Homeowners insurance in California

For years, California’s home insurance market has been defined by extremes. First, the Golden State is home to extreme weather. It leads the nation in both wildfires and damage-causing earthquakes. Then there are housing market extremes: more California counties have median home values over $1 million than any other state. Below, we break down how home insurance works in California — what it covers, what impacts costs, and how to navigate a market that's become one of the most challenging in the country.

What does California home insurance cover?

A standard California home insurance policy includes several types of coverage. Knowing what those coverages are — and how they work together — is the first step to making sure you're properly protected.

Dwelling coverage (Coverage A)

What it covers: Dwelling coverage covers your home's physical structure — walls, roof, ceilings, and floors — along with attached structures like garages and built-in features like counters and cabinetry. It pays to repair or rebuild after a covered event like fire, wind, hail, or vandalism. 

How much you need: Your dwelling coverage policy limit is based on what it would cost to rebuild your home from the ground up — referred to as its replacement cost in industry-speak. This calculation factors in local labor and material costs. Most insurers require you to carry dwelling coverage equal to at least 80% of that figure. 

Notably, your home's replacement cost is separate from its market value — what you could sell your home for based on current real estate trends.

Trends to watch in California: Residential construction labor costs have surged in California, driven by demand in the wake of multiplying catastrophic climate events. At the same time, tariffs are driving up the cost of home building materials. To make sure your dwelling coverage stays on pace with rising costs, consider adding extended replacement cost coverage to your policy. This provides a buffer above your policy's limits, so you're covered even if rebuild costs come in higher than expected.

Other structures coverage (Coverage B) 

What it covers: Other structures coverage covers buildings and structures on your property that aren’t attached to your main dwelling, such as detached garages, sheds, accessory dwelling units (ADUs) like casitas, and solar panels. 

How much you need: Coverage is typically set at 10% of your dwelling coverage limit, but you can adjust it to fit the value of the structures on your property. 

Trends to watch in California: If you rent an ADU on your property, you may need separate landlord or business insurance to cover it. You might also need separate coverage if the rebuild value of the ADU exceeds the Coverage B limit on your policy. 

Personal property coverage (Coverage C) 

What it covers: Personal property coverage covers your belongings, including furniture, clothing, books, and appliances not built into your home. 

How much you need: Coverage is typically set around 50% of your dwelling coverage limit, but you may need to raise or lower that limit to match the value of your property. Often, high-value items like jewelry, sporting equipment, and art come with lower sublimits that may not provide sufficient coverage. However, you may be able to adjust these limits by purchasing optional add-on coverage, called an endorsement. 

Trends to watch in California: Most standard home insurance policies cover personal property on an actual cash value (ACV) basis. That means if your belongings are damaged or destroyed, your payout reflects what they were worth at the time of the loss — not what it would cost to replace them today. A five-year-old laptop, for example, might only pay out a fraction of what a new one costs once depreciation is factored in. If that's a concern, ask about replacement cost value (RCV) coverage, which pays out what it actually costs to replace the item.

Loss of use coverage (Coverage D) 

What it covers: Loss of use or additional living expenses (ALE) coverage helps pay for costs such as hotel bills, food delivery fees, restaurant meals, laundry, and more if your home is temporarily uninhabitable due to a covered event or mandatory evacuation. 

How much you need: Coverage is typically set at 20 to 30% of your dwelling coverage limit, but you can request a higher or lower limit. 

Trends to watch in California: California has special rules for loss of use or ALE coverage in the case of wildfire. Homeowners have up to 36 months to collect additional living expenses if there are reasonable delays in the rebuilding process. 

Liability and medical payments coverage (Coverage E & F)

What it covers: Personal liability coverage (Coverage E) pays for your legal costs, as well as medical bills or property replacement and repair for others, if you or a member of your household are responsible for bodily injury or property damage. Medical payments coverage (Coverage F) offers direct payment for medical costs if someone is injured on your property. 

How much you need: Personal liability coverage limits typically range from $100,000 to $500,000 per occurrence. Medical payments coverage is usually set at $1,000 to $5,000 per person per occurrence. 

Trends to watch in California: California's high cost of living means medical care, lost wages, and legal fees can add up fast after a serious claim. The state also has one of the highest rates of residential swimming pool ownership in the country. Plus, homes in high-value areas tend to attract larger legal claims. For most California homeowners, it's worth considering higher liability limits — or adding an umbrella policy for broader protection. 

