Are You the Risk? How Insurers Judge California Homeowners

Published Date: 07/02/2024

California homeowners are facing an insurance crisis unlike anything the state has seen before. Between catastrophic wildfire losses, soaring reinsurance costs, and rigid regulations, many insurers have stopped writing new business or are non-renewing policies altogether.



For consumers, that has sparked one deeply frustrating question:

“Is my home too risky to insure — or am I the risk?”

In a recent episode of Insurance Hour, industry expert Karl Susman addressed this very issue after a listener shared a troubling situation. She had lost a second home to a wildfire, and that claim was still open. When she tried to renew insurance on her primary residence, located elsewhere, her carrier refused.

“Seems no admitted carrier will cover my primary home due to the risk,” she said. “Is it possible that insurers view me, not my property, as the risk? And is that even legal?”

Susman’s answer was direct: yes, it’s possible — and yes, it’s legal. But the reality is more nuanced, and understanding it can help homeowners navigate California’s tightening insurance market more effectively.

How Insurers Underwrite Both You and Your Home

Susman began by explaining a core principle of property insurance underwriting: insurers evaluate both the property and the person.

“When you are purchasing property insurance, there are two factors that the insurance industry looks at,” he said. “They’re going to look at that property, and they’re going to look at you.”

On the property side, insurers examine:

• Location and wildfire exposure
• Year built and type of construction
• Roof type, square footage, and updates
• Prior claims made on that specific property

On the personal side, insurers evaluate your insurance history:

• How many claims you’ve filed
• What types of claims they were
• How recently those claims occurred
• Whether they suggest a pattern of higher risk

“They’re going to look at prior claims on that property,” Susman explained. “And they’re going to look at you — have you had claims in the past? What types of claims? Do you tend to have lots of claims?”

In other words, underwriting is always a two-part equation: the risk of the home and the risk of the homeowner.

How Prior Claims Follow You Across Properties

To illustrate how personal claims history can affect underwriting, Susman shared a common example.

Imagine a homeowner on the East Coast files a claim after pipes freeze and burst during a winter storm. Years later, that same person relocates to Palm Springs, where freezing temperatures are nearly nonexistent.

Should that past frozen-pipe claim affect their premium?

It depends on the insurer.

“Some of them might look at that and say, ‘Yeah, that’s not going to happen again,’” Susman said. “Some of them might look at it and say, ‘That was at a different house, we don’t care.’ And some might look at it and say, ‘This person doesn’t maintain their home well.’”

Three companies can interpret the same claim in three entirely different ways — and in a normal market, competition allows homeowners to find a carrier whose underwriting philosophy fits their situation.

Why California’s Lack of Competition Makes This Worse

In most states, homeowners can shop multiple insurers and find alternatives if one company declines them. California’s current market no longer works that way.

“Because we don’t have competition in California right now — because we simply do not have carriers offering coverage — you don’t have the ability to go to those three carriers and get three options,” Susman said.

When insurers pull back or freeze new business, the few remaining carriers become far more selective. Homeowners lose choice, leverage, and fairness in the process.

In today’s environment, even a single claim — regardless of fault — can be enough to limit your options simply because there is nowhere else to go.

When Insurers Legally View You as the Risk

Insurance operates on risk pooling. To spread losses fairly, insurers must evaluate each customer’s likelihood of filing future claims. That includes reviewing your personal claims history.

Key factors insurers consider include:

• Frequency: Have you filed multiple claims, even small ones?
• Severity: Were your claims costly?
• Type: Were they maintenance-related or catastrophic events like wildfire?
• Timing: How recent were the claims?

“If you are finding yourself having problems getting your property insured and you’re asking, ‘Is it me?’” Susman said, “yeah, it could be partially you — not you personally, but your claims history.”

Even uncontrollable losses, such as wildfire, still become part of your underwriting profile and can affect your insurability across multiple properties.

The Impact of an Open Insurance Claim

In the caller’s case, the situation was made significantly worse by the fact that her wildfire claim was still open.

“I am so sorry that you still have a fire claim open,” Susman said. “It should not be open this long.”

Open claims raise red flags for insurers because they represent unresolved liability. Until the final cost is known, underwriters cannot accurately measure financial exposure.

Open claims are reported to national databases such as CLUE (Comprehensive Loss Underwriting Exchange). That information follows you from property to property and can affect your ability to secure new coverage, even when the loss occurred at a different home.

Is This Legal Under California Insurance Law?

Yes. Under Proposition 103, which regulates insurance in California, insurers must justify their rates based on risk — but they are still allowed to evaluate individual loss history when deciding whether to write or renew a policy.

While insurers cannot discriminate based on protected characteristics such as race, age, or income, they are legally permitted to consider:

• Your prior claims
• The nature of those losses
• Your overall risk profile as a policyholder

This practice is frustrating, but it is fully embedded in how underwriting works in California and nationwide.

What Homeowners Can Do If They’re Labeled “High Risk”

If insurers are treating you as a higher-risk customer, there are still steps you can take to improve your position.

First, resolve open claims as quickly as possible. Open losses create uncertainty for underwriters and can block new coverage entirely. If your claim is stalled, escalate with your adjuster or file a formal complaint with the California Department of Insurance.

Second, limit small and maintenance-related claims. Insurance is designed for catastrophic losses, not routine repairs. Frequent minor claims can make you appear riskier than you truly are.

Third, document all preventive and mitigation efforts. Records of home hardening, defensible space, alarms, roofing upgrades, and system improvements demonstrate responsible ownership.

Fourth, explore surplus lines coverage. While more expensive, surplus carriers are not subject to the same regulatory delays and may offer options when admitted insurers will not.

Fifth, work with an independent insurance broker. Independent agents can access multiple admitted and non-admitted carriers and help position your risk more effectively.

A Systemic Problem, Not a Personal One

Susman emphasized that California’s insurance crisis is structural, not personal.

“You can be the most responsible homeowner in the world,” he said, “but because we don’t have competition, you’re at the mercy of whoever’s still writing.”

Long-term reforms under Commissioner Ricardo Lara’s Sustainable Insurance Strategy aim to restore competition by allowing forward-looking catastrophe modeling and rewarding mitigation. Until those changes fully take hold, many homeowners will continue to feel unfairly judged.

Final Thoughts: How to Take Back Control of Your Insurability

It’s unsettling to realize that insurers may view you as the risk. But as Susman noted, understanding how underwriting works is the first step to navigating it successfully.

“If you’re having trouble getting coverage and asking, ‘Is it me?’ the answer might be partially yes — but not because you’ve done anything wrong,” he said.

Most homeowners caught in today’s crisis are victims of an imbalanced market shaped by climate losses and regulatory delays. While you cannot control wildfires or insurer withdrawals, you can control your claims behavior, documentation, and how proactively you manage your risk.

In California’s strained insurance market, knowledge, patience, and prevention remain your strongest defenses against losing coverage.