crunch in insurance availability across California. It is reshaping how homeowners buy, keep, and afford coverage.
Until reforms stabilize the market, the best defense is vigilance: pay premiums on time, start renewals early, maintain your property, strengthen wildfire defenses, and work with professionals who understand the rapidly shifting landscape.
In today’s California insurance market, getting coverage is no longer just about protection—it’s about persistence.