Perils and exclusions: What is covered and not covered by home insurance in California?

The causes of damage covered by your home insurance policy — e.g., fire, wind, or theft — are known as perils in the insurance industry. Your home insurance policy may cover a specific list of perils (called named-peril coverage), or it may cover all perils except those listed in your policy as exclusions (called open-peril coverage). 

The most common named perils are: 

• Fire and lightning 

• Windstorm and hail

• Smoke

• Theft

• Vandalism

• Falling objects

• Explosion

• Riots

• Aircraft

• Vehicles

• Weight of ice, snow, and sleet

• Accidental discharge and overflow of water or steam

• Sudden and accidental tearing, cracking, burning, and bulging

• Freezing

• Sudden and accidental damage due to short circuiting

• Volcanic eruption

Most standard home insurance policies in California cover your home’s dwelling and other structures on an open-peril basis, but personal property is covered on a named-peril basis. 

Regardless of the type of coverage that applies, all standard home insurance policies in California exclude the following causes of loss: 

• Flooding: Home insurance won’t cover flood damage. If you live in a flood-prone area, you’ll need to add a flood insurance endorsement or purchase a separate flood insurance policy. 

• Earthquake: Standard home insurance doesn’t cover earthquake damage, but insurers in California are required to offer their policyholders the opportunity to purchase separate earthquake insurance. 

• Nuclear hazards and war: These are never covered by home insurance. 

• Animals or insects: An infestation of termites or other insects can do significant damage to your home. Because that damage is generally not sudden and can be addressed through home maintenance, insurance typically won’t cover the cost to treat an infestation or repair damage caused by vermin. 

• Normal wear and tear: Insurance exists for sudden, unexpected events outside of the homeowner’s control, so routine home maintenance and repair costs aren’t covered. 

Additional home insurance coverage to consider in California

A standard home insurance policy doesn't cover every risk — and in California, the gaps can be significant. Here are some optional types of coverage you can add to your policy or purchase separately for better financial protection. 

Earthquake insurance

Standard California home insurance policies explicitly exclude damage caused by earth movement, including earthquakes. However, if you have an active home insurance policy, your insurance provider must offer you the opportunity to purchase earthquake insurance. 

Most earthquake insurance in California comes from the California Earthquake Authority (CEA), which partners with private insurance companies to provide this coverage. You can’t buy a CEA policy directly, so you’ll need to ask your home insurance provider about getting earthquake insurance. 

A CEA policy includes: 

• Dwelling coverage: Your earthquake dwelling coverage will match your base home dwelling coverage limit, but it will be subject to a percentage-based deductible (the amount of damage you’re required to cover out of pocket) that’s between 5% and 25% of your coverage limit. For some homeowners, the lowest deductible amount available will be 15%. 

• Personal property coverage: Coverage limits range from $5,000 to $25,000. 

• Loss of use coverage: Coverage limits range from $1,500 to $100,000 and will help cover additional living expenses if you’re displaced from your home by earthquake damage or a mandatory evacuation. 

If your home was built before 1980, CEA coverage may be more expensive. Retrofitting your home to meet earthquake resilience standards could earn you discounts up to 25% off your earthquake insurance policy, and you may be able to apply for retrofitting grants through the California Residential Migration Program. 

Service line and buried utility protection

Service line and buried utility protection covers excavation and repair costs for underground water, sewer, and power lines if they are damaged between your home and a public street. 

Many of California’s established metro areas, like Los Angeles, San Diego, and the Bay Area, have extensive aging infrastructure that may be vulnerable to sudden and unexpected damage. If that damage happens on your property, this endorsement can reduce the cost to repair the damage and restore your home and surrounding structures. 

Accessory dwelling unit and casita coverage

Accessory dwelling units (ADUs), such as “granny flats” or casitas, are a staple of the California real estate landscape. The passage of recent housing laws like SB 9 and SB 10 to encourage density means more Californians than ever have an ADU on their property. 

In some cases, your home insurance policy’s other structures coverage (Coverage B) may cover your ADU, particularly if you don’t rent it out and it’s worth less than 10% of the rebuild value of your home. But larger, more elaborate ADUs and any property that’s rented out for income — on either a short-term or long-term basis — may require additional coverage. 

Talk to your insurance provider about options to insure your ADU, such as a landlord endorsement or a separate business insurance policy.

Solar panel and battery backup endorsement

California leads the nation in residential solar and battery storage thanks to Title 24 requirements. If you own a home with solar panels — and you own the panels themselves rather than participating in a solar lease — you might need additional coverage. 

Some standard home insurance policies cover damage to solar panels. Others do not. Check your policy documents carefully, or speak with an agent to determine if yours are covered.

Even if your policy includes solar panel coverage, consider the following: 

• Where your solar panels are located: If your solar panels are on your main dwelling, they might be covered under the dwelling coverage (Coverage A) portion of your policy. If they’re on a shed or other detached structure, they could fall under Coverage B, which has a much lower limit. If your policy limit is too low to fully cover the panels, ask about an endorsement to extend your coverage. 

• Breakdown risk: You may be able to purchase an equipment breakdown endorsement to extend your homeowners coverage to protect against sudden mechanical breakdown, especially if caused by a power surge or similar incident outside of your control. 

Equipment breakdown coverage

In California, electrical grids can be put under immense stress during heat waves or other climate shifts that lead homeowners to use higher amounts of power. That’s why you might see Flex Alerts during the summer — a call for voluntary energy conservation to prevent a failure that affects the entire grid. 

When electrical failures do happen, they can damage your home systems, including HVAC, pool pumps, water heaters, and electronics. Your electrical equipment can also be damaged by a surge when power is restored following an outage. 

An equipment breakdown coverage endorsement may cover mechanical damage caused by this type of sudden and unexpected failure. This is not the same as a home warranty; it typically covers different equipment. So check the details of any endorsement you’re offered against the terms of an existing or prospective home warranty. 

Ordinance or law coverage

California’s high-regulation culture isn’t exclusive to insurance; it also extends to building and energy codes, which are more strict here than in many other states. For instance, all new residential construction must include automatic fire sprinkler systems and energy-efficient heating and cooling systems. 

If you own an older home, these code requirements could add significantly to the cost to rebuild your home to 2026 standards in the event of a loss. Ask your insurance provider about an endorsement that extends your dwelling coverage limits to meet the cost necessary to follow local building ordinances. 

The cost of home insurance in California

According to the latest data from the Consumer Federation of America, the average annual home insurance premium in California is $1,724 per year for $350,000 in dwelling coverage. 

However, that average doesn’t represent the reality for many California homeowners or the diversity of homes in the state. For example, the cost to insure a 3,000-square-foot home worth $1 million in Ventura County will be very different from the cost to insure a 1,000-square-foot home worth $350,000 in Plumas County. 

To better understand home insurance costs in California, it’s important to look at the factors that influence rates. Your home insurance premium may be based on a combination of: 

• Your selected dwelling coverage limit

• Other coverage limits, such as Coverage C

• Your home’s age, building materials, and square footage

• Your home’s location

• Any home-hardening measures you’ve undertaken

California home insurance requirements

Home insurance is not required by law in California. However, if you have a mortgage, your lender likely requires it. 

It’s the reality at the crux of California’s insurance crisis: If Californians can’t afford home insurance, they can’t get mortgages — and without mortgages, homeownership is out of reach for all but the very wealthy. 

For decades, the California Fair Access to Insurance Requirements (FAIR) Plan functioned as the solution to this problem. As the name implies, the program was created in the 1960s to give homeowners who couldn’t get insurance through the voluntary market access to the coverage mortgage lenders require. 

• Fire-only policies: The California FAIR Plan offers fire-only insurance policies for homeowners in high-risk areas — for additional coverage like personal liability, water damage, and theft, it’s up to homeowners to purchase a difference in conditions (DIC) policy from a private insurer. 

• A safety net for the California insurance market: The FAIR Plan operates as California’s “insurer of last resort,” providing basic coverage to homeowners in high-risk areas who are unable to secure coverage in the private market. But as risk has grown statewide, so has reliance on the plan — raising questions about its long-term sustainability. 

• Coverage expansions: Under California’s new Sustainable Insurance Strategy, FAIR Plan limits increased to $3 million for residential households.

Challenges in the California insurance market

California also has the nation’s most regulated insurance market. Proposition 103 — designed to protect insurance consumers from arbitrary and unfair rate increases — locks insurance companies in California into a rigorous rate approval process that can take over six months to complete.  

In other words, California is a nightmare for property insurers. 

The nightmare’s gotten worse in recent years. Since 2018, California has experienced the seven largest wildfires in state history, with billions of dollars of damage across the state. Unable to adjust rates quickly to account for an unprecedented volume of claims, insurers began pulling out of California. In 2023, the California Department of Insurance (CDI) reported that seven of the 12 carriers representing 85% of the state’s home insurance market had either paused or restricted new business, and all remaining carriers had filed for rate increases, many as high as 20 to 30%. 

Since 2023, California Insurance Commissioner Ricardo Lara has led a statewide initiative to modernize the home insurance market, with the goal of keeping home insurance available, affordable, and sustainable for Golden State homeowners. As the market stabilizes, new priorities are emerging: transparency, risk mitigation, and making homes more resistant to fire damage.

Understanding the Sustainable Insurance Strategy (SIS)

In late 2023, Governor Newsom signed Executive Order N-13-23, directing Commissioner Lara to modernize the California property industry, with five essential goals: 

• Expand coverage choices for Californians living in underserved areas

• Improve the transparency and efficiency of the state’s notoriously slow rate approval process

• Overhaul the rate approval process with sustainable market competition in mind

• Keep the FAIR Plan sustainable by reducing its market share and moving homeowners into the voluntary market 

• Maintain the long-term availability of home insurance for consumers in California 

Since 2023, Lara and the CDI have accomplished a number of initiatives in the far-reaching Sustainable Insurance Strategy (SIS). The SIS puts an emphasis on transparency and sustainability in overhauling California’s outdated regulatory system in several ways. 

• Insurer commitments in high-risk regions: CDI is seeking a voluntary commitment from property insurers to write at least 85% of their statewide market in wildfire distressed areas to ensure that coverage is available through the private market for homeowners. 

• Integration of new catastrophe modeling: The department has developed new catastrophe models for insurers to use when pricing policies. These models take modern climate risks, as well as homeowner’s home-hardening initiatives, into consideration, leading to more accurate pricing and less insurer loss. 

• Mandatory discounts for home hardening: Building on 2022’s Safer From Wildfires regulation, the SIS requires insurers to discount policies for homeowners who harden their properties against wildfires. 

• New options for FAIR Plan policyholders: Wildfire mitigation initiatives help FAIR Plan policyholders transition to the voluntary market, while expanded coverage limits give homeowners more options. 

• Overhaul of the intervenor process: Commissioner Lara recently announced a major overhaul of the intervenor system, whereby third parties can intervene in the home insurance rate approval process. 

Wildfire mitigation and the Safer From Wildfires regulation

Wildfires are a key factor in California’s challenging home insurance market — and wildfire mitigation is a priority for both regulators and homeowners in resolving the insurance crisis. 

Mandatory discounts through Safer From Wildfires

The Safer From Wildfires regulation, passed in 2022, requires insurance companies in California to reward homeowners with discounts for undertaking certain wildfire mitigation procedures. The legislation doesn’t specify the size or nature of the discounts insurers must provide, so the CDI encourages policyholders to compare all their discount options. 

Homeowners can qualify for mandatory discounts by doing any of the following: 

• Install a Class-A fire rated roof: Asphalt shingles, concrete, masonry, and metal may all qualify as Class A fire-resistant rated, but you can check with the Office of the State Fire Marshal for a list of approved roofing materials.

• Create a five-foot ember resistant zone: You’ll need to clear out greenery and wood chips and replace them with stone or decomposed granite in a five-foot zone around your home. If you have a wood fence, it must be replaced with metal to avoid leading fire directly to your house. 

• Create a six-inch noncombustible zone from the ground up: The first six inches from the ground up as well as from any attached horizontal surface (e.g., a porch or deck) must be constructed of noncombustible materials like concrete, stone, cement, or brick. 

• Clear out combustible materials underneath your deck: All vegetation and debris (including weeds) must be removed. The only thing under your deck should be soil, concrete, gravel, or other noncombustible material. 

• Install ember- and fire-resistant vents: Vents must be made of 1/16- to 1/8-inch corrosion-resistant metal. Covering exterior vents with this mesh can keep embers from being carried into your home by the wind. 

• Enclosing eaves with fire-resistant soffits: A soffit refers to the underside of your roof’s eaves. Enclosing your eaves with soffits made of noncombustible materials can help reduce the spread of wildfire to other parts of your home. 

• Upgrading to multi-paned glass windows: Broken windows offer a convenient path for wildfire spread. Reinforced multi-pane glass reduces the chance of breakage. You can also earn a discount by installing shutters. 

• Move combustible structures at least 30 feet from the house: A shed, ADU, gazebo, dog house, or wooden play structure can increase fire risk to your home if it’s within 30 feet of the main dwelling structure. 

• Follow local defensible space guidelines: Check CAL FIRE or your local municipality or county’s laws for maintaining defensible space around your home. You may need to trim trees, remove brush, space out shrubs, and reduce all sources of fuel in a 100-foot zone around your home. 

• Forming a Firewise USA community: Joining or starting a community fire mitigation initiative can reduce risk across an area. 

Under the Safer From Wildfires legislation, you can request your home’s wildfire risk score from your insurance provider. Your insurance company must provide your score, as well as detailed explanations of how much you could save by taking the steps above to lower your score. 

The California Safe Homes grant program

The 2025 California Safe Homes Act (AB 888) established a new grant program to help homeowners upgrade to fire-resistant roofs and implement fire-mitigation measures in “Zone 0,” the five-foot zone closest to their homes. However, as of April 2026, no website has been established for the Safe Homes grant program, and no information is available about grant amounts or eligibility requirements. 

Community-level mitigation

Another key way that homeowners can reduce their premiums is through community mitigation programs including Firewise USA, led by the National Fire Protection Association (NFPA). In order to earn Firewise USA recognition, community members must: 

• Establish a core group, including residents and key fire experts like local fire departments and forestry agencies. A Firewise community can represent eight to 2,500 homes. 

• Build a wildfire risk assessment plan in collaboration with state agencies and engage in online training. 

• Create and follow an action plan that prioritizes risk reduction for local homes and educational initiatives. 

• Organize outreach activities and aim for at least one volunteer hour per dwelling per year. 

• Submit an application for recognition.  

If your community successfully builds a Firewise USA community and earns official recognition from the NFPA, all homeowners in the community will be eligible for discounted home insurance premiums. 

Other California insurance laws and consumer protections

As the CDI embarks on a strategic mission to modernize California’s insurance market, the state legislature has passed a number of recent measures to reinforce and expand consumer protections. 

Notification 6 months before nonrenewal (SB 1301) 

As of July 1, 2027, all insurance companies will be required to send renewal notices 90 days before a policy’s expiration date and nonrenewal notices 180 days before expiration. Existing notice periods are 45 days and 75 days, respectively. 

The law will also require insurers to give a clear explanation for the grounds on which a residential insurance policy is being nonrenewed. 

One-year nonrenewal moratoriums after a fire

Passed in 2018, SB 824 enforces a mandatory one-year moratorium on home insurance cancellations and nonrenewals in areas within or adjacent to a fire that’s been declared a state of emergency. 

You can find a list of past and active nonrenewal moratoriums on the CDI website.

How to save on your California premium

Maintaining affordable home insurance in California isn’t impossible, but it may require strategic moves. 

• Routine shopping: Don’t just “set and forget” your home insurance. At least annually, get quotes and compare rates from several different insurers — it can help you keep the lowest possible premiums in California’s rapidly shifting market. 

• Bundling: If you own both a home and a car, bundling both policies has the greatest discount potential, with some insurers offering as much as 20% off your premiums. 

• Home upgrades: Home hardening measures, earthquake retrofitting, and installing home security systems can all earn you a discount on your premium. 

• Deductible management: For small but immediate relief from high premiums, you may be able to raise your policy deductible. A higher deductible means you’ll have more out-of-pocket financial responsibility in the event of a covered loss, but it will also lower your premiums. 

How to navigate a California insurance renewal

If you receive a notice of nonrenewal from your home insurance company, try not to panic. Instead, follow these basic steps. 

• Use the Home Insurance Finder: In light of the growing number of nonrenewals, the CDI has created an interactive Home Insurance Finder tool on its website. You can use it to locate brokers and carriers still offering home and fire coverage in your ZIP code. If your policy was canceled due to fire risk, be sure to check the box that limits your search to insurers active in higher-fire-risk areas. 

• Apply for at least one private policy: Ideally, you should compare three to five quotes or more when shopping for home insurance. Not only will this help you find the best rate, but if your home is considered high risk, you’ll need to prove you made a “diligent search” by showing denial by private carriers before you’re eligible for FAIR Plan coverage.

• Enroll in the FAIR Plan and find a DIC policy: If you’re not able to find the coverage you need in the private market, you can join the FAIR Plan and shop for a difference in conditions wraparound policy from a participating private insurer. Consider following Safer from Wildfire standards to fortify your home’s fire protection and potentially get off the FAIR Plan as soon as possible.